The Chinese Men's Cosmetic Market: Guangzhou, Hong Kong and ...

Reported Provided to U.S. Commercial Service, U.S. Department of Commerce
by Ohio Northern University, The James F. Dicke College of Business Administration
The USDOC does not endorse any of the contents herein, but provides as a market
research courtesy to American exporters.
The Chinese Men’s Cosmetic Market:
Guangzhou, Hong Kong and Macau
By: Alyxia Caragiu
Chi Wo (Wilson) Wu
Britney Melcher
Benoit Schwoerer
Peter Fitch
Robert Bourdette
Peter Fitch
Matthew Keating
Mikhail Prokopovich

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Contents
Contents .............................................................................................................................. 2
Abstract ............................................................................................................................... 3
Men’s Cosmetics Products .................................................................................................. 3
Overview of the Cosmetic Market ...................................................................................... 4
Overview of the prospective cities of Hong Kong, Macau, and Guangzhou ..................... 5
Market Dynamics ................................................................................................................ 6
Market Demand .................................................................................................................. 8
Consumer Behavior: ........................................................................................................... 9
Purchasing decision influence factors ............................................................................... 10
Primary Research .............................................................................................................. 11
Market Entry Strategies .................................................................................................... 12
Chinese Politics ................................................................................................................. 15
Advertising Regulations.................................................................................................... 18
Conclusion ........................................................................................................................ 20
Works Cited ...................................................................................................................... 21

Abstract
This paper focuses on exploring what is sure to be a market with high growth
potential: the men’s cosmetics market in China. The market opportunities within the
areas of, Hong Kong, Guangzhou, and Macau will be identified and discussed throughout
this paper. Research has been conducted on the size, characteristics, demand, consumer
attributes, and potential market entry strategies. Primary research was conducted on a
sample of consumers within these markets, the results of which are detailed below.
Additionally, the legal requirements and political characteristics of each individual region
have been identified and links have been provided to ease the research process. The goal
of this paper is to aid American firms in understanding the male cosmetic market in
China and to provide valuable information that will help these firms identify profitable
segments within various regions. To those who grasp this unique culture and business
landscape there are great rewards to be gained from involvement in the industry of male
cosmetics.
Men’s Cosmetics Products
There are numerous types of men’s cosmetics products. In fact, there are almost
as many cosmetic products directed towards the male consumer as there are for the
female consumers. Some of the most common products used by the Chinese male
consumer include facial cleansers, body and hair care, shaving care, moisturizers,
fragrance, lip moisturizer, and deodorants. Within the areas of Hong Kong and Macau,
the product offerings have become more extensive and sophisticated. Product lines
include “anti-ageing, exfoliating and energy-boosting properties… Several cosmetics
firms led by L'Oreal have introduced China-specific products, such as face whitening
creams” (Jones). L’Oreal is also selling its newly developed charcoal mousse for men in
China, something that is expected to become a bestseller (Jones). According to a
spokesman for Procter & Gamble, “Spending by Chinese men on all kinds of face
creams, anti-aging gels and cleansing lotions already exceeds spending on razors and
blades by a factor of 4:3 and the gap will keep widening” (Balfour). Some of the best
selling men’s products include: “L’Oreal’s Men Expert line, which is the No. 1 brand
within China and has helped L’Oreal gain a 32 percent market share in 2009. Other key
products include the domestic brand GF’s creams and lotions, followed by premium
skincare products developed by Shiseido, Dior, and Clinique.” (Red Luxury) According
to ChinaPolling, “Almost 99% of male consumers regularly use cosmetics, with facial
cleanser, body and hair care, and shaving cream being the most frequently used products”
(CinaPolling). Chinese men are beginning to feel the pressure of fast-paced life style and
are turning to male cosmetics to boost their appearance and give them a competitive edge
within their personal and professional lives. Though some men are not quite ready to be
“Du Shi Yu Nan” or City Jade Men, the name given to men who purchase and use
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cosmetics (and the local language term that translates to “metrosexuals”), studies show
that 50% of purchases at L’Oreal’s China stores come from women buying for their
husbands and boyfriends (Balfour).
Overview of the Cosmetic Market
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Hong Kong & Macau
The manufacturing sector for cosmetics and toiletries in Hong Kong is fairly
small. Most local manufacturers produce toiletries and perfumes that compete at a low
price level. In the mid to high end market, international brands overtake local ones.
Lately, international companies such as Sulwhasoo, Kiehl’s and L’Occitane are making
men’s skin care products in addition to their female product lines. (HKTDC)
As of December 2010, there were 80 establishments in Hong Kong producing
cosmetics. Most of the companies in the industry are traders who sell to the Chinese
mainland, United States, Macau, Japan, Southeast Asia and the European markets.
(HKTDC) The Chinese Mainland accounts for 19.7% of Hong Kong’s cosmetic product
exports, followed closely by Macau, with 19.5%. The United States stands at number
three, with 13% of exports from Hong Kong. (HKTDC)
Some mid to high-end foreign brands procure sales counters in department stores
and often set up outlets within shopping centers. Salons often sell professional grade
products and specialty cosmetics chains sell international brands at heavily discounted
prices. International brands have strengthened their sales by selling their products through
various internet sites. (HKTDC)
Research shows that Hong Kong consumers are using popular brands and
products made from natural ingredients. (New Zealand Trade and Enterprise) Large
product categories in this segment include facial moisturizers, anti-aging products, makeup
foundation, lipsticks and eye makeup. (New Zealand Trade and Enterprise)
In Hong Kong, the skincare market grew 9% from 2002 to 2007. In 2007, 85% of
the market share was comprised of skincare products. Another 12% market share was
evenly divided between body products and sun care. (New Zealand Trade and Enterprise)
Increasing amounts of tourists from mainland China have boosted cosmetic
industry sales. “According to the Hong Kong Tourism Board, about 80% of the mainland
Chinese tourists who visited Hong Kong ‘went shopping’ and cosmetic and skincare
products were among their top 3 shopping purchases”. (New Zealand Trade and
Enterprise)
As the average age in China increases, there continues to be a strong demand for
anti-aging “cosmeceutical” products that feature a concoction of vitamins, herbs, and
sometimes pharmaceuticals such as vitamin C lotions, tea tree oil-infused cleansers and
collagen masks.
In Hong Kong, men currently make up less than 10% of the total expenditure on
skincare products. However, many well established brands such as L’Oreal and Shiseido

are taking advantage of this emerging market by creating product lines especially for men
and opening up men-only skincare centers. (New Zealand Trade and Enterprise)
Very little industry data can be found for Macau. A case can be argued that
Macau, however, is very similar to Hong Kong in terms of the men’s cosmetic market.
Both regions are special administrative regions in China and enjoy more freedom when it
comes to foreign trade. Both cities have had a history heavily influenced by European
foreigners and share many of the same consumer tastes and preferences.
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Guangzhou & Mainland China
In mainland China, domestic products are more popular in the lower-end
segments, while international brands are the main players within the mid- to high-end
market. (Li & Fung Research Center) The sales value of cosmetics has increased steadily
from 2005 to 2009 in mainland China, hitting $111 billion in 2009. (Li & Fung Research
Center) These numbers look very promising; however increase in costs, such as “rental,
labor, logistics, advertisement, and slotting fee etc. are exerting heavy pressure on
cosmetic enterprises.” (Li & Fung Research Center) “Many cosmetics players, especially
those with poorer brand equity, have witnessed their profit margin eroding.” (Li & Fung
Research Center)
Unexpectedly, Guangzhou is the center for cosmetics and beauty product
transactions in China. The annual beauty cosmetics transactions in Guangzhou accounted
for over 40% of the country’s transactions in this industry. (WholesaleMarket) The
Guangdong province (of which Guangzhou is the capital) has been center of the local
beauty and fashion industry since the 1980’s. It serves as the entry point for many
international companies seeking to take part in the Chinese market. “Of the 2,800
producers of beauty, hair, cosmetic, personal daily care and toiletry products in China,
1,500 are found in the Guangdong province, across cities such as Guangzhou, Shantou,
and others. These cities alone are collectively responsible for 70% of the output in
China.” (ForeignerCN.com) Guangdong is known as having the most mature supply
chain industry and the most advanced infrastructure system compared to other provinces.
Additionally, these regions are considered to be the most appropriate environment for the
beauty and cosmetic industry. (ForeignerCN.com)
The men’s skin care and cosmetics market within Guangzhou reached a record of
$1.1 million in 2008 and was predicted to hit $2.1 million in 2010. The market
penetration for the men’s cosmetic market is low and thus rapid sales growth is apparent.
“Market specialists point out that young men, aged between 18 and 25, including students
and white-collar workers are still the major customers and main drivers of growth in the
market”. (UK Trade and Investment)
Overview of the prospective cities of Hong Kong, Macau, and Guangzhou
Shanghai and Beijing are the most well-known and prosperous cities within
China. The cosmetic markets in those two cities are competitive and condensed, which
makes almost impossible for some small companies to enter the cosmetic market. In
addition, those global companies are looking for any means to increase their market

shares. Therefore, it is essential to be able to identify any secondary cities that would
become the next Shanghai or Beijing, which has over 6 million and 8 million visitors per
year respectively (Facts and Details). There are a few secondary cities that show a huge
potential growth in cosmetic market and long term profit. Those secondary cities are
Guangzhou, Macau, and Hong Kong. Guangzhou is the key national transportation hub
and trading port and it is the third largest city in China as well as the largest city in
southern China. Economically, Guangzhou is one of mainland China’s leading
commercial and manufacturing regions. In 2009, the GDP reached $133.5 billion, with
total income per capita around $13,111. Additionally, Guangzhou has the International
Beauty Expo annually, which is the most influential beauty trade event in China. The
expo attracts visitors from all over China, Asia, Europe, America, and the Pacific region.
With 10 exhibition halls presenting a wide spectrum of beauty and related products, each
edition recorded over 200,000 entries by trade buyers and professional visitors in 2010
(CantonFair.net). The Guangzhou Beauty Expo has become one of the best known beauty
industry events in the world. The men’s cosmetic market within Macau and Hong Kong
are expected to see significant growth for several reasons. First, the mainland granted all
Hong Kong and Macau products tariff-free treatment under the Mainland and Hong Kong
Closer Economic Partnership Arrangement (CEPA). All goods made in Hong Kong,
including cosmetics and toiletries products subject to the CEPA’s rule of origin, can
enjoy duty-free access to the Chinese mainland since January 2006. Second, there are 28
million visitors and 14.6 million visitors to Macau and Hong Kong each year
respectively. An estimated 58 percent of these visitors from mainland China come to
Macau each, and the number of visitors has increased at a steady rate 13.4 percent since
2007 (HKTDC).
With the arrival of mainland tourists under the individual visitor scheme and the
concomitant surge in Hong Kong’s cosmetics sales, many businessmen are eyeing the
lucrative local cosmetics market. Hong Kong is often viewed as a showcase region for
foreign brands wishing to target mainland customers and has continued to attract new
brands. Thirdly, Chinese men are becoming much more health and appearance cautious
within the secondary cities. In addition, the demand for men’s cosmetic products has
been increasing consistently since appearance takes a more important in business in
China. This change has often been referred to as the “beauty economy”. Finally, the
purchasing power for the middle class and the willingness to spend money on cosmetics
products are ranked among the top five compared to the rest of secondary cities in China,
which explains why Guangzhou, Macau, and Hong Kong are the three of the most
attractive secondary cities to many cosmetic companies.
Market Dynamics
China currently stands as the second-largest economy in the world with $10.09
trillion in sales in 2010 (CIA). With a GDP growth rate of 9% per year and a steady
increase in disposable income, there is a large market for companies interested in
pursuing the market for personal care items (Nielson). Fueling China’s economic boom is
the increased migration to urban areas over the past 10 years. Increased work
opportunities in urban areas have lead to a steady increase in disposable income at a level
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3 times that of rural China (Nielson). By 2025, it is projected that 59% of China’s urban
households will be in the upper middle class and earning between $20,000 and $40,000
per year (Nielson). This increase will stimulate spending in areas such as food, apparel,
household products, and personal products.
Growing Middle Class
According to The China State Information Center (CSIC), the Chinese middle
class currently contains around 300 million people. While classifications differ, if a
Chinese citizen has a stable income sufficient to afford an apartment, a car, a child’s
education, and more discretionary purchases, they are likely to be considered members of
the middle class (LiAnne Yu). As of 2010, about 25% of the population falls into this
category (Nielson). There has been a 350% increase in per capita income over the last 60
years and the population is on track to create a 700% growth over the next 20 years. By
2025, there should be a consumer market of around 1.3 billion people (Nielson).
Although the wealth is highly concentrated in urban areas, overall increased income is
driving the spending habits of the population (Nielson).
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China’s New Consumer
China’s new consumers view products as status symbols (LiAnne Yu). Increased
competition in the job market has caused a recent surge in the cosmetic industry as
individuals are looking to differentiate and improve their appearance to improve their
professional standing. The wealthiest consumers in China will be between 25 and 44
years of age (Nielson). China’s new consumers are young, have higher incomes, and
access to more information. These shoppers frequent hypermarkets and supermarkets
channels for their spending channels. “Convenient to get”, “Staff provided good service,”
and “clean and hygienic stores” are the key drivers influencing where these customers
choose to shop (Nielson).
Chinese Consumer Confidence
The Consumer Confidence Index measures the degree of optimism that
consumers feel about the overall state of the economy and their personal finances.
Consumer confidence levels above and below a base of 100 represent varying degrees of
optimism and pessimism. Shoppers growing confidence reflects an increased willingness
and ability to spend (Daily). The Nielson Consumer Confidence survey asks over 3,500
Chinese how confidently they feel in regards to their job, financial prospects, and
willingness to spend (Nielson). Results from the most recent survey indicate that Chinese
consumers are increasingly optimistic. In the most recent Nielson survey from 2009,
China’s average consumer confidence score was 103 while the world average was only
87 (Economics).
Cosmetic Market
On a national level, shampoo leads the non-food spending categories with an annual
growth rate of around 7%. Additionally, skin moisturizer has an annual growth rate of
around 11%. Toner achieved the highest non-food growth rate with a 37% national sales

value growth from 2008-2009 (Nielson). The significant amount of growth has come
from the recent emergence of men’s cosmetic products. Hong Kong is one of the most
significant areas of opportunity for men’s skin care products. The Deloitte Business case
study states that Hong Kong is an important launch pad for marketing cosmetics and
skincare products into the mainland Chinese market (Deloitte). Over 23 million tourists
visit Hong Kong for shopping and tourism each year with a majority of those visitors
from the mainland. Retailers and distributors are eager to increase the variety of men’s
cosmetic products and are looking to cater to needs of the local population (Deloitte). In
2010, the size of the cosmetic market was estimated at $1.169 billion and is expected to
grow 21% in 2012. Male consumers in Hong Kong between 30 and 49 represent the
largest age group, have the highest disposable income, and are the biggest buyers of
men’s skincare products (Deloitte). To help meet the demands of the market, there has
been an increase in the number of men-only skincare salons opening throughout this
region (Deloitte).
Market Demand
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Size of Market and Potential Market Growth
As the job markets are becoming more saturated and competitive, men are
beginning to show more of an interest in how they look. This phenomenon has created a
large market for men’s cosmetic products. The male cosmetic industry in China is seeing
aggressive growth rates in several regions. With about ten percent of Chinese men
already using skin care products made specifically for them the market is projected to
expand by 28.7 percent by 2014 (Terradaily.com). Research indicates that as a man’s
income rises in China they will begin to purchase personal care cosmetics in order for
them to get ahead professionally. The current leading consumers of men’s cosmetics in
China are the white-collar workers who are entrepreneurs with above average salaries.
China will account for half of global growth in the men’s skin care market from 2009-
2014 which opens up huge opportunity for growth for cosmetic companies
(Euromonitor). Even though 500 of the 3500 cosmetic manufactures in China are foreign
owned they control eighty percent of the market share (Factsanddetails.com/China). In
2010 the sale of men’s skin care products increased by thirty percent to $280 million in
China, ahead of the United States (Terradaily.com). Increasing consumer-lending
demand for specialized products will drive the Chinese cosmetics and toiletries market to
grow at a compound annual growth rate of around 12% during 2011-2014, says
RNCOS.com. With such a spike in demand for male cosmetics, spa’s are unable to keep
up with demand which results in opportunity for retail sales for companies like Proctor
and Gamble and L’Oreal.
Research demonstrates that men are embarrassed to buy cosmetics for themselves
and often have a family member or wife purchase the products for them which results in
female and male cosmetics to be sold together in China for ease of sale. In 2010, the
population in China was 1,339,724,852 with 51.27% being males. With about 72% of the

675 million males in China falling between the ages of 15-65 this leaves a potential
market of about 410 million males with only 41 million or ten percent currently
purchasing cosmetics leaves about 369 million potential new customers. This is a
massive market size to target which opens opportunity to current and new cosmetic
manufacturers and retailers.
Consumer Behavior:
The Gross domestic product (GDP) at purchasing power parity (PPP) is the
sum value of all goods and services produced in a given year at prices prevailing in the
United States. Here are the figures for the year 2010.
Hong Kong Macau Shenzhen Guangzhou
GDP PPP
(billion $)
224.46 31.27 146.44 163.32
GDP per capita ($) 34,587 59,451 14,615 12,860
The GDP per capita is the gross domestic product divided by the population. We can see
that Macau and Hong Kong have a high purchasing power. (GDP; PPP (US dollar) )
It means that many people likely have the disposable income to afford non-essential
lifestyle products such as cosmetics. Therefore, these markets are very interesting.
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Chinese general tastes and preferences:
Chinese consumers who are concerned about the environment mainly live in
the big cities like Shanghai or Beijing. More and more of these men are also concerned
with their health status. This is why many advertising campaigns use issues such as being
overweight, pollution, and skin care issues to create a demand for their products. Chinese
consumers are unpredictable and demanding and many factors may come into play when
buying a product. There are not as brand loyal as American consumers but they love
famous brands. (Labbrand) They are very influenced by price and innovations. Chinese
people also appreciate luxury goods and products associated with luxury. A good
cosmetic product must highlight the health benefits and have a relatively luxurious
packaging with a price comparable to those of the competitors. Those purchasing
decision influence factors are summarized in the following graph.

Purchasing decision influence factors
We can notice that the three most important purchasing factors are the features
and benefits of the product, the brand name and the ingredients of the product.
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29.71% 28.28%
42.75%
57.97%
53.62%
64.49%
71.01%
81.88%
56.52%
55.8% 60.14%
50.72%
50.72% 21.74% 19.57% 16.57%
4.35% 4.35% 7.25% 7.97% 9.42% 13.77% 19.57% 21.01% 22.46% 20.29% 26.81%
36.96%
34.06%
28.26%
24.64%
13.77%
Cosmetic Usage Habits:
43.48%
Ten percent of Chinese men are already using skin care products specifically
made for them (L'Oreal). These customers typically live in urban areas. They are more
educated and more knowledgeable than the average consumer about the benefits of those
products. These consumers are mainly white-collar workers, entrepreneurs or people
whose salaries are above the average (20minutes). They are looking for safe and quality
products. Chinese men believe that using skin care products can give them a competitive
edge for their jobs and can help them improve their social status. (Balfour) (China's male
cosmetic market of Heuristics)
The attitudes have changed about men who take care of their appearance.
Chinese men don’t have any problem using these products (Tianyu).This new confidence
comes from the desire to impress and to show their success. Nevertheless, they are often
too embarrassed to buy the products themselves. Women account for about half of the
male products purchases. (Li-chyun) In fact male products sell best when they’re sold
with women’s cosmetics. In this way, men no longer have to borrow cosmetics products
from their wives or girlfriends.
Strong
Not so strong
No influence

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Products used:
65 percent of Chinese men who use cosmetics are using skin-cleaning products,
with milks and scrubs among the most popular among shoppers.
However, while sales of moisturizers and lotions may be on the rise, few men are buying
facial masks. They also are purchasing skin lotions, whitening agents, face cleansing
cream, deodorant spray, mud masks and anti-aging beauty creams made especially for
them. (Hays)
However, the habits and products used are changing rapidly. The male cosmetics
are a new market and the tastes are constantly changing. Innovation is the key to success
in this market. Chinese men are ready to use more and more new products.
Primary Research
Primary research was conducted in order to supplement the data presented in this
research. A survey was sent to 28 young people with an average age of 21 years old, the
optimal age demographic for predicting future market behavior in the cosmetic industry.
20 of these young people were men and 8 women. The sample was drawn from youth
with permanent residence in or originally from Guangzhou, Hong Kong, Macau, our
target cities. We have summarized the results below.
Within the survey population, in terms of products, the most common product
men chose were moisturizing cream, shaving foam, hair style produts, deodorant, and
cologne. The majority of men indicated that they normally buy men’s cosmetics by
themselves, and they rarely buy it through their friends or family, or are given cosmetics
as gifts. The average pocket money per month (in dollar) that our Chinese respondents
have is about $560 dollars, and the average amount of money they would spend on
cosmetic products per month is about $65 dollars, which is roughly 12 percent of their
disposable income.
The survey results show that men are more concerned about their appearances
than ever before, and they believe cosmetic products will make them look younger.
Especially in the business world, appearance is important in achieving success, and most
of the students pointed out that they would be somewhat embarrassed if they were around
people and did not look their best. Essentially, students use cosmetic products not only to
boost up their confidence, but also for medical treatment purposes. In the men’s survey,
13 out of 20 students indicated cosmetic products were necessary in every aspect of life,
and past experiences have significant impact on their decision of what brands they should
purchase.
Most of them would rather purchase cosmetic products through stores because it
normally takes 2-3 days for delivery in China. Also, people want to try the products
before purchasing them in order to avoid risk of purchasing poor quality products.
Interestingly, we discovered that the men who are married or in a relationship tend to
spend more money on cosmetic products than those who are single. From the women’s
survey, responses showed that women expect men to use cosmetic products.
Additionally, these women have indicated that it is normal for them to see men purchase
cosmetic products at the store.

Surprisingly, the 8 female students who did the survey expressed that they do not
believe men who wear cosmetic products are un-masculine, which is different from the
past perspective of women. Another interesting aspect of the primary research indicated
that women who are married or in a relationship state that their partners would make
them proud if they put in the effort to look their best around their peers.
Market Entry Strategies
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China
There are several factors that need to be considered when entering China’s
market. First is an assessment of the demand for the products and how it will be
perceived in this culture. With an increase in the usage of cosmetics, the demand for
these products is large. Just because the current demand stands high, this does not mean
that it will remain consistent over the years. It is important to also determine whether or
not there will be a future demand. Lastly, a company needs to assess their own
commitment to this market, before pursuing any business ventures within China. All of
these factors assist in determining an entry strategy (Gross).
Common trends for market entry in China include exporting directly to mainland,
establishing a distributer in Hong Kong, setting up a joint venture, or establishing a
wholly foreign owned enterprise. Exporting to Hong Kong and then distributing to China
is a more simple strategy to implement. A well-established distributer would have
connections within the mainland and would be familiar with the market. This strategy
ensures sales of the products, but may require costs paid to the distributer. To
compensate for these extra costs, businesses tend to increase the price for the end-user
(Lee).
Trading directly to China may include contacting a foreign trading corporation,
dealing with industrial trading companies, finding a more exclusive independent trading
company, selling directly to the end-user, or using a domestic Chinese distributor.
Foreign trading corporations are large organizations in China that are available to assist
new entrants to the market. They provide information that will assist with strategies used
to sell products. However, these corporations typically lack knowledge on specific
industries. Their focus is more on market analysis. Industrial trading companies make
up for this lack of knowledge, but they tend to focus on market trends in specific
geographical regions. Independent trading companies have a higher cost, but are of more
assistance. Dealing with one of these independent companies would be similar to hiring
on a specialized staff to create an entry strategy. The last method would include selling
directly to the end-user. This is the most costly approach as it requires a labor force to
direct sales in China (Gross). Exporting goods directly requires a substantial amount of
registration and knowledge of business practices and regulations, and is therefore not
recommended for beginners in the exporting game to China. Using a distributor in China
is recommended. The distributor will have knowledge of China’s laws and regulations
and access to market information (Lee).
The option to establish a joint venture or wholly foreign owned enterprise is even
more complex. The exact type of legal entity depends on the size and structure of the

company. More information can be found at the SAIC website (State Administration for
Industry and Commerce): http://202.108.90.68/index.html. It is on this state owned
website that the documents required for setting up a limited liability company in China
are found (SAIC). Foreign investors seek ownership of the company’s products and will
distribute them to the market in China. There are several advantages and disadvantages
to this strategy. The parent company will have limited liability but will lose some control
of management decisions. The investors will provide direction on sales of all products
involved. The joint venture or wholly foreign owned enterprise will be considered an
entity under the company’s ordinance. Cost risks will decrease as investors are
responsible for earning revenue, and taxes will decrease for the parent
company. Production will occur in-house eliminating the need for exports to the country.
However, this may impede on production methods as policies vary (Gross).
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Hong Kong
Entering the Hong Kong market is similar to mainland China. Two other methods
(not stated above) include establishing a branch office and establishing a partnership.
These two options allow for a quick entry as in Hong Kong, the minimal time to
establish a business is six days. “If a company incorporated outside Hong Kong has
established a place of business in Hong Kong, it is required to register with the
Companies Registry within one month of the establishment of the place of business as a
“non-Hong Kong company” under Part XI of the Companies Ordinance. Unlike a
subsidiary, a branch can leverage off the credit rating of the overseas owner. It is not a
separate legal entity from the parent” (Invest HK- The Government of the Hong Kong
Special Administrative Region). Having a branch office requires the parent company to
take full responsibility. The company is required to follow all local policies and will deal
with distribution to the end-users. An advantage to having a branch or partnership in
Hong Kong is the location. Distribution to mainland or the locals will require fewer
exports, hence less cost. In the cosmetics industry, these branches would target locations
such as malls or outlets for selling their products (HKTDC).
The most involved entry method is direct investment into Hong Kong, in which a
person or group of people set up a business within the city. One of the most basic
methods to do this is to set up a sole proprietorship. This is ideal for those setting up
small businesses who do not wish to become involved in the more complicated
paperwork of more complex business structures. Businesses selling cosmetics would
develop an establishment in a local mall, or would setup an outlet on a popular strip in
Hong Kong. A form for business registration is required in Hong Kong. More
information can be found on the Inland Revenue Department Website at:
http://www.ird.gov.hk/eng/tax/bre.htm . The model of sole proprietorship allows for easy
start-up, and decision-making flexibility, but exposes the owner to full financial liability
(HKTDC).
For those who are not willing to expose themselves to the financial risk of setting
up a sole proprietorship in Hong Kong, the option to incorporate a business exists. “Most
of the limited companies incorporated in Hong Kong are private companies limited by
shares.” (Invest HK- The Government of the Hong Kong Special Administrative Region)
Incorporating a company in Hong Kong can easily be done online at:

https://www.eregistry.gov.hk/icris-ext/apps/por01a/index or by submitting the
appropriate documents and fees at the Hong Kong Companies Registry. The documents
required are an Incorporation Form NC1 (for a company limited by shares); a copy of the
Company’s Memorandum of Association and Articles of Association and a Notice to
Business Registration Office. The fees for incorporating a local company limited by
shares are: an application fee of HK $1,720 and a capital fee of HK $1 for every part of
HK $1,000 of the nominal share capital. A maximum capital fee is set at HK $30,000 per
case. (Invest HK- The Government of the Hong Kong Special Administrative Region)
Exporting directly to Hong Kong involves few risks and is a cost-savvy option.
Exporting is also a valid option for companies wishing to enter the Hong Kong market
since Hong Kong imposes no tariffs on general imports (US Commercial Service).
General trade policies may be found at: http://www.tdc.trade.com/sme/iepract/index.htm.
Distributors will import the cosmetics and distribute them accordingly. Two options for
distribution would include controlled and secondary. Controlled distribution follows the
ordinance of the parent company. They decide where the products will be distributed,
hence giving the parent company control of sales. Secondary distribution is controlled by
the distributor and sales are made from the parent company to the distributor. Secondary
distribution lacks control and may prevent the success of a business attempting to enter
the market (New Zealand Trade and Enterprise).
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Macau
The procedure for setting up a company in Macau is as follows: the first step is
the application of admissibility of a trade name; the second step is writing the
Memorandum and Articles of Association within 60 days of obtaining a trade name; the
third is the registry of the company within 15 days of signing the memorandum; and the
fourth is the declaration of commencement of operation.
The Commercial Registry Office in Macau (CRCBM) handles the applications for
trade names. The requirements for obtaining a trade name are the required forms with
proposed name and a clear definition of the objectives of the company. The
Memorandum and Articles of Association are submitted through either IPIM’s private
notary, a lawyer registered in Macau, or a document written by the applicant and certified
by a notary. The requirements for this stage are a notary contract or individual contract
confirmed by a public or private notary according to the type of company and legal
requirements in force. The registry of the company is done by the Commercial Registry
Office (CRCBM). Required at this stage are a letter of application with a verified
signature, company constitution document, list of names and shareholders and ID copies,
list of names of the administrative board, letter of appointment of the administrative
board and a copy of the Certificate of Admissibility of Trade Name. Finally, the fourth
step is completed at Macau Finances Services Bureau (DSF). Required at this stage are
an Industrial Tax Form (M1, 2 copies with a verified signature), a list of names of the
shareholders and their ID copies, list of names and the letter of appointment of the
administrative board, a certificate of registration issued by the CRCBM, a copy of the
Memorandum and Articles of Association and payment of the Industrial Tax (Form M7).
(IPIM)

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Intellectual property rights
Since joining the World Trade Organization (WTO), China has followed the
agreement to protect companies’ property. However, China has a large problem with
counterfeit products entering the market. To protect a product properly, a company must
register patents with China’s State Intellectual Property Office (http://www.sipo.gov.cn),
and trademarks with the Chinese Trademark Office (found locally). Both systems are on
a “first-file basis,” meaning the first to apply and provide evidence will receive the
protection. Any party found guilty of violating laws related to intellectual property rights
will be fined and may be further prosecuted depending on the severity of the violation
(U.S. Department of Commerce International Trade Administration).
Import controls
The country has implemented import tariffs for all foreign cosmetics in
accordance to the World Trade Organization standards. As previously stated, importing
from Hong Kong is an exception to this standard regardless of the country of origin. As
of 2009, tariffs were lowered to 6.5% with an additional 15% for hair/nail care products.
Any color product automatically obtains up to an additional 10% to the initial tariff
(Pisacane). After all requirements have been met for importing cosmetics, the prices
could be up to 50% more than the initial value of the products. As of June 2011, in order
to reduce this large price increase which will in turn promote more sales in China, the
tariffs will be reduced to 2%-15% (Dayang). CCC Certification is only for use on
electrical products. This will not apply to cosmetics.
Chinese Politics
The People Republic of China or the PRC was founded in part to establish a more
stable government. From the PRC four different constitutions have been formulated that
have been adapted by the PRC in 1954, 1975, 1978 and 1982. The constitution that is
currently active was adopted in 1982, but was amended four different times and most
recently on March 14, 2004. The legislation power lies within The National People’s
Congress (NPC) and its Standing Committee. The NPC and its Standing Committee are
responsible for representing the people and all of the levels that are part of the
Congresses in China. The NPC supervises all state-level institutions. Its primary power,
however, is electing the President of China. China is made up of 23 provinces, five
autonomous regions, four municipalities directly under the Central Government, and the
special administrative regions of Hong Kong and Macau. The 23 provinces are Anhui,
Fujian, Gansu, Guangdong, Guizhou, Hainan, Hebei, Heilongjiang, Henan, Hubei,
Hunan, Jiangsu, Jiangxi, Jilin, Liaoning, Qinghai, Shaanxi, Shandong, Shanxi, Sichuan,
Taiwan, Yunnan, Zhejiang; the five autonomous regions are Guangxi, Inner Mongolia,
Ningxia, Xinjiang and Tibet; the four municipalities are Beijing, Chongqing, Shanghai
and Tianjin (Politics).
The current head of state is President Hu Jintao, who was elected on March 15,

2003. Hu Jintao is the general secretary of the Communist Part of China (CPC) and it is
the countries only political party in power. Hu Jintao became the general secretary of the
CPC at its 16 th National Congress in November of 2002. The CPC was founded in July
1921. The CPC has over 70 million members and there are eight other political parties
with a lot less support. The State Council makes up the administrative body. The State
Council is the cabinet or chief administrative body of the PRC that includes the heads of
all governmental agencies, which is headed by Premier Wen Jiabao. Another political
party is the Chinese People Political Consultative Conference or the CPPCC. The CPPCC
represents all ethnic groups, and different types of political and special interest groups.
The CPPCC is also responsible for the supervision over the government as well as
providing advice on social issues (Politics).
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Regulations on Cosmetic Products in China:
In the early 90’s China made a strong push concerning issues on quality of
cosmetics products and other hygiene products. The Ministry of Health (MOH) of China
that underlined strict regulations concerning the hygiene supervision of cosmetics issued
decree No. 3 on November 13th, 1989 that took effect on January 1 st , 1990. The Decree
was issued in order to strengthen hygiene supervision of cosmetics, ensure hygiene
quality, safety of cosmetics, and most importantly to protect customers. Cosmetics
include any kind of daily used industrial chemical that is spread on the outside part of the
human body, which may include skin, hairs, nails, lips, and etc. Cosmetics must also be
used for the purpose of cleaning, deodorizing, providing skin care, beauty and make-up,
by way of smearing, spraying or other similar means.
According to the Regulation, companies who plan to place cosmetics on Chinese
market must apply for and obtain hygiene license or record-keeping certificate from
Health Administrative Department of the State Council - State Food and Drug
Administration (SFDA). Foreign companies shall appoint a Chinese responsible agent to
deal with registration and obtain such certificate. In addition, the Administrative
Measures on Inspection and Quarantine of Import and Export of Cosmetics requires that
imported cosmetics pass the inspection of the General Administration of Quality
Supervision, Inspection and Quarantine (AQSIQ) and must be affixed with a China
Inspection and Quarantine(CIQ) label and Chinese label in according to the
Administrative Rules for Labeling Cosmetics.
Type of Product Required SFDA
License
Ordinary cosmetics
Record-keeping
hair care, nail care, skin care, perfumes and make-up
Certificate
Special use cosmetics
Hygiene License
products for hair growth, hair dye, hair perm, hair removal,
breast shaping, fitness, deodorizing, spots removal and sun block (More expensive and
time-consuming)
New Cosmetic Ingredient Hygiene License

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Application of Hygiene License or Record-keeping Certificate
The following documents are required for application of hygiene license or record
keeping certificate:
� Application form for license;
� Product ingredients;
� Effective components, evidence of use and inspection methods;
� Manufacturing technique and diagram;
� Product quality standard;
� Testing report from a cosmetics testing institution approved by the SFDA and
related materials;
� Product package (sales package & product label);
� Certified document for production and sales in the manufacturing country
(region);
� The statement on related problems of ‘Mad Cow Disease’;(new)
� Power of attorney, if responsible person has been appointed;
� Some other documents that may be helpful for inspection;
Testing Requirements
According to the official implementation of the national standard: Procedures and
methods of safety evaluation for cosmetics (GB 7919-87), all testing items below are
required for new cosmetics ingredients. For finished cosmetics, only some of the testing
items below are required.
� Physiochemical and microbiological testing;
� Acute oral toxicity and acute dermal toxicity;
� Acute dermal irritation and acute eye irritation;
� Dermal sensitization;
� Dermal photo-toxicity test & dermal photosensitivity;
� Sub-chronic oral toxicity and dermal toxicity;
� Teratogenicity test;
� Mutagenicity test;
� Chronic toxicity and carcinogenicity test;
� Safety evaluation of using tests of cosmetics on human body;
Labeling Requirements
According to the official implementation of the national standard: Instruction for use of
consumer products— general labeling for cosmetics (GB5296.3-2008), the following
information, in Chinese, needs to appear on a label for cosmetics:

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� Product name;
� Name and address of the manufacturer;
� Net content;
� Product ingredients;
� Shelf life;
� The code of manufacture license and product standard;
� The code of hygiene license or record-keeping certificate;
� Safety statement and guidance on uses;
In case of imported cosmetics, country of origin and the name and address of the
distributor in China shall also be given on the label. Besides, a CIQ label needs to be
acquired from AQSIQ. An imported cosmetic with a CIQ label means it has already
passed the examination of China Entry-Exit Inspection and Quarantine Bureau and is
allowed to be sold in China. Consumers will check the CIQ label before purchasing
imported cosmetics.
How to Obtain A CIQ Label
After hygiene license or record-keeping certificate has been issued, domestic importers
will need those certificates to pass the inspection of AQSIQ when the goods are imported
into China.
The inspection work includes label auditing, sampling and check. The inspection
authorities will charge at least 0.15% of the total value of goods as inspection fee. This
process takes approximately 1 month.
AQSIQ will issue the CIQ label for imported cosmetics when the following documents
are provided:
� Application form for labeling review for the import and export of cosmetics;
� Business license or company registration certificate of the manufacturer or
distributor;
� 6 copies of label;
� Product ingredients;
� Certified evidence of usage for cosmetics with special functions;
� Certified document for production and sales in the original manufacturing
country;
� Hygiene license or record-keep certificate;
� Testing report for cosmetic products from AQSIQ;
Advertising Regulations
Men in China have created the largest single market in the world for male
cosmetics. These men want to look beautiful on the inside and the outside. Men feel that
the more attractive they look, the higher chance of success they will have in the future
(Li-chyun). Two of the giant cosmetic industries that are attracting Chinese men’s
attention are L’Oreal and Beiersdorf. These companies are spending large amounts of

money on advertising to attract the men in China (Men’s Cosmetics Take off in China).
Popular movie stars and models appear on billboards in China that advertise men’s
cosmetics to the Chinese population. Advertisement agencies feel that cold and neutral
colors are better to use because they reflect the impression about male stereotype as an
individual. Male models tend to wear more clothing in advertisements, which shows that
the advertisements are not used to embellish or enhance the product (Feng). The Chinese
advertising consists of both body and skin care products, which is one of the reason it
attracts so many customers. Men are willing to pay any amount of money for these
cosmetics because they think it is going to give them competitive advantage for their jobs
and with girls. Advertisements are predicted to keep increasing in the future because
sales of men’s cosmetics in China are growing more than double the rate for women’s
(Balfour).
When companies attempt to advertise their product to the Chinese men, they are
faced with some laws and regulations. In order to advertise men’s cosmetics in China, a
company must obtain a registration slip. A few contents that are prohibited from
advertisements are the national flag and emblem, anything harmful to the environment
and natural resources, and anything that may jeopardize social or public order (China
Business News). Penalties will be awarded to any advertisements that violate these
contents. Smaller penalties consist of a fine, but large penalties may lead to criminal
liability. All of the advertisements must not contain false information. Having false
information misleads consumers and can lead to penalties by the government (China
Business News). Fortunately, this has not been a problem when dealing with men’s
cosmetics in China.
Not every city in China has the same laws and regulations when advertising
men’s cosmetics. We researched two different cities in China confirming this. The two
cities are Hong Kong and Guangzhou. In Hong Kong, Chapter 456 Consumer Goods
Safety Ordinance governs. This states that a person shall not supply, manufacture, or
import consumer goods unless the consumer goods comply with the general safety
requirement for consumer goods or the consumer goods must satisfy an approved
standard if applicable (YU). On the other hand, Guangzhou is in accordance with the
Regulations on Marked Prices of Advertising Services. Any advertising service that
adjusts their service fees for advertisements must update these price details and keep and
keep a record. They must also make an announcement three days before the new
standards become effective (Guangzhou). Along with all of the other set laws and
regulations in China for advertising, these are a few that differ in certain cities in China.
China has a large amount of men in their population to advertise their products to.
Advertising agencies must be careful when promoting their product because there are
cultural contexts that must be taken into consideration. Advertising campaigns can be
effective if they convey the correct message. Before promoting a product, advertising
agencies have to understand what certain signs and symbols represent in the Chinese
culture. By doing this, certain strengths and weaknesses can be uncovered. For example,
a motorcycle being advertised in the United States is viewed as freedom, adventure, and
speed. On the other hand, the Chinese view this as dangerous, noisy, and low status.
Another great example is an advertisement illustrating an open landscape. In the United
States, people view this as independence and lifestyle. Conversely, Chinese citizens view
the countryside as dirty and dusty (Labbrand). These examples represent how American
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advertisements are translated differently into the Chinese culture. In order to convey the
correct message to a Chinese man, advertisements must possess attributes like
thoughtfulness, a sense of tradition, strong family values, a successful career, and a
personal sense of peacefulness and harmony. Advertising campaigns must understand
what is culturally accepted in the Chinese eyes. They can accomplish this by conducting
market research, which will help them figure out if their advertising campaigns will be
successful or not (Labbrand).
Conclusion
To conclude, China’s cosmetic market for men is in its growth stage, and for
those who can learn the ways of the culture and business practices in China, many
potential gains will come from riding this industry wave to maturity. In Mainland China,
Guangzhou has turned out to be one of the main players in the cosmetic industry, despite
not being as large or popular for Western businesses as cities such as Shanghai and
Beijing. China’s two special administrative regions, Hong Kong and Macau, have few
trade restrictions, making them ideal places for Western companies to use as a base for
importing their products into China and then conducting business from there into the
mainland.
The Chinese male market is partially this strong due to the fact that Chinese men
are re-evaluating their priorities in the fast-paced competitive lifestyle they find
themselves newly in. Now that completion for jobs and even wives is so high, men are
doing everything possible to get an edge—including investing in their appearance. No
longer are men who use cosmetics viewed as “unmanly”, rather they are just seen as
ambitious people who want to get ahead in the new China.
Fitting with a Chinese proverb, it must be said that nothing this great comes
without hard work. For companies who want to invest in their future in the Chinese male
cosmetics market, much research needs to be done, in order for China’s many rules and
regulations to be adhered. We hope that this paper has enabled some clarification and
helpful suggestions as to those regulations. Market research must also be carefully
conducted as more and more companies seek Chinese consumers for their male
cosmetics. Having a product that will appeal to the target market is essential in any
country, and perhaps even more so in China, where it seems that everything is available,
and everything has a cheaper counter-part. Again, we hope that this paper has provided
some relevant insights into the Chinese market.
In going forward we only suggest that companies start investing in China now:
relationships must be built and there is no time like the present for that. Now that China’s
men’s cosmetics market is just beginning its boom, Western companies can benefit from
being first to develop long lasting business relationships that will endure later entrants to
the market.
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