China’s “Oriental Beauty Valley” – Asia’s Silicon Valley for the beauty industry has attracted widespread attention. The China Beauty Expo team takes a look inside this emerging industry cluster to share insights on what’s happening today and what it could look like tomorrow.
Oriental Beauty Valley Today
After only several years, China’s Oriental Beauty Valley has already welcomed more than 100 domestic and international cosmetics and biomedical businesses, including Kaibao Pharmaceuticals, Gala Group, Cosmax, Raas, Pechoin, ChicMax, Shanghai Hutchison Pharmaceuticals, Intercos, Gali Packaging and other well-known industry players. The industrial zone has also attracted flavor and fragrance suppliers, food testing providers, and international R&D facilities, creating one of China’s most dynamic biotech parks.
How Fengxian Became the “Oriental Beauty Valley”
Fengxian has used two main assets to create “Oriental Beauty Valley”: its attractive natural setting and strong industrial base. The district has ample green space, Shanghai’s largest bay national forest park, and the Huangpu River forest. The lush natural environment helps it maintain some of Shanghai’s highest air quality year-round. The district’s industrial base is strengthened by a broad set of skin care, perfume, chemical, health care product, and biomedical producers. Fengxian has successfully attracted beauty industry leaders like Cosmax, Jala, and KanS. Fengxian now is home to 25% of Shanghai’s beauty industry businesses and accounts for more than 40% of the city’s overall beauty industry revenue.
What Does It Take to Set Up In Fengxian?
Fengxian has high standards when it admits new businesses into its industry cluster. First, companies seeking to base themselves in “Oriental Beauty Valley” need to its overall positioning as a health and beauty industry cluster. Second, the district looks for strong players within their industry category. Third, it emphasizes the technical capabilities of the companies and their growth potential. For this reason, Fengxian has unveiled a series of policies and incentives to attract and support technology-focused small and mid-sized enterprises. Fourth, the district looks for companies that prioritize environmental awareness and friendliness. And, the district is prepared to veto the admission of enterprise that don’t’ comply with its environmental focus.
Incentives and Support for Oriental Beauty Valley Businesses
Currently, Oriental Beauty Valley supports its resident businesses in three ways. First, the district offers a range of preferential policies for land, talent, investment, and public services. Second, in terms of service, Oriental Beauty Valley prioritizes the needs of its enterprises in the form of “X+1” and “X-1” business services. X+1 refers to policies and services that have a higher impact than other zones. X-1 refers to management barriers to growth that are lower than other zones, resulting in twice the return from the same level of investment. Third, the government has used the best possible design to support and assure the implementation of market-oriented companies.
The Challenges in Building Oriental Beauty Valley
The first challenges in launching Oriental Beauty Valley has been creating adequate levels of visibility. To build awareness for the district and increase its influence within the industry, Fengxian district government has taken a multi-channel approach toward promoting the area. First, a district government leadership delegation visited South Korea, Japan Germany, France, the US and other major health and beauty markets to promote the Oriental Beauty Valley. In France, the valley signed a comprehensive mutual cooperation agreement. Second, the valley worked with 50 to 100 top cosmetic and biomedical companies to conduct business-to-business visits. Third, major local media, including the Shanghai branch of Xinhua News Agency, Liberation Daily, Xinmin Weekly, China Economic Herald, and other well know media promoted the valley through print advertising. The valley also participated in major beauty exhibitions in Shanghai, Shenzhen, Paris, and the US.
Oriental Beauty Valley has also been challenged by the industry’s fragmentation. Despite the fact that the health and beauty industry plays a relatively large role in the Fengxian economy, it remains a high fragmented with few common marketing channels. Therefore, the Fengxian district government and Shanghai Fengxian Economic Development Zone Biotech Park use the zone’s solid industrial base, high quality industrial resources, and positive investment policies to promote the rapid development of beauty and health ventures in the area. At the same time, the district has adopted a “1+3+X” promotional strategy. “1” refers to the establishment of a single office for the promotion and development of the health and beauty industry. “3” refers to the Oriental Beauty Valley Research Institute, the Oriental Beauty Valley Corporation, and the Oriental Beauty Valley Health and Beauty Industry Development Center. The Oriental Beauty Valley Research Institute was and organization created by the Fengxian District and the Shanghai Institute for Applied Technology to serve the health and beauty industry. The Oriental Beauty Valley Corporation is the Fengxian District’s first state-owned enterprise and responsible for the Oriental Beauty Valley’s core biotech park and other related industry zones. The Oriental Beauty Valley Health and Beauty Industry Development Center was created by a consortium of well-known health and beauty industry companies. The first members are 126 companies in the health and beauty industry who have combined resources and collaborated to promote development of the industry. “X” refers to the Oriental Beauty Valley platform, its laboratory facilities, and capabilities. The valley is confident that it will be able to accelerate the development of the industry by fully embracing the “one institute-one company-one center” concept.
Where is Oriental Beauty Valley Headed?
Oriental Beauty Valley will continue to develop as a leading industry cluster for the health and beauty sector. At the industry level, the valley will focus on attracting more investment in the health and beauty industry by adding more high quality enterprise tenants and consolidate industry players in a common area. The valley will also add services to accelerate the development of its health and beauty enterprises in the form of a R&D center, design center, testing center, exhibition center, marketing center, experience center, service center, and professional development center.
Are Clusters like Oriental Beauty Valley an Emerging Trend in the Cosmetics Industry?
The consolidation that Oriental Beauty Valley promotes helps to build out a complete industry value chain, enabling companies to connect with upstream and downstream partners. It also adds a level of competition that pushes companies to improve technology, products, and services. From the government perspective, these types of industry clusters enable it to centralize industry-specific policies and policy implementation and concentrate high quality public services and infrastructure. Currently, similar industrial cluster success stories have emerged in Silicon Valley, Beijing’s Zhongguancun, Shanghai Jiading Motor City, and Zhangjiang Hi-tech Zone. Fengxian has taken the first steps to replicate this type of success in the health and beauty sector.
Learn more about the latest trends in China’s cosmetic industry development. Visit China Beauty Expo 2017. Register today! https://goo.gl/N6Dcq5