Opportunities in the cosmetics industry in Hong Kong and China

In the past three years, from 2000 to 2002, skincare products dominated the cosmetic market, the second runner-up was make-up product and the following was perfume. Both of the three products recorded a decline in 2001. The decline was settled down and the sales of skincare products in 2002 (1320 millions) is higher than that in 2000(1267 millions). The growth rate of skincare products is higher than the rest products in the cosmetic market. Also, it is the only cosmetic product to show a positive growth rate within the last 3 years.

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The market for skincare product is highly competitive due to the profitable sales. Perfume and make-up products are still in the downturn after 2000. The sales of perfume in 2002(223 millions) is just one-third of that in 2000(603 millions). The sales of make-up products in 2002(426 millions) is two third of that in 2000(686 millions). From Figure (), it shows the nominal wage is increasing rapidly from 1990 to 1997. From 1997 to 2001, the nominal wage keeps steady, around 150. And the real wage keeps stable from 1990 to 1998, around 100. Started from 1998, the real wage are increasing slowly.

Also, From Figure ? , it shows the growth rate of real GDP from 1997 to 2001, fluctuation is large, the lowest real GDP growth rate is -7 at 1998-03, And the growth rate of real GDP started to increase and positive from 2001. Both the data of wage index and real GDP helps us to analyse the purchasing power of the customers. As the nominal wage keeps stable and real wage keeps increasing in the recent years, it shows that people are more able to buy unnecessary things like cosmetics product, and increase in wage encourage people to buy high-priced product .

The real GDP growth rate increased from negative to positive, it meant the economy become better and induce people not to save money but consume more. In cosmetic industry, competition is very keen. In order to analyze the competition among the cosmetics producers, we will identify the types of customers that have been targeted by the existed cosmetics producer. Then, we will examine the marketing strategy of the existed producer and the product trend of the cosmetics industry. There are several kinds of target customers in the existed cosmetics market.

That is, Children (aged 1-10), Young people (aged 11-19), women (aged 20-59) and elderly (aged above 60). Among these target customers, young people and women are the target of most cosmetics producer, and the elderly are most neglected by cosmetic industry. Most of the cosmetics producer set their marketing strategies according to their target customers. For example, if their targets are young people, their products must be set in a lower price. And, for Women, as most of them have enough purchasing power to purchase.

The price of cosmetics can be arranged to a higher level. The price of cosmetics can be arranged to a higher level. Therefore, the market of cosmetic industry is then divided into three types. That is, the high-priced market (For example, SK2 and Lancome), middle-priced market (For example, Fancl House and H2O+) and low-priced market (For example, Clean &Clear and Pounds). As different customers may have different demand in cosmetic, prices will be the main factors for them to choose the cosmetics product.

That’s why some other competitors may have different line of production to suit different customers. For the product trend of the cosmetics industry, the exploration of a new item mainly concentrates on improving the skin problems. As customers may have different kind of skin problems which will alter according to their age. For example, young people may need more natural type of cosmetic and oil control skin care products as they are in puberty.

Women may need to have more hydrogenised and whitening masks for their skin. For children, more nutritious cream may be needed to protect their skin. Therefore, the product trend can be changing vastly, sensitive sense is a must for every cosmetics producers. In order to gain a place in the cosmetics industry, a new entry needs a different character compared to the existed producer. Therefore, elderly who are most ignored in the market can be targeted by a new entry.