Franklin Chu, managing director of Azoya USA, shares the views on the evolution of the Chinese market
If you think that beauty in the e-commerce market is not important you are wrong, indeed, in the largest e-commerce market in the world, beauty is always the most popular category in terms of sales volume. We are obviously talking about the beauty market in China, which is in fact evolving, while consumer preferences continue to change.
A market evolution in China that always attracts more retailers and US and global brands, who know that their presence in China is essential to stay in an increasingly competitive and profitable market.
Chinese beauty brands are gaining market share and foreign brands should be careful
According to HKTDC 2017 data, local Chinese brands occupied 46% of the skin care market and 44% of the cosmetics market. The main Chinese brands include Pechoin (skin care), Chando (skin care) and One Leaf (facial masks), all ranked in the top 10 for Singles Day sales in 2017. This result was achieved even though these brands did not have brand recognition in western markets.
Although they are not famous worldwide, Chinese brands are known for providing impressive value at affordable prices. In China they are particularly popular in smaller cities, where they benefit from strong off-line distribution and distribution networks.
Many international brands have even collaborated or acquired Chinese brands to exploit their vast distribution networks
The famous Chinese brands Dr. Plant (skin care) and Timier House (skin care and cosmetics) operate at around 2,500 and 1,000 off-line stores respectively, compared to only 400 Innisfree stores and 357 The Face Shop stores. Both Innisfree and The Face Shop are South Korean brands.
But there are foreign brands that have realized the potential of the Chinese market. Many international brands have even collaborated or acquired Chinese brands to exploit their vast distribution networks. Johnson & Johnson bought a lottery manufacturer Dabao in 2008 for $ 300 million and Coty bought a majority stake in the skin care brand T-Joy in 2010 for $ 400 million.
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