Yanhong Liu

China Research Institute of Daily Chemical Industry, China

Introduction

Since June 2015, due to the tariff of imported skin care products in Chinese market has decreased from 5%to 2%, many foreign cosmetics brands from European countries, American, Japan and South Korea, have cut the price at the different degree to further stimulate Chinese consumers’ purchasing demands. According to General Administration of Customs of China, from January to October of 2015, China has imported cosmetics at a total quantity of 61,252 tons, increasing by a rate of 50.2%, which has amounted to more than 15 billion yuan, which also grew at a rate of 36.2%. this indicates that Chinese cosmetics market has been ushered in a new wave of importation, which gradually shapes a great effect on Chinese cosmetics market in 2016, and ten current situations of imported cosmetics in the market are described as follows.

Current situations of imported cosmetics

Purchasing capacity

Purchasing channels become more diversified. Seeking for a suitable purchasing agent is the most popular method when people want to buy imported cosmetics. the agents can be professional purchasing agents, consumers’friends, families, or even strangers. Sometimes people choose to buy cosmetics via shopping overseas channels,which possesses a ratio of about 52.65% among varied means. personal care stores like Sephora, Watsons, Sasa,Mannings, are also the main channels for imported cosmetics purchasing with a proportion of 34.69%;shopping online and shopping malls occupy a rate of about 20%, and for the supermarket purchasing, the number decreases to 12.65%.

Imported cosmetics attracting more attention of purchasing agents.there are 62.12% of the interviewees who are imported cosmetics sellers or purchasing agents;about 87.88% of the interviewees intend to be a seller or agent; only 12.21% of them has no interests in imported cosmetics. Generally speaking, 74.24% of the interviewees think that imported cosmetics market will shape a good prospect in China, while the rest holds the opinion that the marketing situation will be nether better nor worse.

Consumer preference

Cosmetics with high performance is more favored by consumers.A report from the Internet shows that cosmetics with high performance is much favorable to be accepted by consumers, while price is the most direct and pertinent index. for example, the products amid 101 to 300 yuan and the products amid 301 to 500 yuan, the purchase proportions for them are 39.18% and 35.51%respectively, while for the cosmetics under 100 yuan,the proportion is only 8.16%. the data demonstrate the preference of consumers when they are buying the cosmetics, showing that the majority of them focuses on the performance of products.

Facial skincare products are most favored by customers.the report also illustrates that the top five kinds of imported cosmetics are as follows: facial skincare products, perfume, cleansing products, hair care products and cosmetics. Among all types related to personal care products, the proportion of facial skincare has reached to 76.33%, while body care and oral care products occupy a total rate of about 25%, falling behind the other types.

Reputation dominates the kernel factor in terms of purchasing rate.On purchase frequency, 26.53% of interviewees show that their frequency of purchasing imported cosmetics is six months to one year; 22.45%of interviewees prefer the period of three to six months;10.61% of interviewees will buy comparatively frequently like one month to three months. However, it is worth mentioning that, up to 36.73% of people chose the“uncertain” in the course of imported cosmetics purchase,and the premise should be meet that the product matches to their demands. As a matter of fact, 69.8% of the consumers prefer good reputation of products when they are purchasing imported cosmetics, and then followed by price, purchase channel, brand image, test effects and advertisement influence, etc.

Imported cosmetics are expected to be diversified.five items are listed in the survey of consumers’ expectation for imported cosmetics in the future, including more attractive brands, store image promotion, larger quantity of customers, senior clients, price raise, among which the second and forth element possess more than 50%.In terms of expectation on imported cosmetics, a survey shows that about 81.82% of people hope that the products can be produced with excellent quality; nearly 60.61% of consumers would like to use more fashionable cosmetics;for the third, it comes with better price adjustment at a rate of 43.94%. Under the background of great demand for imported cosmetics, more and more purchasing agents vote for the prospect of Chinese cosmetics market;meanwhile, it exits a series of derivative problems such as language barrier, lacking of purchasing agents, issues of tariff and relevant laws & regulations. Besides, 72.73% of the agents think that the biggest problem for them is the high purchase price. Some other factors as no popularity,order issues, supply shortage and unsuitability for Chinese consumers occupy the following ratios: 51.52%,46.97% and 15.15%. Generally speaking, no matter for the marketing trends in China or the point of consumers themselves, imported cosmetics will experience a huge development space in the following days.

importers with high popularity

Korean cosmetics become the first choice of purchasers.Influenced by Korean culture in recent years, 80.3% of the Chinese retailers and purchasers give option to Korean cosmetics, while 43.94% prefer french products, 27.27%would like to import Japanese cosmetics, and 7.58% of them show a tendency for Germany products. from the perspective of category, skincare products dominate the first place with a rate of 81.82%, followed by cosmetics,hair care products, perfume and body care products,with a proportion of 54.55%, 46.97%, 39.39%, 28.79%,respectively (figure 1). With a higher demand of green cosmetics, the organic or natural imported cosmetics has become the most favored products at a rate of 86.3%,which is followed by plant cosmetics with a proportion of 42.42%, then come the medical cosmetics and essential oil cosmetics. for import manufacturers, price gains much concern compared with other factors. In detail, the most ideal price range of imported cosmetics is 150 to 200 yuan, reaching a rate of 40.91%, while for other types of ranges are as follows: 100 to 150 yuan, over 200 yuan and below 50 yuan, with the proportions of 27.27%, 22.73%,3.03%, respectively.

Figure 1. Proportion of different categories of imported products in 2016

France is still the largest import country of Chinese cosmetics market.In terms of import resources regions,the largest one should be france as before, which is followed by South Korea, Japan, the USA, Hong Kong,Germany, Australia, taiwan, New Zealand and so on. Meanwhile, there are 16.73% of the interviewees shows that they have no specific options for the import country. Business france indicates that Chinese market has been developed into a mature stage with a great potential in cosmetics consumption. Chinese consumers show increasing interests in European products, which has created new commercial opportunities for french cosmetics enterprises. In addition to giants like L’Oreal,many other excellent french businesses is looking forward to entering into Chinese market someday.

Sales competition

The speed of entering into Chinese market is accelerating.A report from the Internet shows that there are 66.94% of interviewees have who can clearly recognize the fast speed of imported cosmetics to China, which is also becoming more popular recently. Only 6.53% of the interviewees have never used imported cosmetics.Besides, more than half of all the interviewees hold the idea that if possible, they would like to prefer imported cosmetics.

The sales amount of imported cosmetics is relatively low.Due to the limited channels and insufficient brand reputation, the sales amount of imported cosmetics is relatively low currently. Specifically, half of the interviewees imports cosmetics accounted for less than 5%, more than 16.67% of the interviewees import more than 20%. In terms of import channels, 66.67% of the interviewees prefer purchasing agency; 31.82% choose direct-sale company; overseas wholesale possesses 7.58% of the marketing share. Another investigation shows that the main purchasers for imported cosmetics are aged from 25 to 40 years old, among which the largest group is between 25 to 30 years old, reaching a proportion of 45.49%; the second large group is consumers aged from 30 to 40 years old; the demand by younger group is also raising, take 20 to 25 years old for example, the proportion is as high as 24.24% at present.

Reasons of tough situations

In the process of seeking to introduce imported cosmetics, the distributors have encountered a series of problems, such as insufficient supply, import homogeneity, high price, lack of brand popularity, order obstacles; etc. However, according to iResearch, in recent years, the proportion of imported cosmetics in Chinese market is around 13%, and increasing at a compound growth rate of 30%. However, the average share of imports in the shop is less than 10%, the reasons are as follows.

The long handle period

Averagely, the period will go through one year at least,no matter in terms of documents, logistics or ordering.In addition, the mode of foreign brands operation and the Chinese side is not the same. foreigners put ordersystem into practice, while it is difficult for distributors from China who want to increase orders, since there will be insufficient orders then. So, it will become into a long handle period during the whole process of importing cosmetics to Chinese market.

High cost of imported cosmetics

the import areas are mainly in Europe, the United States, Japan and other developed regions, basically, they have higher cost in the aspects of labor power, production cost and operating cost compared with China. Besides,the distribution cost is increased during several rounds of price raising from general agents to retail stores, bringing a relatively low profit for the sellers. therefore, the cost of imported cosmetics will be very high.

Negative effects to market by fake goods

the wholesale market seems to have numerous categories of imported products, while the quality and source are not guaranteed. the key conundrum is not the decision of importing cosmetics, but the source of products with original packaging and complete credentials.

Indefinite positioning of import brands

Before a foreign brand is introduced into Chinese market, general agents need to do marketing research including saturation of target brands, popularity and consumer group. According to related statistic, personal care products among imports are perceived to have a relatively large space, due to the little marketing share,adequate goods supply, more personalized and diversified consumption requirements.

Suggestions for imported cosmetics sellers

In recent years, with the upgrading of consumption and diversification of consumer demands, tariffs reduction and favorable trade policies by the state, a growing number of retailers are starting to focus on cosmetics importation.thus, how to identify the hidden needs of consumers has been a main task for imported cosmetics sellers. firstly,new product categories with a strong supply chain system is particularly important. Usually, exclusive sales agreement should be imperative, and some other categories are selected in accordance with fashion and novelty. Second,capital rationing in four core aspects, including talents training, retail system upgradation, outlets expansion,and international brand agency business. third, creating imported cosmetics experience center to establish own supply chain system, for a better convenience of goods inspection and global best-selling products collection. Last but not least, optimizing the product structure by the means of transferring cosmetics to life’s necessities like foods,miniature household appliances, and so on.

Conclusion

In recent years, with the gradual reduction of cosmetics production cost and more loose Chinese tariff policies,brands originated from European countries, American,Japan and South Korea begin to trigger an influx of entrance to Chinese market, leading to an increasing competitive situation of Chinese cosmetics industry. With the rapid economic development of Chinese society, governmental management of imported cosmetics approval has become more scientific and rigorous. this will help to regulate the healthy operation of the whole industry by strengthening the market supervision. Under such a strict management mechanism, the commercial value of imported cosmetics will become more attractive for investors in Chinese market, thus it is predictable that the future of imported cosmetics industry will be a coexistence of opportunities and challenges with a good development trend.