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The cosmetics and personal care market in China by Daxue consulting

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The cosmetics and personal care market in China by Daxue consulting

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The cosmetics and personal care market are growing very fast in China. How are the sales of international brands/imported products in China? Who are the main consumers of cosmetics and personal care products in China? Daxue consulting is providing a comprehensive presentation targeted towards foreign brands interested in entering China's market.

The cosmetics and personal care market are growing very fast in China. How are the sales of international brands/imported products in China? Who are the main consumers of cosmetics and personal care products in China? Daxue consulting is providing a comprehensive presentation targeted towards foreign brands interested in entering China's market.

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The cosmetics and personal care market in China by Daxue consulting

  1. 1. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Add cover picture 2018 DAXUE CONSULTING ALL RIGHTS RESERVED THECOSMETICSAND PERSONALCARE MAKRETINCHINA
  2. 2. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Key findings of cosmetics and personal care market in China The cosmetics and personal care sectors are growing fast in mainland China. Quality and effectiveness are the most important factors for consumers Large foreign brands are the most attractive to female consumers than local ones E-commerce (Taobao/Tmall and JD) presence is crucial for all international brands Utilizing social media platforms (Weibo and WeChat) is the best way to engage with consumers
  3. 3. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Market drivers for international brands in China 1. 2. 3. 4. 5. The rising income and beauty consciousness make Chinese consumers raise their standards on cosmetics and personal care products The high-end images and good reputations of international brands make them a favourite among Chinese consumers (men and women). Cross-border e-commerce makes international brands easily access China’s market with less barriers, such as tax. Social media (Weibo and WeChat) and KOLs help international brands engaging with local consumers. Mobile apps are becoming important channels for cosmetics and personal care brands to promote and sell their products.
  4. 4. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED CONSUMPTION ANALYSIS Skin care products are the most commonly consumed products around China with an almost full penetration of the market. However, consumption of cosmetics products recently faced a fast increase among millennial generation, who are the main consumers for this product category. — C l a i r e G e r a r d , P r o j e c t l e a d e r o f D a x u e c o n s u l t i n g
  5. 5. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Consumption and market size in China In China, the market size of cosmetics industry has been continually growing in recent years. Since the increasing income and beauty consciousness of Chinese people, more of them have started to pursue fashion and beauty trends, which enhanced the demands for cosmetics products in China. 296.1 315.6 336.1 358.8 0 50 100 150 200 250 300 350 400 2014 2015 2016 2017 BillionRMB Market size of cosmetics industry in China (billion RMB –2014-2017) Source: Chyxx.com
  6. 6. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Consumer analysis: People under 35 years old are the main buyers of cosmetics Chinese people between 30-35 years old have been the biggest customer groups of cosmetics for their strong purchase powder. Young (25-29) consumers usually care about people’s comments about their appearance and most of them have been deeply affected by the beauty info from Chinese social media, thus they are willing to buy more cosmetic products. 24 and younger 12% 25-29 36% 30-35 40% Above 35 12% Age distribution of cosmetics consumers in China (percent – 2017) Source: Chianbaogao.com
  7. 7. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Consumer analysis: most consumers care about effect, price and brand Effectiveness, price, and brand are the most significant qualities Chinese consumers look for in a product. A survey in 2018 (from Ministry of Commerce) explained that 75% Chinese consumers claimed that skincare products in China’s market couldn’t meet their needs. Therefore, imported products will be popular among China’s consumers. 70% 61% 54% 40% 40% 9% Effect Price Brand Reputation Ingredients Package Main concerns of skincare consumers (percent– 2017) Source: BDEX
  8. 8. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Baidu Index – Interest trends toward the segments (1/2) The number of searches of cosmetics reached the highest point during 2017 Double 11 shopping carnival (the largest offline and online shopping day in China, launched by Taobao). The search index of skincare fluctuated around the average value, the highest peak was also during 2017 Double 11. The search keyword “cosmetics” on Baidu index The search keyword “skincare” on Baidu index Baidu is the #1 search engine in China. The volume of search (more than ¾ of the total search made on Chinese Internet) exhibits the market digital trends 2017 Double 11 shopping carnival 2017 Double 11 shopping carnival
  9. 9. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Baidu Index – Interest trends toward the segments (2/2) The search index of perfume sharply increased early February and August 2018, when it was the week right before the Valentine's Day and Chinese Valentine's Day. The search index of hair care skincare fluctuated around the average value, it’s one of the most common topics among Chinese netizens. The search keyword “perfume” on Baidu index The search keyword “hair care” on Baidu index Baidu is the #1 search engine in China. The volume of search (more than ¾ of the total search made on Chinese Internet) exhibits the market digital trends The week before Valentine’s Day The week before Chinese Valentine’s Day
  10. 10. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Baidu Index – Semantic analysis (1/2) The most related keywords of “cosmetics” are “brands”, “pictures of cosmetics products”, “top 10 of cosmetics brands list” and “cosmetics companies”. The most related keywords of “skincare” are “top 10 skincare brands”, “top 10 in the rank list of skincare for women”, “make-up” and “which skincare products are easy to use”. Cosmetics top 10 of cosmetics brands list All cosmetics brands Pictures of cosmetics cosmetics companies Brands Which cosmetics brands are good Cosmetics poster Skincare which skincare products are easy to use Top 10 Skincare brands list Skincare brands Make-up Pictures of skincare top 10 in the rank list of skincare for women
  11. 11. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Baidu Index – Semantic analysis (2/2) The most related keywords of “perfume” are “perfume brands”, “Chanel”, “Dior”, “ranking list of perfume” and “perfume for men”. The most related keywords of “hair care” are “hair conditioner”, “hair oil”, “the right way of using hair conditioner”, “Amore” and “the top 10 in the ranking list of hair conditioner”. Perfume Perfume brands Chanel Dior Ranking list of perfume Categories Versace perfume for men Brands Hair care hair conditioner hair oil the right way of using hair conditioner the top 10 in the ranking list of hair conditioner Amore Hair mask essential oils
  12. 12. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Zhihu questions – consumer concerns & information requests On Zhihu, questions and answers about cosmetics mainly consist the following aspects: 1) How to pick products based on different needs. 2) The knowledge of using cosmetics products. 3) Comparing different brands. (Chinese consumers like comparing brands, other people’s feedback will impact their purchasing decisions) Are there any cosmetics and skincare products worth buying during Double 11 2018?(online and offline shopping day in China) SK-II facial treatment essence, Shiseido (资生堂) power infusing concentrate. Are there any recommendations about good domestic make-up (including skincare products) brands? FlaminGo mascara and ALOBON eye liner. Zhihu is the first Q&A website. in China, and has transitioned to a social media sharing platform gathering more than 100 million answers on various topics. The platform is especially relevant to reach higher-, well- educated social classes
  13. 13. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Social media analysis - Wechat On WeChat, most posts about cosmetics and personal care focused on 3 aspects: 1) Product and brand recommendations based on different needs. 2) Knowledge about the process of makeup. 3) Market related info (sales/consumption of cosmetics in China). Girl, you don‟t need so much cosmetics. This post is about the basic daily cosmetics for women, such as foundation, BB cream and etc. The post has 12,788 views and 159 likes. The correct steps of using cosmetics This post is a makeup application tutorial for eye makeup The post has 915 views. Wechat is the #1 social media in China and an absolute must-have for a market entry promotion. It accounts for over 1 billion active users
  14. 14. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Social media analysis - Weibo Consumers and KOLs mainly share the information of popular cosmetics brands/ products and their experience through pictures and videos on Weibo. International brands are more popular than domestic brands among those posts. This post is about “Which products are the best and cheapest from each country?” China‟s duty-free stores: Estee Lauder Thailand: Thann, Boots, Snail White and Loreal The post has 330 likes and 203 shares This post is about the relationship among large cosmetics brands and their most famous products. The post has 864 likes and 935 shares. Sina Weibo is a microblogging site with nearly 400 million monthly users, and is a well leveraged platform to spread marketing campaign on Chinese Internet
  15. 15. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Context of consumption in China On many social media platforms in China, product and brand introductions are the main content in the posts about cosmetics and personal care products. International brands are popular for their effectiveness, nice design and high reputation. However, there are many users who also recommended domestic brands because they are cheap and still effective. This picture has been shared on Weibo. It introduced daily use cosmetics and personal care products for women, most of them are international brands. This picture has been shared on Baidu Tieba (百度贴 吧), which is a popular online community that heavily integrates Baidu„s search engine. The picture recommended the skin care products of FANJEIS (梵洁 诗).
  16. 16. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Online trends : consumer perception On Tmall/Taobao and JD, most positive feedback focused more on effectiveness, easy to use, fast delivery and reasonable price. Negative feedback focused more on broken packages, bad/no effect and insufficient quantity of goods. Nice product, easy to use and price is reasonable, make skin fresh and not oily, it is quickly absorbed. It‟s a bargain. The Blemish Balm has very good quality, very satisfied with this shopping. Tried with my hand, feels very good, effective, I like it very much. Friends, go get the product quickly, its really nice. The quantity is too little, is it 50g? The sunscreen was used up in a few days, I don‟t know what to say. The product is hard to use and not effective. It‟s not worth this price, feel very dry after using the product, skin peeling.
  17. 17. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED COMPETITION ANALYSIS China’s competitive landscape is very dense, with a large presence of international players, which are facing a growing domestic competition with more qualitative products than before. — C l a i r e G e r a r d , P r o j e c t l e a d e r o f D a x u e c o n s u l t i n g
  18. 18. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Market shares in China Among the top cosmetics players in China, international brands show an obvious advantage, there are only 3 domestic brands among top 10 players in 2017. In 2017, the top 10 cosmetics brands occupied 38.5% market share, which means China’s cosmetics market hasn’t been dominated by a few big players。 Source: FORWARD THE ECONOMIST 2.2% 2.2% 2.3% 2.5% 2.5% 2.6% 2.6% 2.6% 8.4% 10.1% Mary Kay Jala Pechoin Amore Estee Lauder Unilever CHICMAX Shiseido Loreal P&G Market share of top cosmetics brands in China (percent – 2017)
  19. 19. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Competition analysis: Makeup On Tmall/Toabao, international and domestic brands both showed high sales of color makeup products in October 2018. The top seller price of international brands is higher than domestic brands, which means imported goods are more expensive but popular for their good reputation and effects. Brands International vs Domestic Presence on Tmall/Taobao and JD Sales on Tmall/Taobao in October 2018 Top seller price on Tmall Price range (RMB) Carslan (卡 姿兰) Domestic Yes 867,984 items 29 RMB 26 to 3,999 CHANDO (自然堂) Domestic Yes 485,068 items 128 RMB 39 to 204 Shiseido (资 生堂) International Yes 439,852 items 590 RMB 180 to 2,580 Maybeline (美宝莲) International Yes 710,993 items 129 RMB 19 to 2,000
  20. 20. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Competition analysis: Skincare products Most skincare brands have built official stores on the main e-commerce platforms (Taobao/Tmall and JD) in China. For skincare products (for women and men), the top seller price of international brands are usually higher than domestic brands, but still popular on Tmall/Taobao, since they have good effects. Brands International vs Domestic Presence on Tmall/Taobao and JD Sales on Tmall/Taobao in October 2018 Top seller price on Tmall Price range (RMB) Pechoin (百 雀羚) Domestic Yes 1,271,200 items 139 RMB 9.9 to 3,499 PROYA (珀 莱雅) Domestic Yes 555,299 items 148 RMB 59 to 1,980 Olay (玉兰油) International Yes 436,234 items 459 RMB 17.6 to 1,460 Laneige (兰 芝) International Yes 121,458 items 195 RMB 125 to 740
  21. 21. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Competition analysis: Hair care products For hair care products, international and domestic brands both showed high sales on Tmall/Taobao. Although international brands have higher price, they are generally more popular than domestic brands for their good effects and reputations. Brands International vs Domestic Presence on Tmall/Taobao and JD Sales on Tmall/Taobao in October 2018 Top seller price on Tmall Price range (RMB) BeeFlower (蜂花) Domestic Yes 331,125 items 19.9 RMB 7.6 to 139 LAF (拉芳) Domestic Yes 345,473 items 29.9 RMB 9.9 to 188 Schwarzkopf (施华蔻) International Yes 561,375 items 109 RMB 6.8 to 268 SASSOON (沙宣) International Yes 467,363 items 139 RMB 9.9 to 237
  22. 22. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Competition analysis: Fragrances Comparing with other cosmetics and personal care products, fragrances showed a lower sales on Taobao/Tmall because Chinese people haven’t had habit to wear perfume on their daily basis. International brands usually have higher price, but they are still more popular than domestic brands, since they have varied product series, better design and higher reputation. Brands International vs Domestic Presence on Tmall/Taobao and JD Sales on Tmall/Taobao in October 2018 Top seller price on Tmall Price range (RMB) Parizino (贝 丽丝) Domestic Yes 6,289 items 8.5 RMB 8.5 to 288 SOLEHE (和 风雨) Domestic Yes 33,894 items 59 RMB 49 to 118 Versace (范 思哲) International Yes 43,358 items 199 RMB 45 to 792 Dior (迪奥) International Yes 72,280 items 618 RMB 15.9 to1,239
  23. 23. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED E-commerce landscape of the category As one of the most common cosmetics/skincare in China, the price range of face cream is quite large on Tmall and JD. Price is a major criteria for purchase, which is counter- intuitive for a face cream product on Tmall. Most expensive SKU Cheapest SKU Top seller SKU •Dabao (大宝) •16.9 RMB Top selling SKU •11.9 RMB •5,478 RMB Price range of the category •0.18 •Market still driven by price Ratio top selling price vs average price •89.98 RMBAverage price
  24. 24. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Business cases – Lancôme (兰蔻) Digital activity The official website of Lancôme are mainly focusing on the new seasonal arrivals and discount activities during Double11 shopping carnival (the largest offline and online shopping day in China, launched by Taobao). The brand has built official stores on the main e- commerce platforms in China, such as Tmall, JD and Kaola. https://www.lancome.com.cn/ Platform Presence Official account Volume (sales, product reviews or traffic) Lancome.com. cn Yes Yes 1.285 million monthly visits Tmall Yes Yes 831,404 sold items in recent 30 days JD.com Yes Yes More than 1.54 million comments Kaola Yes Yes 666,414 followers on Kaola Pinduoduo Yes Yes Daily sales are 660 items
  25. 25. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Business cases – Lancôme (兰蔻) E-reputation in China The most related keywords of Lancôme are “official website”, “Lancôme black bottle”, “Lancôme Tonique Confort” and its competitors, such as “Estee Lauder” and “Dior”. Weibo and WeChat both have been significant promotion channels for Lancôme, the brand frequently releases videos and pictures about its new/seasonal arrivals on those platforms. Platform Presence Followers Posting frequency in October Wechat Yes 460,980 7 posts Weibo Yes 15,270,10 44 posts Lancôme Official website Estee Lauder Laneige Dior Lancôme black bottle Lancôme Tonique Confort Lancôme lipstick
  26. 26. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Business cases – Estee Lauder (雅诗兰黛) Digital activity As a famous cosmetics brands from USA, the main content on Estee lauder’s official website is the introduction of different series products (cosmetics and personal care). The brand has been selling on the main e-commerce platforms in China, such as Tmall, JD, Kaola and Pinduoduo. https://www.esteelauder.com.cn/ Platform Presence Official account Volume (sales, product reviews or traffic) Esteelauder.co m.cn Yes Yes 282,736 monthly visits Tmall Yes Yes 505,109 sold items in recent 30 days JD.com Yes Yes More than 1.6 million comments Kaola Yes Yes 728,238 followers on Kaola Pinduoduo Yes Yes Daily sales are 214 items
  27. 27. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Business cases – Estee Lauder (雅诗兰黛) E-reputation in China The most related keywords of Estee lauder are “official website”, “eye cream”, “make- up foundation” and its competitors, such as “YSL” and “Lancôme”. The brand has built official account on WeChat and Weibo for products promotion in China, its’ accounts usually publish videos, pictures and articles to introduce new arrivals and discount activities. Platform Presence Followers Posting frequency in October Wechat Yes 1,000,010 8 posts Weibo Yes 1,023,640 45 posts Estee lauder Estee lauder official website Lancôme make-up foundation eye cream Estee lauder USA official website Lipstick Estee lauder 2018 Christmas Package
  28. 28. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Business cases – Dior (迪奥) Digital activity The official website of Dior released a lot of information about new arrivals (make-up products and perfume), most of them are specialized for women, a few products designed for men. The brand has been selling popular e-commerce platforms as its online distribution channels in China. https://www.dior.cn/zh_cn Platform Presence Official account Volume (sales, product reviews or traffic) Dior.com.cn Yes Yes 714,052 monthly visits Tmall Yes No 196,005 sold items in recent 30 days JD.com Yes Yes More than 10 million comments Kaola Yes Yes 524,124 followers on Kaola Pinduoduo Yes No Daily sales are 1,227 items
  29. 29. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Business cases – Dior (迪奥) E-reputation in China The most related keywords of Dior are “official website”, “Dior lipstick”, “perfume” and its competitors such as “Chanel”. The brand engages with China’s consumers by posting fashion news, videos and pictures about its products/ new arrivals on Weibo and WeChat. Platform Presence Followers Posting frequency in October Wechat Yes 448,900 5 posts Weibo Yes 3,038,429 47 posts Dior Chanel Dior lipstick Dior official website Perfume Lipstick Dior 999 Official website
  30. 30. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Comparing online interest for leading brands On Baidu index, Dior showed the highest search frequency, Estee lauder had the second highest search frequency and Max Factor showed the lowest search number during the past one year. On WeChat index, Shiseido showed the lowest search index and there is no large difference among the other 3 brands during last 90 days. The search brands are Lancôme Estee lauder Dior Shiseido Max Factor The search brands are Lancôme Estee lauder Dior Shiseido
  31. 31. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Advertising – case study This advertising video was released by Dior to introduce its skincare product series, the DiorSnow. The main product is brightening light-activating micro infused lotion. Since the product is targeting Asian women (including Chinese women), this video mainly highlighted its good effects of skin whitening (Asian/Chinese women believe white skin is a symbol of beauty). https://v.youku.com/v_show/id_XMzQyODU5NzE1Mg==.html?sp m=a2h0k.11417342.soresults.dtitle This advertising video is about the skincare products series of Dior—DiorSnow. The video started from the scene covered by snow, which indicated the name of the product series. Then the main product, brightening light-activating micro infused lotion was showed. After that, the video used different angles to show of the model ‘s white skin and highlight the functions of the product, such as reduce spots. Finally, the video highlight the effect of the product by showing model’sface skin. Only for the audience in China
  32. 32. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Brand naming – case studies The Chinese names of cosmetics and personal care brands (international) usually come from similar pronunciation, however they also have the meanings of beauty, young and romance. Part of the international brands expressed their main products through their Chinese names. •In the Chinese name, “兰” means orchid, “ 蔻” has the meaning of young. •The Chinese name expressed that its products can make users beautiful and young. 兰蔻 (Lancôme) •In the Chinese name, “雅” means grace, “诗” means poetry, “兰” means orchid and “黛” is a kind of black pigment used by ancient Chinese women to draw eyebrow. •The name built a romantic image for the brand and indicated it’s a cosmetics brand. 雅诗兰黛 (Estee lauder) Justification / reason / detail #1 •The Chinese name “迪奥” is the Chinese translation according to the similar pronunciation of Dior. 迪奥 (Dior)
  33. 33. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED DISTRIBUTION& PROMOTION ANALYSIS Even though online penetration is very important on personal care products, offline retailers are still dominating the market. In store experience is very valuable, especially for high-end and luxury brands which can create a global experience around the products. — C l a i r e G e r a r d , P r o j e c t l e a d e r o f D a x u e c o n s u l t i n g
  34. 34. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Distribution and promotion in China: supermarket and internet are the main sales channels In China, supermarket and e-commerce have occupied half of the share of distribution channels for cosmetics by 2017. Offline (supermarket +department stores+ specialized stores) was still the main sales channel of cosmetics in 2017. Supermarket 27% Department stores 19% Specialized stores 10% E-commerce platforms 23% Others 21% Market share of the main distribution channels of cosmetics in China (percent –2017) Source: Euromonitor
  35. 35. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Online retail Coverage in China On Tmall/Taobao and JD, most brands are launching more discount activities because of the Double 11 shopping carnival (the largest offline and online shopping day in China, launched by Taobao). The number of brands on JD are more than Tmall, mainly due to the higher requirements and deposit of Tmall for those brands want to entry the platform. Market Segments Number of brands are selling on Tmall Number of brands are selling on JD Blemish Balm (bb cream) 199 518 Eye shadow 150 256 Lipstick 200 507 Face cream 199 755 Facial toner/water 199 428
  36. 36. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Offline retail: Coverage in Shanghai On Baidu map and Dianping, the search results of cosmetics mainly consist of two kinds of places: shopping stores (supermarket and specialized stores) and beauty/fashion salons (or relevant places). Although, consumers can’t buy perfume from salons, but they still can be seen as promotion channels for perfume brands, since they provide relevant services with cosmetics. Segment Number of offline stores in Shanghai Lipstick 57 Perfume 405 Nail color 60 Facial mask 45 Baidu Map: 3,770 results Dianping: 8,049 results Cosmetics Cosmetics
  37. 37. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED On-the-shelf: representation of the category in stores In supermarket and department stores, cosmetics and personal care products usually have individual areas for different brands. Most cosmetics and personal care products/brands are specialized for women, however, men’s cosmetics and skincare products also start to get more attention (specialized shelves for men’s products).
  38. 38. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Online sales: volume assessment As examples, we want to consider the popular types of goods. BB cream and lipstick showed high sales on Tmall in October 2018. Among skincare products, the sales of facial mask higher than face cream and facial toner on Tmall. Make up Main brands Way of ranking: general, popularity, new arrivals, sales and price categories 2.04 1.79 6.20 0.87 Blemish Balm Eye shadow Lipstick Foundation Sold items of make-up products on Tmall (million– October 2018) 5.85 2.1 8.42 Face cream Facial water Facial mask Sold items of skincare products on Tmall (million – October 2018)
  39. 39. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED Promotion channels to leverage for international brands in China Dedicated Websites/Apps: • Sasa.com (莎莎网) • Zunagxuan.com (妆炫商城) • JUMEI.com (聚美优品)/Jumei HD app • Showjoy.com (尚妆)/ SHOWJOY app • Beauty Evolution app (美妆修 行) • Xiaohongshu (小红书) Specialized Magazines: • RayLi Clothes & Beauty (瑞丽 服饰美容) • CCR (中国化妆品) • Health & Beauty (健康与美容) Sasa.com (莎莎网) is a well-known shopping platform specialized for cosmetics, personal care and mother & baby products. RayLi Clothes & Beauty (瑞丽服饰 美容) is a popular fashion magazine in China. Cosmetics and personal care are both important topics in the magazine. It provides info about related brands and new products to readers.
  40. 40. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED KOL landscape in China For international brands, KOLs are a huge part of modern Chinese product promotions, and cosmetics / personal care buyers are influenced by KOL’s shared opinions and experiences. KOLs related to cosmetics/ personal care industry mainly consist of fashion writers/models, make- up artists, brand founders and cosmetic formulators. This is a fashion KOL, cosmetics and personal care are important topics among her posts. Her Weibo account has 440,223 followers and 365 posts. One of her posts about skincare products received 325 likes and 125 shares. This KOL is a fashion writer, her Weibo account has 9,971,801 followers and 63.103 posts. She frequently posts info about make-up and skincare products. One of her posts about cosmetics from different countries has 233 shares. The Key Opinion Leader (KOL), or influencers, are a major part of the Chinese online journey, and therefore of the online marketing funnels for international brands in China. KOL will especially be as relevant to target niche audience (micro-KOL) and mainstream consumers (mass-market)
  41. 41. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED MARKETTREND ANALYSIS Consumers often refer to social media platforms such as Xiaohongshu to discuss cosmetics and make purchasing decisions, trusting consumers feedback over official brand content. — C l a i r e G e r a r d , P r o j e c t l e a d e r o f D a x u e c o n s u l t i n g
  42. 42. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED E-commerce channels and social media are the keys for cosmetics market in China For all cosmetics and personal care brands (international and domestic), social media and e-commerce platforms have been perfect approaches for branding in China. By using social media and e-commerce channels, cosmetics and personal care brands can effectively build trust and good reputation among Chinese consumers. • E-commerce websites, such as Tmall, JD and JUMEI.com, are the main platforms for purchasing cosmetics and getting detail info of products. Thus, most well-known cosmetics brands have built official stores on those platforms. Shopping platforms • Weibo is the platforms where beauty/fashion KOLs engage with fans/audience, they can easily affect consumers’ purchasing decision for cosmetics and personal care products. • WeChat is a perfect channel for brands to quickly engage with consumers and collect personal feedback from them. Weibo and WeChat • Purchase sharing apps like Xiaohongshu and shopping apps like Jumei.com have been good ways for cosmetics/personal care brands (especially foreign brands) to promote their products, since those apps are getting extremely popular among Chinese women. Mobile apps
  43. 43. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED OUR OFFICES Beijing, China Dongzhong Jie #40 Shanghai, China Room 504, 768 Xietu Road, Xuhui District Hong-Kong Island, Hong- Kong, 13 Queen’s Road, Floor 23 ABOUT US Daxue Consulting is a market research Company dedicated to providing the best specially tailored, high quality, customer- specific data in one of the most challenging markets in the world; China. We leverage our unique network of university organizations and professors, business associates, industry experts and foreign and local consultants to find the information you need efficiently, reliably and in a manner that addresses your specific needs. We excel because we’re reliable, resourceful and flexible, everything that the Chinese market demands. TO ACCESS MORE INFORMATION ON THE SHARING ECONOMYIN CHINA, PLEASE CONTACT DX@DAXUECONSULTING.COM
  44. 44. TO ACCESS MORE INFORMATION ON THE CHINESEMARKET, PLEASE CONTACT DX@DAXUECONSULTING.COM www.daxueconsulting.com +86 (21) 5386 0380 2018 DAXUE CONSULTING ALL RIGHTS RESERVED This report is the property of Daxue Consulting. No copyrighted materials may be reproduced, redistributed, or transferred without prior consent from Daxue Consulting. For more information on the sharing economy in China, please contact us. CONTACT US HONGKONG|BEIJING|SHANGHAI www.daxueconsulting.com dx@daxueconsulting.com +86 (21) 5386 0380 +86 134 6658 3902 © 2018 DAXUE CONSULTING ALL RIGHTS RESERVED

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