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Skincare items popular despite cost

2010-September-6 08:05:12

Private players

Skincare items popular despite cost

Dermatologist Chen Hongduo said the cosmetics and skincare industry in China is not a friendly area for speculative investment because it requires massive investments in innovation and research.

He has witnessed the efforts of private Chinese cosmetics enterprises, but he stressed that these companies need to be integrated and their product categories do not always match market demand.

Ma Ya, president of the Chamber of Beauty Culture and Cosmetics of the All-China Federation of Industry and Commerce, said private cosmetics makers should be given more government policy support since the industry faces soaring marketing costs - easy for international players, but not affordable for fledging Chinese enterprises.

She also advocated that the government should create some special funds to support innovation and development of emerging Chinese brands.

Hou Juncheng, chairman of Hangzhou PROYA Holding Co Ltd in Zhejiang province, said his company has started to expand in the Chinese competitive cosmetics market from second or third tier cities as well as the rural areas, and currently has around 20,000 outlets and shopping mall counters nationwide.

"But it is extremely hard for us to enter first-tier cities since we need to pay a huge entrance fee to shopping mall operators which has led to a difficult set of circumstances for us to gain popularity, which is key to the development of cosmetics companies," he added.

Hou said many smaller manufacturers are jealous of international brands because shopping mall operators provide them with free counter space in the best locations.

"The dilemma for Chinese private cosmetic companies is that most of them are purchased by international players when they develop to a certain level, leaving others struggling for survival," Hou said.

RNCOS's report showed that there are nearly 3,500 domestic cosmetics makers in China, but the majority of them operate on a small scale. When domestic players are compared with their foreign counterparts, they are far less competitive.

"We anticipate that the big foreign and domestic cosmetics makers will adopt the merger and acquisition route to attain inorganic growth in the market. This will translate into a moderate level of industry consolidation and the consumer will benefit via improved product quality at a reasonable price," the research firm said in their report.

In 2003, French beauty brand L'Oreal acquired Chinese local brand Little Nurse, and then acquired another local cosmetic brand YUE-SAI in 2004.

In 2008, US healthcare and cosmetics giant Johnson & Johnson purchased Beijing Dabao Cosmetics Co Ltd for $337 million.

However, Ma and Hou claim that as a huge cosmetic consuming country, China also has great manufacturing strengths and needs a brand of its own.

Other trends

Meanwhile, the world's health- and beauty-care industry is also experiencing a revival of Chinese traditional herbal products, which are favored by Chinese consumers and also many in other countries.

For example, ganoderma, one of the most popular ingredients in Chinese traditional herbal medicine, has been used in many skincare products like YUE-SAI.

Strong local brands are being rejuvenated and contemporized, for instance Shanghai Jahwa's Maxam has kept developing and re-launching new products via new formulas and new packaging, said TNS' Wong.

Shanghai Jahwa's medium-priced brand, Herborist, which was launched in 1995, enjoyed more than 60 percent growth last year and the company plans to open 250 new Herborist stores in the country this year.

Beijing Tongrentang, a 100-year-old Chinese brand also launched skincare products for dark rings, acne and many other common skin problems.

Daniel Chen, research and development director of Henkel Cosmetics, said: "The application of Chinese traditional herbs does not actually involve (digesting) individual herbs but taking advantage of their whole prescriptions or formulas combined with modern technology."

By Yu Tianyu

(China Daily 09/06/2010 page16)

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