Many cosmetic companies see China as a market they have to be in. If the whole world is competing there, what will mark out the winners? IntroductionFor decades, the Chinese, under Communist rule, appeared to have no use for cosmetics. Women worked hard, just like their men, and both genders, at least on the surface, seemed committed to the ideal of hard work in order to lift up the country. In such an environment, it was considered bourgeois and contrary to the ideals of the people for anyone to make beauty a priority in his or her life.
This could be seen in pictures from the Communist era, showing people wearing pretty much the same kind of attire. As the article “China’s new role model, ” notes, “In Mao days, Chinese communism was unisex-minded. Women weren’t supposed to look like women. “The education of beauty did not exist in China for 40 years” (Button 1994 44). 1970s, as China has allowed capitalism to take hold, the people now have the opportunity to express themselves in ways that they choose, and beauty has taken centre stage.
Although there are many companies vying for the Chinese market in cosmetics, only those who understand Chinese sensibilities and know how to manoeuvre in that special market are likely to survive over the long haul. The China Cosmetic MarketParr of the attraction of the Chinese market is the sheer number of bodies to be found in the country. For a country with more than one billion people it does not take an Einstein to figure out that if even a small percentage of people can purchase one’s product, one can laugh all the way to the bank.
Much anecdotal evidence also support the notion that the cosmetics business is a prosperous one in China. Indeed, as Chinese begin to have more money in their pocket, they have proven to love self-care and self-pampering as much as their counterparts in Japan or in Western countries such as the United States and Canada. The fact that 95% of cosmetic companies in China are private companies means that it is difficult to get reliable information in terms of sales figures, making it difficult to estimate the true value of the market.
As the report, “China Cosmetic Market” notes, “it has been extremely difficult to gather reliable statistical data for this industry. For example, most press articles estimated the current market size at RMB40 to 45 billion, while many industrial leaders believe that this figure should range from RMB60 to 80 billion” (Li China Cosmetic Market http: //www. strategis. ca). For the truly ambitious, these figures, as important as they, are not the whole story. The fact that the market exists and that there are indications of people clamouring for cosmetics is more than enough attraction.
It must be understood by companies that want to enter the Chinese market that China is itself the 8th largest cosmetic producer in the world. As the country’s economy expands it goes without saying that a market that was only RMB2000 million in 1982 and reached about RMB45 billion in 2002, will expand further more. With sales in the cosmetic sector growing at an average rate of 10% it is estimated that the market will reach RMB 80 billion by 2010 (Li China Cosmetic Market http: //www. strategis. ca).
The indications are strong that the market will continue to be robust. The National Statistics Bureau of the People’s Republic of China, for example, has reported that “disposable per capita income has surged by an average of 11.3% over the last five years. This has helped to drive personal care expenditures up by 13.4% each year” (Kline study 2007) Companies that want to enter this market also need to understand that the competition is fierce, with between 3,500 and 4000 companies vying for market shares in the cosmetic market.
While domestic companies might be thought of as having an inside track, in terms of their understanding of the Chinese market, already, companies from the United States, Japan, Germany, and France, all have demonstrated experience in penetrating markets other than their own. In fact, many foreign companies that are now competing in China may already have a strong presence in the Hong Kong market.