China luxury skin care: Consumers refocusing on ‘essentiality and real value’ – Shiseido

By Amanda Lim

- Last updated on GMT

Chinese beauty consumers are zeroing in on the efficacy and functionality of luxury skin care products in the wake of repeated lockdowns and the threat of unemployment. [Shiseido / Clé de Peau Beauté]
Chinese beauty consumers are zeroing in on the efficacy and functionality of luxury skin care products in the wake of repeated lockdowns and the threat of unemployment. [Shiseido / Clé de Peau Beauté]

Related tags Luxury Skin care China Cosmetics COVID-19

Chinese beauty consumers are zeroing in on the efficacy and functionality of luxury skin care products in the wake of repeated lockdowns and the threat of unemployment, says the CEO of Shiseido China.

Kentaro Fujiwara reflected on the last decade in China: “In the last 10 years, consumption was stimulated by rapid and accelerated digitalisation in people's lives which supported the GDP growth.

“It was based on stable employment and increased income and consumers, especially younger people, became confident about the future of China and it drove consumption.”

Against this backdrop, Chinese consumers relied on price to determine the quality of products, driving the partiality for high-end cosmetic products from foreign brands, he continued

“Consumers' preference for imported products drove rapid expansion of the cosmetic prestige market and the growth was spurred by the rise of e-commerce centred on Tmall as a new channel for consumption.”

However, repeated lockdowns and higher unemployment rates have left a lot of uncertainty hanging over Chinese consumers. This is pushing them to restrain consumption and refocus on saving.

“Changes are so dramatic in China with a resurgence of COVID-19 this time consumer sentiment has changed so much,” ​he said.

Luxury and function

At the same time, he observed that this is also driving Chinese consumers to value long-term effects and well-being.

“As a result, they are putting more importance on the effects and efficacy of skin care products and are starting to buy local brands if they are worth the price. Younger people are becoming more selective and also low-price oriented,”​ said Fujiwara.

In this environment, the company anticipates a rise of local beauty brands, especially skin care brands backed by scientific research. On the other hand, Fujiwara highlighted opportunities for Shiseido in the luxury beauty segment.

“As for import brands, growth is clearly in high prestige. The market will shift to a stable growth from rapid growth recorded in the past. As consumers are focusing on essentiality and real value, I think that gives us a great growth opportunity.”

In line with this, the company is making plans to drive growth from “consumer-oriented brand and product communication”,​ rather than large-scale promotions as it did in the past, said Fujiwara.

“We will evolve communication centred on products effects and efficacy and expand online touchpoints for communication. We will also provide brand-new experience for consumers to deepen their understandings of our products and brands.”

Furthermore, the company will expand the online touchpoints of its prestige brands, such as Clé de Peau Beauté which recently launched on JD.com.

In the mid- to long-term, the company will build a strong foundation based on its prestige brand portfolio with focus on function and efficacy. “We will shift investment from the second half with a view to developing them,” ​said Fujiwara.

Overall, the company’s goal is to position itself as the Asian beauty expert in China.

New growth areas

Fujiwara also emphasised the importance of being proactive in creating new growth categories. He highlighted the firm’s expansion into categories like men’s cosmetics and beauty supplements in China.

In July this year, it launched the SIDEKICK in China through e-commerce. The brand targets generation Z male consumers. Earlier in June, it launched INRYU, a beauty supplement brand developed in China. through cross-border e-commerce channels.

Additionally, the firm will partner with medical aesthetics care firm Trautec Co., to jointly develop new functional skin care for the mass market as well as professional channels.

“While promoting transformation and structural reform to realise sustainable growth with existing brands, we are working proactively in new growth categories aiming at achieving growth in the changing Chinese market,” ​said Fujiwara.

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