Andre Thibaud

Daxue Consulting, China

Facing a slowdown but expected to rebound

In 2015, the Chinese skin care market recorded a current value growth of 7% with a sale volume of CNY160.8 billion last year. Skin care industry in China saw a slowdown in 2015, mainly caused by the economic downturn and rising overseas purchases. Indeed, the economic downturn led to a fall in consumer confidence,and Chinese shoppers showed reluctance to pay higher prices for skin care products. Moreover, a growing number of Chinese consumers purchase skin care products abroad, where famous multinational brands are often cheaper comparatively. Despite this slowdown in the skin care market, it is expected to post a value CAGR of 8%over the period of 2015-2020 and to reach CNY233 billion in 2020.

85% Chinese men say that they pay attention to their appearance, not only impress their counterpart but also satisfy themselves or to feel more confident. This appeal for their appearance impacts the cosmetic market,including the skincare market.

China has become the largest male skincare market in the world. This is due to demographical reasons, there are more Chinese men than Chinese women (the natural sex ratio at birth is estimated by United States’ CIA to be close to 1.15 males/female in 2016), and also based on society facts. Influenced by neighboring countries like South Korea or Japan, and thanks to the improvement of living standards, Chinese men spend more time and money on a variety of personal care products.

In Chinese culture, appearance plays a key role in a successful career. That’s why Chinese people are the biggest luxury spenders in the world currently. As fashion clothes, cars or jewelry, the grooming is an outward sign of prosperity. New research found that in 2014, the size of the male facial skin care market in China had been evaluated to 1.14 billion dollars, while it could reach almost 2 billion dollars by 2020.

Currently, the shares of Chinese skin care market is held by some international companies. In 2014, the international brands held 76.6% shares of the men grooming market in China. But the possibility to take share should be encouraging Chinese companies to invest in this market.

Growing interest for electric beauty devices

A trend shakes up both the competitive field and innovation in skin care: the rise of beauty devices. Skin care companies introduce cleansers or lotions that work with the devices, electronic facemasks, and rejuvenation devices. These products, in comparison with services offered in beauty salons, give access to at-home treatments which are more convenient.

Examples of such products include Clinique’s Sonic System Purifying Cleansing Brush and Olay’s Professional Pro-x Advanced Cleansing System.

Since 2013, facial masks are growing much more popular in Chinese skin care market. This category took the second place of the performance in the skin care industry in 2015. Sales are expected to rise by 6% till 2018, thanks to Chinese consumers’ increasing awareness of basic skin care routines and the active marketing of the major brands. Brands are continuously innovating with new product formulations and by adding premium ingredients such as ginseng. A wide variety of different facial masks is sold well on the market and e-commerce sites like lefeng.com and jumei.com.

Magic Holdings, a brand acquired by L’Oréal at the end of 2013, currently dominates the Chinese sheet masks market.

Facial essence oils have been increasingly popular in 2015. Facial essence oils were an integral part of the Asian skin routine in ancient times. Western consumers have adopted these products and it finally came back to China.Facial oils were already presented in the skin care market since 2012 as ingredients added in skin care products.

New launches in 2015 include Sisley Black Rose Preains Face Oil in July, Chanel Sublimagel’ Extrait in October and Estée Lauder Advanced Night Repair Recovery Mask in Oil in December.

Examples of successful brands in China

L’Oréal Paris, the world-renowned French skin care brand. L’Oréal Group is one of the world’s largest cosmetics company. This French group is active in the dermatological, tissue engineering and pharmaceutical fields and is the top nanotechnology patent-holder in the United States. The first brand of the group to penetrate the Chinese market was Lanc?me in the 1990s. The group owns an extensive brand portfolio, from ShuUemura and Kérastase that offer professional products, YSL and Giorgio Armani in the luxury category to L’Oréal Paris,Garnier and Maybelline that provide consumer products.

To L’Oréal Group, the Chinese market is the place to reinvent their brands.

Innisfree, a Korean skin care brand that is sold well in China. Innisfree is a South Korean leading cosmetics brand owned by Amore Pacific. The brand was created in 2000 and was one of the few Korean brands that use organic ingredients certified by the French ECOCERT organization. Innisfree offers skin care, makeup, eye care,sheet masks, and body care products to both women and men. Innisfree Top 3 best-selling products are currently the super volcanic pore clay masks, the green tea seed serum, and the long wear cover cushion.

Pechoin, a well-known domestic brand that reinvented itself. Pechoin is a skin care brand of Shanghai Pehchaolin Daily Chemical. Pechoin was established in Shanghai in 1931 and has been positioned as an “affordable” skin care brand in the minds of target consumers. The brand works on its high-end line and is currently to deliver betterrounded products to approach a younger clientele. In 2008, it won the title of Famous Trademark of China.

Chando, a growing domestic brand with a strong reputation. Chando is one of the core brands of Jala Group in Shanghai. Since the brand entered the cosmetic industry in July 1997, Chando has become the leading brand in China’s domestic cosmetics industry by investing wisely in TV advertising, building up its company image through charitable contributions after the Wenchuan earthquake, and using famous KOLs (Key Opinion Leaders) or celebrity endorsers.

Adapt strategies & products in Chinese market

Chinese cosmetics market is very volatile. Chinese consumers have a lot of expectations and are always looking for new products on the market. There are many local and international companies which try to win the market shares. Moreover, the important role of social media and e-business in Chinese economy make the competition intensely. Those companies have to gain attention of customers, who can immediately compare the products on the Internet and social media. L’Oréal has opened an online shop on Tmall.com in 2010. It was the first international cosmetic brand to do so. Companies,especially the international ones, need to adapt their products to the Chinese market. It is not enough to offer the same products as western consumers. That is why,some international companies, like L’Oréal, are investing in their research and development lab. Thanks to their researches, the companies can catch the consumer attention and offer unique products to them.

For example, L’Oréal developed its Hydrafresh Genius Water especially for Chinese consumers.

With fierce competition, the Chinese skincare market has driven the companies to innovate for offering some news skincare products. Even if there was a slowdown in the Chinese skin care market in 2015, it seems to be only temporary. The economic variable on this market shows that Chinese skin care market is still dynamic and will continue to grow, driven by Chinese consumers’ needs,preferences and new expectations.

[1] Published on line at http://daxueconsulting.com/male-groomingmarket-in-china/.

[2] Published on line at http://blogs.wsj.com/chinarealtime/2014/05/29/china-becomes-worlds-largest-market-for-mens-skin-care/, May 2014.

[3] Published on line at http://www.chinadaily.com.cn/business/2016-07/06/content_25991436.htm.

[4] Published on line at http://europe.chinadaily.com.cn/business/2016-01/01/content_22898243.htm.

[5] Published on line at http://chinawatch.washingtonpost.com/2016/01/goodbye-mr-habitual-hello-mr-metrosexual/.

[6] Published on line at http://www.loreal-finance.com/fr/rapportactivite-2015/ focus-chine.