Chinese cosmetics market analysis中国化妆品市场分析.docx

Chinese cosmetics market analysis 11级工商管理2班（117）纪梦桐Melissa1166022212012.12.2Abstract:Nowadays, a growing number of cosmetics enterprises pay more attention on for development of various cosmetics. All kinds of new products in nursing, maintenance, cosmetics and so on emerge endlessly to follow new direction in international cosmetics market. Green, natural and environmental protection has become a mainstream voice in global nondurable consumer goods industry such as cosmetic and food. Therefore, securities, non-toxic side effects of leaf alcohol and ester perfume will become new favorite in Chinas cosmetics industry. Chinese pure makeup supplies market is far from saturated. Though more and more young and middle-aged women chase makeup fashion in the city, most of the populations do not makeup in China. At present, our country has become the most potential cosmetic market all around the world. With Chinas rapid economic and sustainable growth, the cosmetics industry has also become one of the fastest growing industries national economies of our country at the same time. Although the competition is so strong, China, a quite good market, still attracts more multinational enterprise to join into.Keywords: market analysis China cosmeticsContents1. Introduction 41.1 Market capacity of cosmetic products 41.2. Cosmetics industry analysis41.2.1 Annual growth rate of sales of cosmetic products 41.2.2 Development direction of cosmetics industry Development direction of cosmetics market Research and development direction of cosmetic products42. Market competition condition analysis of cosmetics industry52.1 Competition condition of cosmetics market52.2 Main sales channels of cosmetic products52.3 Competitors analysis of cosmetics industry62.3.1 Basic data of main production enterprises of cosmetics industry62.3.2 Management strategies of main cosmetics brands83. Condition of consumption of cosmetics market84. References85. Appendix91. IntroductionNowadays, a growing number of cosmetics enterprises pay more attention on for development of various cosmetics. All kinds of new products in nursing, maintenance, cosmetics and so on emerge endlessly to follow new direction in international cosmetics market. Green, natural and environmental protection has become a mainstream voice in global nondurable consumer goods industry such as cosmetic and food. Therefore, securities, non-toxic side effects of leaf alcohol and ester perfume will become new favorite in Chinas cosmetics industry. In addition, people more and more recognized the hairdressing action of daily edible fruits and vegetables and they absorb natural trace elements which are human body need by them. To be anti-aging, well-nourished, cosmetic and economical become fashionable.Although popular trends are various, for all cosmetics enterprise, having a macroscopic accurate understanding and grasp of the cosmetics market consumption structure is important and necessary beyond doubt.1.1 Market capacity of cosmetic productsThousands of cosmetic brands exit in the whole country. Products of the foreign joint venture brands occupy the main position of the market among them, about 70% market share in total. Although small and medium-sized state-owned cosmetics enterprises occupy the Chinese cosmetics market most in number, the aggregation of market share is little. Chinese pure makeup supplies market is far from saturated. Though more and more young and middle-aged women chase makeup fashion in the city, most of the populations do not makeup in China. 1.2. Cosmetics industry analysis1.2.1 Annual growth rate of sales of cosmetic productsAccording to the statistical data shows by industry association, Chinas cosmetics market maintains an average annual growth rate of 15% in the next few years. At present, our country has become the most potential cosmetic market all around the world. With Chinas rapid economic and sustainable growth, the cosmetics industry has also become one of the fastest growing industries national economies of our country at the same time.1.2.2 Development direction of cosmetics industry Development direction of cosmetics marketOur country cosmetics market is mainly divided into skin cosmetics, hair care cosmetics, beauty cosmetics and other types of cosmetics. Skin care products are hot in professional hairdressing cosmetics market. Consumers spend about 100-800 RMB every time in average. Research and development direction of cosmetic productsWith the global cosmetics market develops unceasingly, the following new development tendencies are worthy to pay attention.(1) Products should be environmental-friendly, green and biodegradable. With voice of the global environmental protection is rising, consumers requirement about cosmetics security is going higher. Derived from natural ingredients and raw material of cosmetics products will appear more often in the market.(2) Products which have natural plants, especially the effect of Chinese herbal medicine own great potential development. Our country is known as the natural medicine kingdom. The development of new products is easy to accept to consumers. (3) Efficacy cosmetics will be valued. Preventing bask in, dispelling the spot, thin body, whitening, resisting acne, hair color and preventing hair loss are also indispensable.2. Market competition condition analysis of cosmetics industry2.1 Competition condition of cosmetics marketFrom the sales in the cosmetics market, the whole cosmetics market is controlled by the international brands. High and middle grade cosmetics market almost is all occupied by import brands or by joint capital brands. Most of them have already invested and landed in China. Now, however, the international giants constantly consolidate the medium and high-end market and they plan to do the powerful penetration to the low end of the market. Although the competition is so strong, China, a quite good market, still attracts more multinational enterprise to join into. The enterprises which have entered the Chinese market are also increasing investment unceasingly. For example, we can see it out clearly from purchase action and advertising investment that P&G and LOreal have took on. 2.2 Main sales channels of cosmetic productsIn the article, I show 10 main sales channels in total. Here are some details in the table below.ChannelsAdvantagesDisadvantagesWholesaleLow purchase costsLow profit per unitSmall commodities wholesale markets1.Large business area2.Large passenger flow3.Sell by both wholesale and retail4.Low price5.More brands1.Poor reputation2. Fake and inferior products from manufacturers may exit.Department stores1. Good geographical position2. Large passenger flow3. The cosmetics department is generally in the first floor, so the attraction is large to the consumer.4. Good reputationHigh priceChain big supermarkets1. Stable passenger flow2. Large business area3. Business variety4. Low priceOnly low level cosmetic productsChain cosmetics shopsLow priceOnly a few types of cosmetic productsBrand storesLow priceSingle typeHairdressing departments and beauty salon schoolsLow priceThe product quality is difficult to be assured.PharmaciesStable passenger flowOnly a few types of cosmetic productsDirect selling1. Low price2. The product quality can assure.Single typeElectronic commerceLow priceThe product quality is difficult to be assured.2.3 Competitors analysis of cosmetics industry2.3.1 Basic data of main production enterprises of cosmetics industry(1) LOrealThe LOreal Group is the worlds largest cosmetics and beauty company (Jones and David, 26 January 2010). With its registered office in Paris and head office in the Paris suburb of Clichy, Hauts-de-Seine, France. It has developed activities in the field of cosmetics.Concentrating on hair color, skin care, sun protection, make-up, perfumes and hair care, the company is active in the dermatological, tissue engineering and pharmaceutical fields and is the top nanotechnology patent-holder in the United States. (LOreal builds on skin testing capabilities. n.d.)LOreal is a listed company, but the founders daughter Liliane Bettencourt and the Swiss food company Nestl each control around 30 percent of the shares and voting rights (Annual Report 2011, 2011).In 2003, LOreal announced its 19th consecutive year of double-digit growths. Their consolidated sale was 14.029 billion and net profit was 1.653 bn. 96.7% of sales derived from cosmetic activities and 2.5% from dermatological activities. LOreal has operations in over 130 countries, employing 50,500 people, 24% of which work in France. 3.3% of consolidated sales are invested in research and development, which accounts for 2,900 of its employees. In 2003, it applied for 515 patents. It operates 42 manufacturing plants throughout the world, which employ 14,000 people.Cosmetics sales by division breakdown: 54.8% from consumer products at 7.506 billion, 25.1% from luxury products at 3.441 billion, 13.9% from professional products at 1.9 billion, and 5.5% from active cosmetics at 0.749 billion.Cosmetic sales by geographic zone breakdown: 52.7% from Western Europe at 7.221 billion, 27.6% from North America at 3.784 billion, 19.7% from rest of the world at 2.699 billion.In 2007, LOreal was ranked 353 in the Fortune Global 500 (Fortune Global 500 2007: LOreal. 2007).The company had earned $2,585 million on sales of $19,811 million. There were 60,850 employees (Fortune Global 500 2007: LOreal. 2007).Joint ventures and minority interests LOreal holds 10.41% shares of Sanofi-Aventis, the worlds number 3 and Europes number 1 pharmaceutical company. The Laboratoires Innov is a joint venture in nutritional cosmetics between LOreal and Nestl; they draw on LOreals knowledge in the fields of nutrition and food safety. Gal derma is another joint venture in dermatology between LOreal and Nestl.(2) UnileverUnilever (Euro next: UNA, LSE: ULVR) is an AngloDutch multinational consumer goods company. Its products include foods, beverages, cleaning agents and personal care products. It is the worlds third-largest consumer goods company measured by 2011 revenues (after Procter & Gamble and Nestl) and the worlds largest maker of ice cream.Unilever is a dual-listed company consisting of Unilever N.V., based in Rotterdam, Netherlands, and Unilever PLC, based in London, United Kingdom. Both companies have the same directors and they operate as a single business. The current non-executive Chairman of Unilever N.V. and PLC is Michael Treschow while Paul Polman is Group Chief Executive. (Unilever buys some Sara Lee businesses for almost $2B, 2009.)Unilever owns over 400 brands, amongst the largest selling of which are Aviance, Axe/Lynx, Ben & Jerrys, Dove, Flora/Becel, Heartbrand, Hellmanns, Knorr, Lipton, Lux/Radox, Omo/Surf, Rexona/Sure, Sunsilk, Toni & Guy, TRESemm, VO5 and Wish-Bone.Unilever PLC has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalisation of 27.3 billion as of 23 December 2011, the 18th-largest of any company with a primary listing on the London Stock Exchange (FTSE All-Share Index Ranking. n.d.) Unilever N.V. has a primary listing on Euronext Amsterdam and is a constituent of the AEX index. Both Unilever PLC and Unilever N.V. have secondary listings on the New York Stock Exchange.(3) Procter & GambleThe Procter & Gamble Company (NYSE: PG), also known as P&G, is an American multinational consumer goods company headquartered in downtown Cincinnati, Ohio, USA. Its products include pet foods, cleaning agents and personal care products. Prior to the sale of Pringles to Kellogg Company, its product line included foods and beverages (Procter & Gamble board meets amid CEO reports, 2009).In 2011, P&G recorded $82.6 billion dollars in sales. Fortune magazine ranked P&G at fifth place of the Worlds Most Admired Companies list, which was up from sixth place in 2010 (P&G Ranks 5th Overall, 1st in Our Industry and a Green Star Among Fortune Magazines Worlds Most Admired Companies(Press release). Procter & Gamble. 2011). Procter & Gamble is the only Fortune 500 company to issue C Share common stock.2.3.2 Management strategies of main cosmetics brands(1) Foreign cosmetics marketing strategy Most of them use self sales, such as direct selling, mail-order sales, telephone sales and television sales. The scale of direct selling is the largest one. At present, the world famous cosmetics company has started to play the network marketing. Network marketing project content about cosmetics enterprises, include training engineering and service engineering currently.In the marketing strategies, many enterprises of European and American brands often use privilege tickets, discounts or gifts to attract customers. But there are also some companies which practice unified price, no discounts in any time.(2) Chinas cosmetics marketing strategyIn China, wholesale is still the main channel. The relationship between Cosmetics manufacturers and wholesalers is close. Cosmetics chain scale is relatively small. Brand stores are still on a smaller scale. Vichy is the first one which enters pharmacy sales of cosmetics in the world. It Entered China in 1996, and opened our country cosmetics in pharmacy sales firstly.3. Condition of consumption of cosmetics marketAt present, cosmetics market situation is more complex in China. Sixty per cent of consumers think that foreign cosmetics have good quality. They feel very good by using them. Twenty per cent of consumers believe that foreign cosmetics are high level and are suitable for their own identity. They can get others envy. Another 10% of consumers hold opposite views that quality of domestic cosmetics is OK, so they can buy them trustingly. According to actual economic strength, the rest can only choose the cheap domestic cosmetics.4. References1. Jones and David, 26 January 2010, Nestle waits for market pressures to soften Hershey. Reuters. (Online) Available from: /article/idUSTRE60P31A20100126. (Cited 2 December 2012)2. LOreal builds on skin testing capabilities. (n.d.) (Online) Available from: C. (Cited 2 December 2012)3. Annual Report 2011, 2011, LOral. (Online) Available from: /_en/_ww/html/company/pdf/LOREAL_RA2011_HD_27032012_EN.pdf. (Cited 2 December 2012)4. Fortune Global 500 2007: LOreal. CNN. 23 July 2007. (Online) Available from: /magazines/fortune/g