By Eakasart Sappachang

Hi-Light:

• Chinese brands are starting to emerge from its domestic market to become major global players. Free trade policies have enabled China to benefit from the exchange of know-how from other countries, and this is filtering down to Chinese consumers in a big way. Most Chinese businesses are currently experiencing rapid growth, and this includes the cosmetics industry. There are already more than 50 cosmetic and beauty trade organizations established in China. 
  
• Economic analysis shows that the cosmetics market in Asia is the second biggest consumer goods market in the world. In China, the skin care and cosmetics industry has grown 17% in the last decade, with growth of more than 20% in the premium segments.
  
• We will be seeing more beauty and cosmetic products aimed at men and people of different socio-economic status, with shrinking package sizes that are more convenient and safer for all consumers.
  
  

In the last five years, I have traveled to China many times, which has allowed me to witness a lot of changes there that will surely start to spill over to Thailand soon. Just last month I attended the China Beauty Expo in Shanghai, and I want to share what I have learned with all my readers: China is becoming more and more beautiful, with no end in sight!

1

The China Beauty Expo is an exhibition of innovative new products and technology. I saw many new kinds of cosmetics, beauty tools, services and trends introduced there. The exhibition attracts more and more attendees every year, and this year there were over 412,000 attendees from 80 countries visiting more than 3,000 booths hosted by entrepreneurs from 34 different countries. As you know, China will produce anything you can imagine as long as you've got the budget.

2

There have been many changes in the last ten years. Chinese brands are starting to emerge from the domestic market to become major global players. Free trade policies have enabled China to benefit from the exchange of know-how from other countries, and this is filtering down to Chinese consumers in a big way. Most Chinese businesses are currently experiencing rapid growth, and this includes the cosmetics industry. To date, there are already more than 50 cosmetic and beauty trade organizations established in China (including Hong Kong and Taiwan). In 2005, the Asian Brand Building Lab was established, which became the kick-off point for the Chinese beauty industry. Soon, exports of Chinese branded cosmetics will follow the same growth trends that technology and other consumer goods have.

3

Economic analysis shows that the cosmetics market in Asia is the second biggest consumer goods market in the world. In China, the skin care and cosmetic industry has grown 17% in the last decade, with the growth of more than 20% in the premium segments. This is a very high rate, so we should try to understand what has caused it.

4

The main reason is that China has a very young population. By the end of this decade, all Chinese millennials will have reached the working age and be more concerned about their appearance. This generation has 415 million members with money burning holes in the same pockets where they keep their smartphones. This all means the beauty market in China is going to be changing rapidly from now on.

5

Why is the smartphone is so important? Don't forget that people were trading on Alibaba, Taobao, and WeChat in China long before Thailand got into e-commerce. Chinese smartphones are also a lot less expensive than the American or Korean brands, which means that everyone can get online. The result of this is that e-commerce has become extremely popular all over China. To capitalize on this, many premium brands from France, America, and Japan now have their own websites selling directly at the Chinese consumer. Euromonitor said that this premium segment should experience a continuous growth rate of 10% in China beginning this year. This is partly because brands from France, American, and Japan are still considered an important indicator of success in China.

6

Another unexpected thing I found out about the Chinese beauty market is that now much of it consists of products for men. Research from Euromonitor in 2017, showed that 63% of male respondents used cleansing milk, lotion or face cream. The main reason for this is because past social values in China favored a son over a daughter, and so the male population is much greater than the female population. Most men are comfortable buying skin care products and caring for their appearance like women do, especially in the big cities such as Beijing, Shanghai, Hangzhou, and Guangzhou. With the end of China's one-child policy, the gender imbalance may stabilize a little, but today's children will be adults in 2050, and then men in their 30s will make up 30% of the population. Euromonitor said that this situation will result in more growth in men's beauty and cosmetics that we have ever seen before.

7

Not only are male beauty products popular in shops, but also in direct sales. At the beauty expo, I also learned that the multi-level marketing model is very popular in China due to the country's large size, which makes it sometimes more convenient to approach customers through a vast selling network of individuals. But, retail shopping and e-commerce are also growing. Most Chinese shop owners are still able to compete with online shopping because people care about the storefront shopping experience with its eye-catching designs and opportunities to handle the merchandise before buying. So, as you can see, China has a very large population interested in both the technology and the hardware aspects of shopping.

8

Another thing that is clear is that the Chinese have a great ability to create brands, which I would say is following in the footsteps of Japan and South Korea. There are now many well-known Chinese brands ranging from dirt-cheap to ultra-expensive. They are mostly made for domestic consumption, but in another ten years, they will be among China's biggest exports.

9

Small and medium-sized enterprises who attach their own brand labels to Chinese products may have to find other sources, as the original manufacturers will be able to negotiate their own distribution. However, due to runaway growth, many Chinese factories have been slow to improve manufacturing processes, which have created problems for the environment and the quality of life among laborers.

10

So, we will be seeing more beauty and cosmetic products aimed at men and people of different socio-economic status. The new products will come in smaller package sizes that are more convenient and safer for all consumers. Also, Chinese people tend to favor more healthy, natural and organic products. Thai business owners who are doing business with Chinese companies may need to find alternative sources or change their business model to be more competitive. It might be better to create and manufacture your own brand or invent something new, which could be a more sustainable business model for the coming decade.

Here's wishing your business all the best!

Reference:

• https://www.chinabeautyexpo.com/en/media-room/press-releases.html
• https://www.scmp.com/lifestyle/fashion-luxury/article/2109267/chinas-beauty-trends-organics-live-streaming-influencers
• https://www.scmp.com/business/china-business/article/2109143/young-chinese-males-driving-growth-countrys-us33bn-beauty