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Fast-Changing Young Chinese Consumers Are Redefining the Beauty Industry

The latest report by Reuter: Intelligence names five key takeaways rewriting the rules of Chinese beauty consumption.

LONDON — China is a booming market for beauty, with consumers aged between 20 and 35 spending more than 518 billion renminbi, or $77 billion, on beauty products in 2018, according to Tmall, Alibaba’s business-to-consumer e-commerce platform.

Reuter: Intelligence, the research and insights arm of Reuter Communications, a China-based luxury intelligence, digital, communications and marketing agency, will release a report on Wednesday called “The New Face of Beauty in China” that points to the rapidly changing consumer mind-set in one of the world’s biggest beauty markets.

Chloé Reuter, founder and chief executive officer of Reuter Communications, said the report reveals that new e-commerce platforms; demand for hi-tech, holistic retail experiences, and the impact of Gen Z means that international beauty brands must understand the new tastes and expectations of China’s demanding consumers.

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“Creating this report gave us a fascinating insight into the real thoughts of the customers that are making the China beauty market one of the biggest in the world — and one that luxury brands can’t afford to miss out on. Years ago in China, we saw the same few beauty brands. Today, the market couldn’t be any more different. According to Tmall, over 3,000 global beauty brands are sold via m-commerce, with a further 1,000 to open flagship stores on the platform in 2019. If you imagine the beauty cabinet of a Gen Z consumer in a first-tier city, it would contain a huge variety of niche brands alongside the well-established leaders, as Chinese consumers are extremely knowledgeable about what’s out there,” she said.

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The report’s findings are based on mobile ethnographies, big data analytics and a quantitative online survey covering more than 300 consumers across the first-tier cities of Shanghai, Beijing and Guangzhou.

Influencers are a must in promoting beauty products, with 65 percent of women and 61 percent of men saying they discover new product through KOLs, or celebrities on social media. Additionally, China’s increasing number of platforms with clearly segmented target audiences enable brands to be more precise in their engagement.

Miss Sylvia, beauty editor at Elle China, said specialized beauty influencers have a strong impact on purchasing decisions. “Famous KOLs will make posts, focusing on the product visually. But quality bloggers genuinely know what they are talking about. They constantly review products, in detail, and we trust what they say. For example, I recently bought a German brand and a Spanish brand because of the blogger’s review, and the product quality is excellent,” she said.

The report also said brands will build on their WeChat foundations and reach out with Xiaohongshu (Red), a social commerce platform that has been increasingly popular among Chinese Gen Z fashion and beauty consumers.

“While the rules of the platforms for both businesses and influencers are regularly updated to avoid overly commercial, ad-style content, it [Xiaohongshu] is growing to become the go-to platform for learning, browsing and related influencer content. An official brand account and collaborations with relevant bloggers on the platform must be a priority for a beauty brand of any size,” the study said.

Similar to the findings in McKinsey’s latest China luxury report, the Reuter report pointed out that while discovery is digital, beauty purchases are made in stores. Some 86 percent of participants said they were looking to have a holistic brand experience as well as guaranteed authenticity.

Klaus Redomske, president of the professional skin-care brand Babor, said: “It’s key to establish our digital footprint everywhere in China’s unique eco-system while consumers really enjoy the full professional ‘Babor experience’ in beauty salons as part of merging online-to-off-line experiences.”

SK-II, the Japanese beauty brand owned by Procter & Gamble, has also tapped into the online-to-off-line model. It opened the Future X smart store at K11 in Shanghai last September. Equipped with technologies such as facial recognition and artificial intelligence, SK-II offered an intimate, immersive and customized shopping journey for visitors.

The report also said that China posed a big opportunity for niche beauty brands. “Not wanting to defer to the same big names that their parents might prefer, the modern generation of Chinese consumers are keen to seek out niche beauty. For brands, this should give creative license to push the boundaries of previously accepted styles, whether in packaging, marketing or product,” it said.

Shine Wei, brand general manager at SpaceNK, the luxury beauty retailer, said the younger generation is excited to try what’s new and discover even more. “Consumers in China are younger than those in other markets, and they live online 24/7. As well as establishing WeChat social CRM, and having visibility on Xiaohongshu, the true online-to-off-line experience is a key expectation of China’s beauty consumer,” he said in the report.

Health, wellness and the eco-boom in China is extending into the field of beauty, the report added. Survey respondents agreed, with 77 percent of females and 84 percent of males answering that they would pay more for products that have organic ingredients. The top three co-mentions along with the phrase “organic beauty” are Facemask, Essence and Face cleaner on the Chinese social media platforms Weibo and Xiaohongshu.

LVMH Moët Hennessy Louis Vuitton’s beauty brand Cha Ling is one example of how Chinese wellness culture has become a key selling point, as it is based on Chinese remedies such as Pu’er tea extract, which the brand claims has antioxidant and antiaging powers for the skin.