Innovation, on-trend and high-quality are three major factors Hong Kong shoppers look for when selecting K-beauty favourites.
With both K-beauty and J-beauty proving formidable in APAC through innovation and expansion, Neilson states that when it comes to Hong Kong consumers, K-beauty is the preferred choice.
“A decade ago, Japanese music, movies and video games were all the rage. Japanese products were widely popular and followed by Hong Kong consumers. As time goes by, this prevailing pop culture has shifted, from Japan to Korea,” Neilson reveals in a recent press release.
Commenting on the key K-beauty drivers impacting its trend, the report states: “With the emerging popularity of Korean dramas, movies and K-pop stars, Korean brands are now widely accepted by consumers as a rising trend and this has laid a strong foundation for the retail market to grow.”
Target audience
Nielsen’s Japanese and Korean Trends report follows Hong Kong consumers' perception on the popularity of Japanese and Korean trends. According to its research, “the popularity of the Korean trend has, never like before, overridden Japanese trend” as over 50% of those asked aged 18 to 54 believe that Korean trends will remain popular in the near future.
Its survey respondents state that eight out of ten millennials feel the K-beauty trend is skewed towards females. In addition, higher income respondents (more than HK$25,000) are noted to have a stronger recognition of Korean trends and are more likely to have spent time in Korea at least twice in the past year (88%).
K-beauty in Hong Kong
K-beauty’s popularity derives from entertainment (76%), followed by fashion/personal care (71%) for millennials being the target customers.
This comes as Korea’s tourism industry prepares to unleash its growth potential. Korea Tourism Organization 2017 reveals there is an average of 600,000 tourists travelling to Korea every year. Korean cosmetic products account for 25% of China's total cosmetic imports. According to 2016, Forbes reveals that the economic impact of K-pop star BIGBANG is anticipated to see pretax earnings of US$44 mn (€37.8 mn).
Current spending on Japanese products is 30% more than that of its Korean counterparts. However, approximately one-third of those respondents asked revealed they will be lifting their claimed spending on Korean products and of those, 37% will increase their spending.
Three winning factors
Korean brands need to achieve higher acceptance with their target customer group to generate increased word-of-mouth. As K-beauty names strongly appeal to Millennial Hong Kong consumers, Neilson states that this target group values products that appeal to fit their need (41%) most and expect the products to be trendy and based on imagery (34%). Innovation (31%) and product quality (31%) are also important when searching for Korean brands.
Choosing effective channels to reach these target groups is also vital and can support maximising the return on investment. Social media platforms such as Facebook, YouTube, and Instagram are important channels for millennials as they opt to share their personal opinions and to seek advice.
Online spending patterns are also vital, as almost half of them do their online shopping with computers at home and office (48%), followed by a respective 25% and 11% using their mobile and tablet for online shopping.
Economic outlook
"The Hong Kong economic environment has remained stable over the years and has been well-supported by the consumption of over 42.8 million of mainland visitors coming to Hong Kong,” explained Michael Lee, Managing Director, Nielsen Hong Kong & Macau.
“With the Korean market slowly emerging in Hong Kong, Korean brands can succeed and win Hong Kong customers' buy-in by being more customer focused, showing emphasis on product quality and charging a premium with innovation. This will certainly open up a new market for opportunities to come,” added Lee.