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Skincare Market in China
Analysis of the beauty market in China
At first, the emergence of the Chinese middle class presents an opportunity for the development of the market. Indeed, this Chinese class saw its revenues increase and thus its quality of life. The Chinese middle class has new expectations and behaviors in the market promising a bright future for the industry.
This surprising growth of the market in relation to Western countries stems from the fact that the development of these two parts of the world did not develop in the same way and at the same time. Indeed, during the revolutionary years of the country, the market for beauty products was virtually non-existent. It is therefore a target of consumers that have not grown with the necessary gestures and knowledge on the market, justifying the strong interest that the Chinese have developed for these products over the last years.
Whitening, skin care and anti-aging products
Popular market trends involve significant feminine attention regarding skin whitening, skin care and anti-aging products. Recently, the demand for hair care products has increased dramatically.
The 20/30 age group is the main consumer group in the market. In addition, individuals born after the 1980s seem to be in a better position to make purchases to enjoy themselves and thus become the vehicle for growth in the industry.
In 2016, the craze for skin care products took a new turn. Consumers now prefer to buy products with higher prices or high-end brands. This enthusiasm is in line with the above-mentioned idea of the growing awareness of personal well-being and the increase in disposable income following the emergence of the Chinese middle class.
More consumers are attracted by the purchase of premium or luxury brands for their personal consumption, synonymous with quality. The purchase of international brands is facilitated by online platforms. The increase in foreign purchases also made it possible to better know the premium brands and develop sales in China.
A highly competitive market
The market is heavily saturated with countless national, Asian and international brands wishing to enter the market.
L’Oréal China remains the market leader in skin care with a market share of 9% in 2016. The brand offers consumers a wide range of products that meet the diverse needs and trends of consumers. Indeed, the brand offers mass products and premium products. By diversifying its range and its product offering, L’Oréal, has a wider target than its competitors.
A market driven by online commerce and social media
The rapid growth of online shopping and accelerated penetration of mobile devices have enabled social media to become an important marketing tool for brands to promote their products and interact with their customers.
China is one of the most important markets for the sale and distribution of beauty products online. This channel of distribution has become a lever facilitating purchases for individuals.
There are generally four online selling platforms for skin care in China:
- Self-operated online platforms
- Online stores on third-party integrated e-commerce platforms such as Tmall, JD.com and Amazon
- Third-party online cosmetic platforms such as Watsons or Sephora
- Cross-border e-commerce platforms such as Tmall Global, JD Worldwide
The reputation of a brand contributes greatly to its success in China. Social relations are very important in Chinese culture. Recommendations and positive word-of-mouth from other individuals can strongly affect the perception of the brand and its purchase.
Trends in the market to be exploited
The skin care market is becoming increasingly complementary to that of health. Indeed, the trend towards “healthy” is increasingly present in our environment is affected many sectors including that of beauty products.
This trend makes the consumer more aware of his consumer environment, his behavior and his expectations.
These behavioral changes allow brands to see several opportunities on the market:
Verification of Ingredients and Components:
- Preference for natural products and organic products
- Increasing interest in brands of dermo-cosmetics
- Products containing sulfates and paraben are considered to be harmful
Awareness of pollution and UV rays:
- Purchase of products related to the protection of the skin
- Interest in whitening products
Constant prevention research:
- Anti-aging products for young consumers
- Acne treatments
Considerations for all cosmetic brands wishing to develop their activities in the Middle Kingdom. Some companies have already jumped on the trend of skin care to gain market share in the sector.
In this second part, we will see how L’Oréal managed to impose itself on the market by adapting its strategy to China.
L’Oréal’s adaptation strategy: a winning strategy
The brand is already very present on the Asian continent, which represents 19% of its total sales. The company is positioned as a leader in several product categories, luxury, makeup, dermo-cosmetics and skin care.
With a portfolio of more than 20 brands, and a desire to understand the Chinese market, the brand has successfully developed an adaptive strategy, placing it as a leader in many areas.
With the help of a research and research laboratory located in Pudong and the acquisition of local brands, the company aimed to get closer and understand its consumers. The growth of the market allows it to offer individuals innovative products and meet their expectations and to make a name in the industry. (other new about L’Oreal)
Development of an online distribution strategy
As said before, China has embraced the arrival of online commerce and has become a juggernaut in the distribution and development of sales and social commerce platforms. The company quickly took its place on these platforms to offer a diversified offer to its customers and develop its online presence. Indeed, an institutional website and social media are important elements to increase brand awareness.
The brand was one of the first international brands to open a store on the Tmall sales site and realized more than 20% of its turnover via online sales.
No Report about Wechat have been made, but we think it will be the next big ECommerce Boom.
Development of its reputation and reputation via social networks
China is a country where digital has become an important part of the daily lives of its people. With more than 900 million Internet users connected to the various social platforms, developing its presence and brand image digitally is compulsory for brands wishing to develop in the country. The group has very well understood this notion of digital and integrates it perfectly in its various communication strategies since digital represents 8% of the communication techniques of the group in China.
To get closer to its consumers, the company launched last year a beauty application called Makeup Genius that automatically detects a face and thus offers a palette of the makeup of the brand. The user has the possibility to try several products of the mark during the editing of his photo. The application has more than 14 million consumers.
Online reputation is an important factor in the development of your activities on Chinese territory. In this section, we will see how interesting it is for you to position yourself on these online sales platforms.
How to open a store on JD.com
JD Worldwide, is aimed at companies with the necessary liquidity to develop. It is a huge investment to make and it takes time.
JD Worldwide is the online sales platform service for foreign brands wishing to sell in China. The company has a strong policy regarding counterfeit products and many checks are carried out so as not to distort consumer sales.
Criteria for opening a store to the platform:
– An entity registered outside mainland China with a capital of more than 500,000 RMB ($ 76,000).
– Qualifications in wholesale and retail sales abroad
– Be the owner of the trademark or the authorized agency
– Possess the necessary stock.
Three possible modes on the site:
– Franchising Business Partner: Allows suppliers to build a JD store and use warehouses and assumes full responsibility for warehousing, delivery and customer service.
– Business Partner License: The seller can configure the store and the complete packaging in order to ship the order. JD will oversee customer service and process invoices.
– Self Operation Partner: The seller can sell on the JD platform. However, warehousing and delivery must be managed by the traders themselves.
The procedures for opening a store on this type of platform are sometimes complicated and knowing how work interlocutors is an important element in setting up your strategy. Using an intermediary company, which will act as a field partner, is an ideal solution for your development because it will help you open your shop and optimize it and will assist you in administrative and commercial procedures, supply management and the payment tools to be put in place
Gentlemen Marketing Agency
Gentlemen marketing agency is a digital marketing agency based in Shanghai for a few years. The empire of the environment has a system of consumption different from that of the West, adapting its strategy and its marketing campaigns is an important step to generate and retain consumers. Our mission is to provide you with an accompanying service in your efforts for the success of your development in China