Cosmetics market in China has demonstrated faster growth in the last decade, with retail sales of the whole industry up nominally 18.7% year-on-year, according to the report on China’s cosmetic market in 2011 published by Li & Fung Research Center. Distribution network in cosmetics industry involve industry players, consumers and intermediaries who focus on the process of making cosmetics produced by manufacturers directly accessible to consumers. With the expansion of the cosmetics industry, distribution networks have displayed the characteristics of diversity and sophisticated segmentation.
Competitive Landscape: a larger pool faced with fiercer competitions
Sophistication of distribution network answers to the fact that a growing number of domestic and international industry players are entering China and vying for the market share. Veteran player US cosmetics firm Mary Kay planned to invest 25 million USD in building a distribution centre in China, which is poised to surpass the US to be its largest market by 2013. French cosmetics brand L’Oreal is reported to plan on expanding into 600 second-tier cities to reach broader customer base. At the same time, their leading position in China is being challenged by newcomers like Skin Food, Etude, Missha, Banila co, to name a few. Foreign cosmetics have upheld prestige in mid- to high-end and luxury segments and are keen to penetrate the mass market through the introduction of middle-range sub-brands.
In recent years, a number of domestic cosmetics brands have risen to fight against their foreign counterparts. Domestic brands are sparing no efforts regain their reputation in the domestic industry and they receive increasing attention in the low-end market. However, they have displayed ambition to compete with their foreign counterparts in high bracket by catering to Chinese people’s special preference for beauty products. Famous for its environmental-friendly brand image and traditional Chinese medicine component, Herborist is a model role in this range.