European manufacturers hone in on booming Chinese market

By Louise Prance

- Last updated on GMT

Recent activity in the Chinese cosmetics market indicates that it
is set to become a lucrative and expanding area, prompting many
European manufacturers to target the booming segment through direct

Euromonitor analyst, Briony Davies told CosmeticsDesign​ that, "Growth in the Chinese market has become more apparent as high penetration in areas such as Western Europe and the US has slowed down their growth - with manufacturers finding it hard to entice consumers". ​"Therefore European manufacturers are branching out into the developing cosmetics market in China, capitilasing on its large population, and the rising income of Chinese consumers,"​ she continued. Both the rise of economical brands from large supermarkets stores and the stagnancy of the mature Western markets have become big incentives for European manufacturers to hone in on the Chinese cosmetics market - currently abundant with development opportunities. Indeed, the young and affluent Chinese cosmetic consumer is eager to embrace European movements and aspire to a Westernised view on fashion, that stretches to cosmetics and personal care. However, Euromonitor has observed that due to the high penetration currently being restricted to inner city areas, there is a lucrative gap in the market for direct sales agents to target more rural areas and focus on the 'out of reach' consumer. A spokesperson for market research analysts Mintel told CosmeticsDesign-Europe​ that, "At the beginning of 2006, China opened its doors once again to direct sales that were then prohibited. Until now, direct sales agents, such as Avon, have had to rely on retail outlets in China". " Since the ban has been lifted, companies such as the Swedish- based Oriflame, Amway and Mary Kay have applied for and received licenses to operate in China,"​ they continued. Indeed, Davies mirrored these statements, stating that the direct sales market is set to become huge in China, however, there are still hurdles to overcome, such as growing competition from budget supermarket cosmetic ranges. She added that European manufacturers would be wise to hone in on the direct sales markets, as women are increasingly staying at home. The skin care market in China is currently leading all other segments. Fueled by massive economic growth and the shear size of the population, the market for professional skin care in China looks set to topple worldwide competition if current growth rates can be sustained. Growth in the market during 2006 came in at 15 per cent, which according to a new study entitled Professional Skin Care 2006: China, published by Kline & Company, easily outpaced other US and European markets - and is expected to be sustained during the course of the next five years. "The sheer size of this market alone makes it attractive​," says Carrie Mellage, industry manager for the Consumer Products practice of Kline's research division. "Factor in the growth potential and it's easy to see why China is becoming such a critical element in sales and marketing strategies for the global consumer products industry, especially for high-margin sectors like professional skin care​."

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