COSMOPROF ASIA – GETTING YOUR BRAND INTO CHINA
These days you don’t have to be an investment banker to realize that China has seriously come of age over the last few years. Doors which were once firmly closed for business are now creaking open as its citizens and businesses reap in the rewards of the global game that we call capitalism. Not being a big ‘numbers’ girl I had just smiled and nodded to myself each time I read of double digit growth, increased productivity and balance of trade, that was until I went and saw a glimmer of it for myself. Suddenly China was real to me and the opportunities that existed within this vast, populous nation splayed out in front of me like a fast flowing river. It was time to get in my boat and go for a ride…
After a nine hour plane ride from Sydney I landed in Hong Kong ready to take on COSMOPROF ASIA 2010. The event has a huge following in this part of the world with up to 40,000 people expected to pass through the three-level exhibition over the three days. So, with bags dumped at the hotel and donning a pair of flat shoes I prepared to join the crowds looking for the ‘next big thing’ to hit the cosmetics market.
This year market the 15th Cosmoprof Asia, an event that brings cosmetic brands, equipment, packaging and market expertise together under the one roof. It is a treasure trove for beauty insiders looking to cement relationships, uncover new products and bag a bargain or two. Brands on display were typically small to medium sized looking to sign up new distributors or to showcase their new formulations to the Asian market. Visitors were a mix of spa managers, health and beauty store owners, brand developers, manufacturers, students, beauty therapists and retailers all looking for a way to bring new technology and international brands into China. What I wanted to know was how to achieve that and lucky for me, Cosmoprof had some experts on hand.
To anyone living and developing cosmetics in Australia (with a population density of under 3 people per square KM), China with over 130 per square KM sounds like a gold mine. However, many have tried and failed to hurdle over the import requirements and have retreated back with their tail between their legs. The answer, it seems is to enter via Hong Kong……
I was excited to hear that at least on a logistical footing doing business in China had come on leaps and bounds. Extensive road networks now link many of the second and third tier cities to the outside world making it possible to send a parcel from Beijing to Tibet in less than a week (it used to take over 2 months). Internet usage and phone coverage is also booming – did you know that there are over 420 million internet users in China and of them 180 million shop online? It sounds like a business gold mine! On top of that demand for imported cosmetic products is huge as many people see these products as aspirational purchases and status symbols when compared to local brands. If it sounds too good to be true it is, unfortunately there is a catch.
Importing brands into China is really difficult as legislation on labeling, ingredients and claims is still changing quite rapidly. On top of that there are the import duties and legal costs of setting up and protecting distribution channels and Intellectual Property overseas (this is true for any country). All of this makes the price and time taken to conform very high and for many smaller brands it ends up falling into the ‘too hard’ basket.
As I mentioned above, many brands start off their China story in Hong Kong where importing is easier and the language barriers are less problematic. From there it is advisable to set up with a local consultant or distributor who has links and experience of moving product through into mainland China. Not all distributors will be able to do this so it pays to ask for real examples and talk to brand owners who have made a success of importing. Your distributor may suggest you up your online presence or opt for a model that sells through a shopping channel rather than try for shelf space early on. This still requires you to adhere to import regulations but could lower your inventory and distribution costs in the early stages.
In addition, you may need to think about re-working your advertising and marketing story for the Chinese market, not only to fit in with legislation but also to appeal to your new target market. Many young Chinese women are looking for strong role models who can multi-task their roles of mother, wife and business women successfully, local characters and celebrities may help your brand to build a deeper connection with the market.
Another important thing to think about is price point. China’s middle classes are earning between 60-100,000 Yuan per year (AUD $9-15,000). Is your product affordable? What is your competition offering? What are your new costs? At present just over 25% of cosmetic sales are from imported brands with those coming from Japan, Europe, Korea and the USA the most popular (Shiseido, Olay, Johnson and Johnson, Laneige). The segment is fast paced and hungry for innovation making it perfect for medium sized private label if the import barriers can be met which is no small feat!
For me Cosmoprof was exciting, manic and laden with opportunity for anyone with the stomach for adventure. If you feel up to the challenge you may like to talk to some of the consultants that were featured during the event (see details below). The Dragons den is opening, dare you look inside?
Useful Contacts For Potential Importers.
1) Huang Qiang, President, Hangzhou Xin Ziyang Cosmetic Co Ltd
Mr Qiang represents one of the most influential agents in mainland China importing Elizabeth Arden, Max Factor, Kose, Menard, Dodo and many more. They have retail lines in over 1000 cosmetic stores and 60 department stores throughout Zhejiang Province.
2) Lu Jian, CEO, Deep Wisdom Innovation Co Ltd
Mr Jian set up his consultancy company to assist in brand development and marketing. He also works with foreign brands looking to enter the Chinese market.
3) Cindy Zhang – CEO DATA 100 Market Research Co Ltd.
Cindy’s company compiles reports on the size and shape of the Chinese market including consumer profiling and brand penetration.
4) Australian Trade Comission:
Room 2404, 24/F Harbour Centre, 25 Harbour Road, Wanchai, Hong Kong,
Tel: 852 2588 5300 e-mail firstname.lastname@example.org
A department of the Guangdong Beauty and Cosmetics Association that can assist companies in getting their hygiene permits from the state food and drug administration of PRC
510 Oriental Finance Building, No 140 Dong Feng West Rd
Guangzhou, China, P.C 510170