Market expert finds cosmetics sector growing, despite China slow-down

21-Oct-2013 - Last updated on 21-Oct-2013 at 15:03 GMT

According to its most recent report on the China cosmetics market, Reportlinker revealed that despite being affected by a slow-down in the economy, the sector has tripled in terms of growth in the last ten years.

The market analyst revealed that despite gross retail sales coming in at a low $21.94 billion, the make-up sector has developed rapidly, with sales in 2012 grossing $3.8 billion, a year-on-year rise of about 20 per cent.

Foreign brands are still reported to be the dominant players in the market, with the top three — L'Oreal Paris, Olay and Mary Kay- collectively accounting for 12.45% of retail sales.

L'Oreal remains a domineering force in China’s cosmetics sector as it achieves RMB12.05 billion in 2012, less than 20 years after wading into the country’s then underdeveloped markets. As of January, the company was selling 20 brands in China, including L'Oreal Paris and Maybelline.

In terms of domestic brands, Shanghai Jahwa is highlighted as giving the bigger players a run for their money with its' well-known ranges; Liushen, Herborist and Maxam.

Earlier in the year, the company eliminated four of its brands, Chinfie, Cortry, Ruby and Cocool, and launched three new ones in a bid to move its all-around strategic layout from middle range to high end department stores, and from massive circulation to franchise cosmetics stores.

Segment breakdown

Skin care is the largest cosmetics category in China, the market size reached $13 billion in 2012, up 9.9% year-on-year. Within the segment the analyst says anti-ageing products are the most popular, with sales standing at above 60 per cent.

According to Mintel research analyst Lui Meng Chow; "Chinese women are developing more sophisticated routines." He also commented: "even though the facial skincare market is mature, there are still gaps that exist between customers' needs and the products that are currently available."

The market expert therefore reckons that in this instance diversification offers an opportunity for domestic small brands and new players in the market, who were initially being squeezed by the sway of foreign giants.

The impact of rising incomes and increased skin care concerns has also seen a shift in focus from providing simple facial care to products that deliver on specialized facial care treatments.

"Products with natural ingredients and carrying 'zero-burden' claims, such as additive-free products, are favoured by customers, following a flurry of product safety scandals."