By
with contributions from Lara Farrar
 on January 21, 2011

During his three-day visit to the U.S., Chinese President Hu Jintao should have built in some time for shopping. The latest beauty launches would have made a great souvenir — especially since the innovations are unlikely to be available in China for quite some time due to a maze of increased government regulations.

For beauty firms trying to launch products in China, the increasingly complex rules have slammed the door shut to one of the most vibrant markets in the world for up to a year.

The central government is making a concerted effort to tighten product safety controls. And after a string of recalls and black eyes — the most bruising, perhaps, was baby formula contaminated with melamine — China’s tough stance on safety is welcome news to consumers worldwide. But the country’s recent revisions of its Cosmetics Hygienic Management Rules have left a number of global beauty firms scratching their heads as they try to figure out how to comply with the new standards, a murky process that requires a good deal of time and money and promises a very uncertain outcome.

The State Food and Drug Admin-istration of China began formally implementing the revisions in April, and the regulations apply to all beauty companies that import products manufactured outside of China and also to any “special-use” products — namely, hair dyes, skin whiteners, sunscreen and antiaging products — manufactured in China. Therefore, a Chinese company manufacturing these special-use products is subject to the same scrutiny as foreign importers.

A spokesperson for the SFDA said the organization is working with beauty firms to help them grasp the changes. “When the SFDA drafted up the regulations, the administration arranged many seminars and workshops with cosmetics companies and experts,” stated the SFDA in a written response to WWD. “The administration also took advice from the public during the process. The SFDA published a guide book to echo the regulations. Before the regulations launched, the administration also arranged the training for cosmetic companies.”

Nonetheless, the ambiguity surrounding the regulations and how to comply with them has dramatically slowed new product approvals.

Companies estimate it will take at least a year to get new products approved, or longer if new ingredients need to be registered as well. The cost per approval is estimated at 2 million yuan to 3 million yuan, or roughly $300,000 to $455,000 at current exchange.

The regulations derail beauty firms’ plans to launch a product in China at the same time the new items roll out to the rest of the world. They also threaten to slow down the innovation pipeline to China as companies weigh the cost of complying with the regulations against their bottom lines.

But given the growth trajectory and might of the Asian superpower, beauty companies aren’t about to issue a direct challenge to China over the regulations, however onerous they may seem. Beauty companies declined to speak on the record about the new rules, emphasizing, as more than one executive said, that the issue at hand is “very sensitive.”

But quietly and through industry trade groups, beauty firms are calling for more explicit instructions detailing what is required to comply with pre-market registration requirements.

At $18 billion in size, according to market research firm Kline & Co., China’s beauty and personal care market is too big and growing too rapidly to risk retribution. The Chinese market, which accounts for 6 percent of global beauty sales, has grown an average of 11 percent each year since 2005, said Kline & Co.

Cosmetics must be preapproved, or licensed, prior to hitting the market. Industry sources said the practice of requiring pre-market approval for products that are not considered special use has significantly increased the workload and financial cost for non-Chinese beauty firms.

What’s more, each shade — whether for foundation, lipstick or eye shadow— has to be analyzed and reviewed separately.

 

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