Chinese beauty industry betting big on localization to enhance customer engagement, says GlobalData

While the Chinese beauty (C-beauty) industry is dominated by global brands, local brands are quick to introduce suitable products in line with the evolving consumers’ preferences. Similar to J-beauty, C-beauty is steeped in local tradition and heritage, including ingredients and rituals from traditional Chinese medicine. Brands are banking heavily on eye-catching product claims, trendy ingredients, quirky packaging, and relying on social media and collaborations with key opinion leaders (KOLs) to enhance customer engagement, says GlobalData, a leading data and analytics company.

GlobalData forecasts the Chinese cosmetics and toiletries (C&T) market to grow at a compound annual growth rate (CAGR) of 6.2% from US$72.6bn in 2019 to US$97.9bn in 2024.

Sumit Chopra, Consumer Research Director at GlobalData, says: “What makes China a high-value market is patriotic consumerism and rising affinity for local brands, especially among the younger generations. Brands too have realized that they cannot succeed in the post-pandemic beauty market with the past arsenal. As a result, personalization, aesthetic shift and a hyper-digitized retail reality gained further momentum during the COVID-19 pandemic.”

Trust in local products among the Chinese customers rose during the COVID-19 outbreak and the subsequent weeks. In the 10-week Coronavirus (COVID-19) Tracker Consumer Survey (26th-31st May, 2020) series, the percentage of Chinese respondents stating products made in China are completely trustworthy increased from week 1 to week 10.

One of the contributing factors for this is the fear of contracting the virus from products shipped from other countries. Local companies like Perfect Diary took a proactive approach in broadcasting safety measures to adopt during the COVID-19 pandemic to its customer community using private traffic over social media. These measures resonated with consumers, strengthening their bond with the brand during these challenging times.

Chopra adds: “Right from C-beauty, J-beauty to K-beauty, all brands have suffered to a different extent. The impact was directly proportional to a brand’s ability to weather the crisis, be it in terms of budgets, digitization abilities, AI skin testing, strong social media presence, openness to alternative sales channels or other new retail tools.”

Consumers are increasingly opting for touch-free experiences and have been more receptive to online shopping. Local manufacturers have been developing virtual systems for consumers to try make-up products. For instance, Chinese beauty technology company Meitu has developed an augmented reality tool, which can generate virtual make-up effects via its virtual make-up editor Meitugenius and allows users to try over 20 styles. Brands can utilize the platform for free and also include purchase links, which redirect consumers to brand websites and facilitate online product purchases.

Chopra concludes: “Future opportunities for C-beauty will be to explore unique products with an amalgamation of Western and local culture to attract consumers, who are open to products influenced by Western culture without forgetting their cultural roots. While existing brands can continue to focus on long-term growth prospects by relying on online sales channel as a primary route as consumers will remain risk-averse post pandemic, new market entrants can strategize their entry by collaborating with specific key opinion customers and credible KOLs to bring out the brand message effectively.”

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