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Health and Beauty We examine the trends underlying the growth of the global marketplace in health, beauty and hygiene. Our analysts will point the way forward by highlighting critical innovations and behaviours that are driving industry evolution.

China Beauty and Personal Care Domestic Brands Gain Ground

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Domestic players in China, after years of product development, are now gaining ground, having reached a combined value share of 4% in 2015 among the top 10 players, up from 3% in 2011. The leading domestic players are present in a wide range of beauty and personal care categories, from skin care and oral care to colour cosmetics. Their value share gain can be largely attributed to their success in second- or lower-tier cities, to which the focus of market development has been shifted from top-tier cities. In addition, domestic players are becoming increasingly strong in terms of brand building thanks to effective marketing and advertising campaigns, which include the sponsorship of popular reality television shows.

On the other hand, domestic consumers have become more mature, changing their attitudes towards domestic brands, which used to be seen as inferior in terms of both quality and design. Increasing sophistication has led to consumers seeking more products with a natural positioning. Herbal ingredients, an area in which many domestic players are strong, for example Yunnan Baiyao and Shanghai Jahwa, are greatly valued by local consumers, thus leading to new growth opportunities for these domestic players. Meanwhile, the growing importance of a national identity and recognition of Chinese culture have also resulted in local consumers’ growing acceptance of domestically manufactured products.

Thanks to the stellar performance of domestic players, some multinational brands have been withdrawn from the Chinese market, such as Revlon in 2013 and Garnier in 2014. On the other hand, leading multinational players have started to pay more attention to online distribution in view of the booming internet retailing channel in China by cooperating with the leading B2C platforms such as Tmall.com and JD.com in order to reach out to consumers in lower-tier cities. Lancôme, for instance, set up its official online flagship store on Tmall.com in January 2015.


Domestic players and brands are expected to continue to gain share over the forecast period, thanks mainly to strong distribution networks, often with a focus on lower-tier cities. Moreover, domestic players are more capable of setting up and running specialist brand stores with competitive prices and high mark-ups for operators. To meet consumers’ changing needs, domestic players are projected to develop more segmented upmarket offerings, as shown by Shanghai Pehchaolin’s Bluemyth series, launched in May 2015, with beauty specialist retailers and department stores its main distribution channels.

Multinational players are likely to improve their distribution networks through acquiring leading domestic brands, with L’Oréal China already having purchased MG face masks in 2014. On the other hand, discounted retail pricing is another measure which is likely to be adopted by multinational players so as to enlarge their consumer base and maintain their share of sales. A reduction in import tariffs in mid-2015 enabled many international companies to lower their selling prices, thus attracting more local consumers. Over the forecast period it is fairly likely that multinational players will further reduce their prices so as to better compete with domestic and South Korean brands, which are growing in popularity.

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