Low risk entry: istyle strives to boost Japanese beauty brands in China travel retail channel

By Amanda Lim contact

- Last updated on GMT

istyle partners CDFG to open @cosme duty-free store on Hainan Island. [Getty Images]
istyle partners CDFG to open @cosme duty-free store on Hainan Island. [Getty Images]

Related tags: Travel retail, China, hainan, Japan

Japanese retail and media conglomerate istyle Inc is aiming to boost the fortunes of Japanese beauty brands in China with a new @cosme duty-free store at the new Haikou International Duty Free City.

The company, which has partnered with the China Duty Free Group (CDFG), believes this will be a tremendous opportunity to lower the hurdles for smaller brands as operating a retail outlet in Hainan typically requires special licenses.

According to istyle, beauty brands will be able to import the products directly to the @cosme store, thus by-passing the need for certification from the National Medical Products Administration, China’s food and drug regulator.

This project would allow Japanese cosmetic brands to enter Hainan at a significantly lower risk. Furthermore, brands can use this channel to test the market in China or create an offline touchpoint for consumers, istyle suggested.

Brands will be able to tap into @cosme’s own marketing and promotion initiatives, which would include live commerce programmes.

Additionally, the partnership would enable @cosme be able to tap into CDFG’s 22 million-strong member base.

In its press statement, istyle said the new store would be at least 200 square metres with space for pop-up events. It did not mention when the new store would be unveiled.

Haikou International Duty Free City will be CDFG’s sixth and largest duty-free mall and is set to open its doors this year.

Duty-free haven

In CosmeticsDesign-Asia’sin-depth analysis​ of the beauty travel retail market, we delved into the major opportunities for cosmetic brands. We also discussed how brands like Rituals are fervently increasing its footprint on Hainan.

Ever since the COVID-19 pandemic disrupted international travel, Hainan has been a lightning rod for the beauty travel retail market. According to McKinsey & Company, beauty accounted for roughly half of all Hainan duty-free sales in 2020.

In 2021, data from China’s Ministry of Culture and Tourism reported that total duty-free sales in Hainan increased by 180% year on year.

This signals that Hainan is likely to play a significant role in the travel retail market even as international borders continue to open.

Based on a 2021 McKinsey & Company survey, 62% of Hainan travellers are likely to return to the island even after international travel is normalised.

The data also showed that these shoppers are willing to spend more during future visits, with 41% saying they planned to increase their spending on their next trip, compared to 12% who said they would likely decrease their spending.

Furthermore, multinationals like the Estée Lauder Companies and the L’Oréal Group are continuing to invest heavily in Hainan to grow their travel retail businesses.

“We expect Hainan to continue to grow in the future, and we expect Hainan success to be relatively independent from the come back to international travel,” ​said Fabrizio Freda, CEO of Estée Lauder

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