Cosmoprof Focus: Mainland China Market

China's already substantial beauty market will continue to grow, and the country shows a marked preference for imported beauty products.

The scene outside Cosmoprof Shanghai.

SHANGHAI — China’s already substantial beauty market will continue to grow, and the country shows a marked preference for imported beauty products. However, establishing distribution networks beyond its large coastal cities continues to pose a challenge, according to the organizers of Cosmoprof Shanghai. The exhibition, which concluded its sophomore installment in mid-January, aims to provide a bridge between international beauty suppliers and distributors from China’s many provinces.

This story first appeared in the February 1, 2008 issue of WWD.  Subscribe Today.

“China today is just starting,” remarked Michael Duck, senior vice president of CMP Asia, at the event’s opening press conference. “China in the last few years has come of age in terms of what is needed in the beauty industry. It is already a crowded market, but we’re introducing a level of beauty trade show in China that has never existed before, the grounding for much larger trade shows for a much larger market.”

Cosmoprof Shanghai 2008 ran from Jan. 15 to 17 at the Shanghai New International Exhibition Center. Its 26,000 square meters of floor space featured 343 exhibitors from 24 countries and regions, including returning pavilions for exhibitors from Australia, Israel, Italy, Russia, Belgium, France, Germany, South Korea, Spain and the U.S., and new pavilions for Hong Kong, Singapore and Taiwan. Categories ranged from cosmetics and toiletries to hair products to salon furnishings and technology to product packaging, with 70 percent of exhibitors representing finished product manufacturers and 30 percent being intermediary suppliers. Fifty percent of this year’s exhibitors also participated in 2007, and 43 percent were from Mainland China.

Last year, about 40 to 50 percent of Cosmoprof’s attendees were domestic Chinese distributors, said the fair’s international marketing director Laura Zaccagnini, and the rest were salon and spa owners and managers. Cosmoprof’s co-sponsor, the 9,000-member China Commerce Association for General Merchandise, organized delegations of department store representatives from around China to attend the fair. “Cosmetics are very important for us, and they occupy the first floors of most department stores in China,” said association representative Chu Xiuji at the press conference.

CMP Asia for the past 12 years has also run Cosmoprof Asia in Hong Kong. “At Hong Kong, they reach the Asian region, but here it is to access Mainland China. The two shows have many of the same companies exhibiting, but different visitors,” Zaccagnini told WWD. “Some exhibitors have some distribution in China, but not nationwide….Not all export companies are ready for the Chinese market. They need a long-term investment perspective toward the different needs of the market.”

The organizers insisted that Cosmoprof Shanghai is not in competition with the Mainland’s other main cosmetics fair, the China Cosmetics Exhibition in the southern city of Guangzhou. Duck clarified, “The Guangdong area is very strong, and plays a major role in importing, while Shanghai has a rising commercial position, as does Beijing, and in the future more and more second-tier cities will also be markets. We can’t have trade shows in every city, though, so Shanghai serves as a platform for entering all of China.”

“The Guangzhou show is much bigger and better, has been running for over 10 years, and has more of a balance of domestic producers and international brands. It is China’s biggest [beauty] fair,” said Cathy Chan, assistant product registration consultant of the Quality and Technology Certification and Consultation Service Centre, or QTCCC, which also attended Cosmoprof Shanghai in 2007. “Cosmoprof is bigger this year, the quality of visitors is down somewhat but it still is an overall improvement.” A division of the Guangzhou Beauty and Cosmetic Association, QTCCC is a consultancy that assists foreign firms with import approval paperwork.

“Guangzhou women receive influences from Hong Kong and [South] Korea and Japan, and want to take care of their bodies, especially after having a child,” continued Chan. “Guangzhou was the earliest to have beauty imports, and has all levels of products from the cheapest up to the highest, while Shanghai has middle to high levels. Shanghai culture has always encouraged women to pursue beauty, while Guangzhou women are more practical, and it is too hot there to wear much makeup, it melts off. Women in all of China are starting to care about beauty, but for most of the country it is more recent.”

Red Earth, founded in Australia in 1989, has operated in China for 10 years and has a substantial presence in the country, with over 100 stores. “China is pretty big for us,” said C.K. Xu, the firm’s marketing manager. “This is our first time at Cosmoprof Shanghai, and we hope it will become a good event; all women like to be pretty, so in two to four years it will be pretty big, but it needs more p.r. and marketing. A lot of international brands are looking to come into China.”

Chan of QTCCC countered that China’s beauty market is not very trend-driven, and the main sellers of 2008 will be the same as in previous years. “The predominant products will remain antiaging and antiwrinkle, sporting, whitening and slimming. The primary clientele is women in their 30s and 40s. When they were young they didn’t have face creams, so now they’re trying to make up for lost time. And Chinese people like to be very white.”

Chan added that foreign brands will continue to dominate China’s beauty market for the foreseeable future. “In the big cities, consumers will almost always choose imported beauty products, or ‘Made in China’ but by a big international brand,” she clarified. “This is 80 to 90 percent of the first-tier market. In smaller cities, consumers will chose more Chinese products, but still the big brands such as Dabao, Li Qi and Avanna. China has a culture of choosing imported brands because they feel that it is more secure and reliable, and that international companies are better managed.”

In 2007, the Chinese government approved roughly 7,000 import permit applications for beauty products, Chan continued, about double the 3,000 to 4,000 permits it issued in previous years. She believed the increase was due to greater efficiency on the government’s part, rather than an increase in applications. “The import restrictions are quite complicated, and require a minimum of four months using us, but on their own it takes companies one to two years to get approval, the regulations are very strict. The bureau looks at the documentation, and if anything is slightly off, it will reject the application.”

Cosmoprof Asia next runs in Hong Kong from Nov. 12 to 14.