China professional hair care is fragmented but holds potential

The global market for salon hair care is currently estimated to have a value of $12bn and last year grew at a rate of 2.1 percent, but in Asia Pacific, although the market is far more fragmented, the market is growing at a far greater pace.

Last week Cosmetics Design Asia featured the professional hair care market in India, where growth is India market leading, but in the much larger China market, growth is almost as spectacular.

The overall market in the Asia-Pacific is still underlined by developed markets such as Japan and South Korea, smaller markets such as Malaysia, Thailand and Indonesia are showing much stronger growth, although this growth is still overshadowed by India and China.

China growth is steady but held back by market fragmentation​

“China continues to perform well as demand for salon hair care products continues to grow posting a near 6 percent increase in 2011 driven by the emerging middle class and an increasing awareness about professional products​,” said Karen Doskow, Industry Manager at Kline’s Consumer Products Practice.

Currently the market research company estimates that the market has a value of $700m, compared to that of India, where the value is much lower at $100m.

Particular to the market in China is the fact that it remains so fragmented, which suggests that it is still far from maturity and offers considerable opportunity for business expansion.

However, although the market is continuing to enjoy steady growth, Doskow points to the fact that the current larger players remain highly divergent and are struggling to carve out a greater share of the market.

"L’Oréal continues to be the leading company in China, and together with a select few major players such as Henkel and Shanghai Schobrunn, achieve strong gains in 2011,”​ Doskow added.

Market fragmentation reflected in distribution​

The fragmentation of the market is also reflected in the distribution of products in the country, where products are primarily sold to salons by distributors, but also by company representatives who make direct sales to both high-end and chain salons.

Shampoo and conditioner products remain the most important category in the market, and is vastly overshadowed by hair styling products, which remain a very small category in the country.

However, perhaps instead of using styling products, coloring is a very important category in the country, with a stable and long-term coloring performance remaining the primary criteria for the consumer.

As this category evolves, the funciton of hair coloring products in China and other Asian markets no longer remains just covering grays, as it is now expanding into providing more dramatic hair coloring effects that reflect the growing desire to make a style statement.

Watch out for counterfeiters!​

As with most luxury cosmetic and fragrance products in the Asia Pacific region, the report also highlights the fact that salon hair care is a target for counterfeiters, which potentially serves to deteriorate brand image.

Ultimately Doskow believes the fragmented and undeveloped state of the salon hair care market in China, combined with healthy economic growth and increasing urbanization should point to significant annual growth over the course of the next five years.