Cosmetics Distribution in China is Strategic

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In China, growth is often linked to the increase of the number of sales terminals, department store,  speciality stores,  online sale or the number of distributors. The Middle Empire has enjoyed a two-digit growth for many years (18,7% in 2011), a higher growth in middle cities than in big one. And big cities such as Shanghai represent 12% of the retail sales in cosmetic, Beijing (11%), Jiangsu province (9%), Canton province(9%).

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What to choose?

 

Large retailors

The entrance fee to large retailers is often too high for most brands. Indeed, the presence in super and hypermarket is the main way for products of a middle and low-end brand, but we also find many premium brands from abroad there. I say it again, the only one disadvantage of large retailor is the high entrance price.

 

Distribution in specific shops

Distribution in specific stores like Sephora is possible only if the brand is already known. Professional shops offer a large variety of cosmetic products, from lower to high-end. Though, they answer to the customers’ needs.

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Be careful, it’s not difficult at all to find in local shops some unofficial products.

Specialized shops are perfect for promoting a brand image, because they permit a quality service and practice standardized prices.

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Presence in shopping center

The major inconvenience of stands in a shopping center is that it’s really hard to be referenced there. To have a kiosk in the shopping mall is a good way to reach your customers and make the brand known, but usually a distributor will get the possible connections to have a stand, still really hard to obtain nowadays.

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Small shops

There are also small shops which offer a wide range of products and play a key-role in the brand visibility. There is a risk of fake products.

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Drugstore

Drugstores are few developed in concerning the cosmetics in China. In this channel, products are referenced notably if the benefits margins are important.  Few foreign brands are presented in Chemistry (Vichy, la Roche Posay); those brands usually commercialize by their own name or act with distributors agents.

 

E-business

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Online sale explodes these few years in China and it also attracts the attention from cosmetics brand. Record turnover on Taobao and Tmall (BtoC platform) got out those times. For this moment it’s mainly brands with a weak added value, which fight for the prices. Consumers are looking for the best products with the more attractive prices.

 

On the lnternet, there are many opinion leaders who are going to direct consumers for choosing their products. It’s interesting to reach them in order to make known and recognized its product range. (More information on our offer for cosmetic china)

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Get a local partners

For most brands, get a local partner who will be in charge of distribution is the most efficient solution. However, you have to convince him to represent you, and ask him to take charge of the clearance formalities, really complicated for all importation of cosmetic products in China.

It is usually advised to choose a trustworthy partner (we repeat it but there is always, every year, there will be numorous cases of conflicts between exporters and distributors)

The best is to have a distributor’s network by sector of geographic area.

 

How to convince distributors?

To convince the distributor to reference you, you have to put yourself into the shoes of him.

They are generally businessmen, who have to invest a lot of resources and money in the importation of a products range. He then has to invest to promote the brand in the country, and he takes a lot of risks in case of the brand does not work on the Chinese market.

He will first looking for an easy-to-sell product: a quality product, with a good package, a precise positioning (spa range for example) or a brand already existing where a part of the work is already done. He also likes to represent brands which will invest into his branding in china (awareness and image).

He will be sensitive to brands which always have good reputation abroad, brands which have received good evaluation from the Chinese press, brands already known by Chinese customers, revolutionary products in the market.

He will look for an exclusivity to be sure nobody else can steal the result of his investment, and that the brand’s products finish at his competitors at a lower price.

This Chinese distributor is also sensitive to the relationship between him and the manufacturers, and to the efforts that they will do to support him.

 

Concretely, what should be done to be referenced by its distributors?

The product must be sold easily; a brand should be introduced, with a clear positioning, and must be known by the consumers.

There are several ways to make a brand known, and I’m still convinced that the Web is the cheapest and more efficient way todays.

See also the adaptation of cosmetic products in China.

 

What are the administrative procedures to export cosmetic products to China? douane-cosmetique-300x200

The regulations in effect are the major preoccupations of SME(small and medium enterprises) which want to take advantage of the high demand of the Chinese market. 2011 has been marked by the adoption of a new regulatory frame, to save new cosmetic formulas copied on the pharmaceutical model which take more time, and which is often unprofitable for foreign companies.

The SFDA has recently published several “guideline” intended to reorganize the control system of cosmetic products in China in order to limit the importation of foreign products and to favor the local brands.

Not long ago, imported cosmetic products are subject to a double procedure

-Recording of the administrative license

-Recording of the product itself

The Chinese authorities ask companies for a file for toxicological and analytical test of the products whose characteristics are the same at the recording of a pharmaceutical substance for a drug.

To date, the majority of the files presented by foreign companies to the SFDA have been rejected without explanations. These companies need Chinese partners who will do the procedures for them and will collect the right information and the right contacts.

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Distribution remains the principal problem

  • The entrance in Hyper and Super market is very difficult.
  • Specialized shops have difficulties for being referenced and have a risk of counterfeit
  • Get a place in a shopping mall is a real challenge today.
  • Online sale is nowadays positioned to low-end products.

China is a market of foreign brands and low-cost products consumption. 90% of the market is monopolized by big international brands.

Smaller manufacturers do not have de integration adaptability upstream, which conduce them encounter difficulties to be known and distribute their products.