“The traditional business landscape is being disrupted. A new world is coming to life. We must identify new entry points and our coordinates in this shifting landscape. This will position us for the future,” China Beauty Expo Executive Vice President and Secretary-General, Sang Ying, predicted during her keynote address at 2019 China Beauty Expo (Shanghai) Elite Summit. The theme of the March 29th event was “New Coordinates”, and it drew more than 1,000 senior executives from beauty brands, retailers, distributors, embassies, and media. Sang Ying identified 10 new coordinates within the beauty landscape.
Generation Z: New Consumer Force
Generation Z -- this emerging generation of post-2000 consumers are emerging with significant spending power in the beauty market. According by a recent report released by Tencent, the average expenditures among the post-2000 generation is more than twice that of their post-1990s counterparts. The report finds that the post-2000 generation is also more financially independent. These consumers are willing to spend and have a clear understanding of what they can afford. They live within their means and are sophisticated shoppers.
In China, most Generation Z consumers are only children. They are more social than previous generations. According to the report Media Consumption of the Post-2000s Generation, Generation Z members use multiple social media apps. 75% want to spend more time with their peers and prefer interactive, experience products. Video game producers have responded to this need by providing “danmaku comment” features that create a co-play experience. Post-2000 consumers generally participate in multiple social circles based on interests.
Growing Market Polarization with Rising Lower-tier City Buying Power
China is experience growth at both the high and low end of its markets. Luxury brands have seen their market shares grow by as much as 30%. Meanwhile, ultra-affordable e-commerce platforms like Pinduoduo are growing rapidly. The beauty market has experienced similar polarization with high growth among premium brands like YSL, Lancome, and Shiseido. Affordable brands have also gained in popularity.
The report, Sophisticated Consumption of Chinese Families, published by VIP.com and Tencent at the end of 2018 revealed that younger consumers are increasingly rational shoppers. Tier 1 and Tier 2 city shoppers tend to spend more on premium brands while those in Tier 3 and Tier 4 cities focused on affordable products with a high “price-performance” ratio.
Live-Streamed Celebrity Content Drives sales Growth
Life streaming celebrities gained popularity in the second half of 2018 as they demonstrated their ability to drive rapid sales growth. Viya, a leading streamer on Taobao, contributed to RMB 2.7 billion in sales revenue in 2018. Li Jiaqi, a beauty blogger nicknamed “Lipstick King” helped sell 15,000 lipsticks within 15 minutes of live streaming.
But live streaming isn’t easy. CBNData’s 2018 report on content marketing emphasizes that high quality KOLs, a deep understanding of the category and consumer preferences are required to drive sales success.
During China Beauty Expo 2019, China Beauty Expo (CBE) will partner with Taobao Live, Lamabang.com, and Smartlion.cn to live stream the event. CBE has invited 52 live streaming celebrities to stream the event.
Innovative Crossover Branding
Beauty brands are experimenting with new crossover strategies to attract young consumers. They used elements from the Forbidden City to create innovative crossover offerings. Similarly, Maxam teamed up with White Rabbit, a famous candy brand, to launch a lip balm. Chando Color and Dicos, a fast food chain, joined hands to offer limited edition products.
Don’t Give Up on the Offline Market
Few companies have gained equal levels of success online and offline. Many brands have begun to neglect their traditional channels in their race for online success. Still, in the beauty market 70% of beauty brands sales are still made offline.
Since 2017, the China Beauty Expo has aggressively expanded its focus on online marketing. At the same time, the expo continues to strengthen its offline networks and events. During the second half of 2019, CBE will hold the Five Northwestern Provinces Summit in Xi’an in July, the Central Plains Region Summit in Zhengzhou in September, and the Southwestern Provinces Summit in Chengdu in October. To support the supply chain, CBE will host the International Innovative Packaging Summit at the end of August in Hangzhou. In November, CBE will organize the Industrial Leaders’ Summit in Guangzhou.
Established and Emerging Local Brands are Investing in Innovation
Established Chinese cosmetics brands are confronted by a pool of new players such as Perfect Diary and Home Facial Pro. These new entrants have mastered online channels to capture market share. They understand online community-building and invest in content to grow their brands. But large incumbents in the market like Jahwa, Jala, CHICMAX, Pechoin, Inoherb, PROYA, UNIASIA, and DANZ. are also adapting to new market demands,
Competition Increases from Imports
In 2018, the Chinese government reduced tariffs, opening the door further to imported brands. The growth in competition from imports is expected to continue in 2019. As one benchmark, the number of international exhibitors at China Beauty Expo 2019 has approached that of local companies for the first time.
New Retail Formats Refocus on Value
New retailing has rapidly reshaped the market landscape in China. For example, giants, L’Oreal and Procter & Gamble are both exploring new retail models. In 2018, pop-up stores stood out as one of the most visible new retail developments.
China Beauty Expo will hold the 9th edition of the Chinese Cosmetics Retailing Conference on May 19, 2019 with the theme, “Bringing Back Value to Retailing”.
Top Local Brands Catch Up with International Giants
Local Chinese cosmetics brands are investing heavily in R&D to catch up with international competitors. Local firms also are partnering with international research institutes to access cutting-edge technology and boost the quality of local products.
Big Data is Capturing Consumer Insights and Driving Technological Development
Consumer data is becoming an increasing important and direct input in the R&D process. China Beauty Expo’s 5th International Cosmetics Technology Conference will create an opportunity share insights and technological advances from around the world.