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China Is World’s Eighth Largest Cosmetics Market

November 14, 2005

CHINA: With disposable incomes on the rise, China is the world’s eighth largest and Asia’s second largest cosmetics market, according to the China Association of Fragrance, Flavor and Cosmetics Industry. More than $5.5 billion worth of beauty products were sold in China in 2002 from 3000 companies. The 22 largest cosmetics producers accounted for 50% of sales. Tariffs on cosmetic imports also fell—from 35% in 1998 to 20.5-25.5% in 2002. Experts predict that the tariff rate will fall to 18.3-22.3%, which should provide a boost to imports. Cosmetics were exported to more than 70 countries in 2002, according to the State Customs Bureau of China. In fact, export volume increased 48% to $267 million last year while imports fell about 30% to $61.7 million.

In the skin care category, Dabao Cosmetic Co. Ltd. was No. 1 in China, with sales of $96.7 million in 2002. L’Oréal’s sales were $107.1 million in China, up 61.3% from 2001. Amway opened its 100th shop in Pudong. Shiseido established the first Japanese-funded cosmetics research institute in Beijing in April 2002. HK Liang’s Group launched Guangzhou Tiawen Jiaoyan Cosmetics Co. Ltd. in Conghua and opened a beauty center in Guangdong’s capital.

Johnson & Johnson was No. 1 in the children’s skin care market and gained more than a 90% share in 2002. Henkel’s sales also doubled in this market in 2002. Tianjin Yu Meijing saw sales reach $18.1 million in 2002 and invested $1.2 million in a production facility. Desheng Baby Golden water, from Desheng Science and Technology Co., prevents mosquito bites and the burning of rashes and pox.
Overall, older companies are expanding their market share and introducing new formulas. New foreign and domestic brands have also appeared, such as Grandway International’s Voqua skin care line, Zhejiang Runsong Daily Chemical Co.’s shower series and Civea’s Jojos hand care items. Liquid soaps also expanded due to the SARS outbreak.

Shampoos, skin cleansers and hair dyes are the largest segments in the Chinese cosmetic market. For years, local producers kept prices low to boost sales; now, multinationals are doing the same. The trend is most evident in shampoos, with new local players such as Lafang, Arche, SOA SOE, Pupen, Taiyuan and Runsong. The trend will continue as more multinationals jump into the market.
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