Skin-care market shows its beauty | Shanghai Daily

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August 14, 2009

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Skin-care market shows its beauty

KIEHL'S, a cosmetics company founded in New York almost 160 years ago, held the unofficial launch of its first Shanghai outlet two weeks ago, hoping to cash in on a largely untapped Chinese market for skin-care products.

The launch in Westgate Mall came after sell-out crowds descended on Kiehl's first Chinese store in Beijing, racking up sales of 200,000 yuan (US$29,412) on the first day alone and emptying the company's icon products in a week.

"The popularity was far beyond our expectations," said Joanna Lee, brand director of Kiehl's.

"With the experience in Beijing and to ensure a proper launch in Shanghai, we decided to warm up the market in the city with consultation services and sample tests before the official launch of the store on August 28."

"Skin and hair treatment concept is well received in China as consumers are increasingly inclined to products that are believed to be natural and free of ingredients that tend to irritate sensitive skins," said Lan Jianxia, research director at Sinotrust. "The market still has huge room for development as consumer awareness grows."

Medicinal beauty and skin-care products account for less than 10 percent of China's 100 billion yuan cosmetics market, unlike about 60 percent in the West. But the market in China has grown by 18 percent on average annually in sales in the past decade.

Beauty and skin-care products which are effective in preventing skin problems such as allergy or hair problems are seen to have a bright future in China.

The world's leading cosmetics makers have shown they are keen on China's prospects, introducing skin hygiene lines that include L'Oreal's Vichy, La Roche-Posay brands, Pierre Fabre's Avene and Kao's Kanebo.

Kiehl's, which began life as Kiehl's Pharmacy, now sells skin-care and hair-care products ranging from lip balms, moisturizers, toners to shampoos such as Blue Astringent Herbal Lotion and Calendula Herbal Extract Toner.

Lee told Shanghai Daily that receipts in the opening week of the Beijing store equaled monthly sales by the firm's peers.

Cosmetics producers also stepped up efforts to market the treatment of Asian ingredients to lure customers.

Japan's Kao has marketed its Asience brand as an Asian formula for Asian beauties, which is based on ginseng, pearl and Camellia oil.

Kao expanded its Asience product line to the southern cities of Guangzhou and Shenzhen last month, after strong sales in its first year in Shanghai.

"Though traditional Chinese medicine is quite complicated because there are different, even unique, treatments for different cases, we tried to find a formula that works on most people," said Yuu Izumi, vice chairman and president of Kao (China) Research & Development Center Co.

Long time to mature

Kao's research arm has been conducting studies on traditional Chinese medicines for more than 30 years. It is working with a Chinese hospital's dermatology department on new herbal products.

Despite booming sales and efforts spent in developing the industry, analysts said it may take another 10 years for the market to fully mature in China.

"It will take time," said Peter Kleinschmidt, a member of the executive board of Beiersdorf AG, Germany's largest skin and beauty care company, which launched its medicinal skin-care brand Eucerin in 2006.

Westerners are in the habit of consulting pharmacists for professional advice on skin care hygiene, he said, and China doesn't yet have a fully developed system of local drugstores.

In fact, China's largest pharmacy chain, Shanghai-based Omey Pharmacy, runs barely more than 70 outlets nationwide after opening its first store in 2003.

"Sometimes I go to Watsons for skin-treatment products but I wouldn't think of going to a local drugstore," said Jenny Li, a 24-year-old bank officer. "I know very little about skin-care cosmetics sold in pharmacies because most brands, such as Avene, are available in cosmetics retailers."

However, beauty and health care retail chains, which are very popular in Asia Pacific, have had trouble with their expansion in China.

Cosmed, Taiwan's largest health and beauty retailer, which is owned by Uni-President Enterprises Corp, set up 10 stores on the mainland in the past five years, far short of the 100 outlets it targeted.

Traditional Chinese medicine is also playing a role in the growing medicinal-concept skin and beauty care market.

Southern China-based herbal shampoo maker Bawang International's profit rose 36 percent last year. Its market share surged to 7.8 percent from 0.7 percent in 2005, said research firm AC Nielsen. Bawang shares jumped 27 percent in their trading debut in Hong Kong last month.

Meanwhile, Beijing-based Tong Ren Tang and Guangzhou Jing Xiu Tang Pharmaceutical Co have developed their own skin-care cosmetics products.

"The market is still dominant by international brands," said Lan, as Chinese firms lack core techniques unlike their overseas peers.




 

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