Asia Personal Care & Cosmetics Market Guide 2016

Personal Care & Cosmetics Products
Executive Summary
Country Guide: China
China is 10th largest market for U.S. personal care and cosmetics exports, with U.S. products exports
totaling $392.6 million in 2015, representing 3% of the total U.S. export market. Within the next
decade, China has the potential to become the largest market for U.S. products, with U.S. exports to
China growing 64% in the period between 2010 and 2015. While China’s rate of economic growth has
slowed over the past few years, it has not impacted the growth of U.S. personal care and cosmetics
exports. This is likely due to the current low rates of these products consumption in China, which at $24
per person, per annum in 2014, is still far lower than neighboring countries such as South Korea and
Japan, which averaged $223 and $174 respectively.
Overview of the Domestic Market
Market Size, Growth Trends and Consumer Profile
With an estimated $50 billion in domestic sales in 2015 and 7% to 10% annual growth predicted in 2016
and beyond, China is projected to become the largest market for personal care and cosmetics products
globally in the next five to ten years. Despite its relatively large market size, merely 10% of the
population uses cosmetics regularly. Consumption of cosmetics is most prevalent in tier 1 megacities,
with increasing penetration in China’s inland tier 2 and tier 3 cities, which are also experiencing the
fastest increases in China’s growing middle class and consumption of consumer products. The majority
of consumers of these products are 20 to 30 year olds, although there is a robust level of consumption
among 30 to 39 year olds who also consume higher percentages of premium products. While the
market is predicted to grow at 10% or greater over the next five years, U.S. companies considering
exporting to China should be aware of the high levels of competition and complex product registration
requirements required to enter China. Although a slice of Chinese cosmetics and personal care
products consumers are willing to pay for branded or premium products, consumers tend to be less
brand-loyal and more price sensitive than U.S. or European counterparts. As a result, product demand,
even among well established brands, can be volatile from year to year.
Multinational companies continue to dominate the personal care products market in China, with nine of
the top ten largest sellers across categories being foreign companies. The three largest sellers in China
currently are Procter and Gamble, L’Oreal and Shiseido. This trend is also reflected in domestic
production, with over 80% of products produced via foreign-owned or joint ventures.
Distribution Channels
Market channels for personal care and cosmetics products are changing rapidly, reflecting consumer
distrust of mass market channels; the upgrading of Chinese consumer preferences; and the growing
middle class in Tier 2 and Tier 3 cities.