Market Analysis: Soap market in China has a great potential
Being the economy with the biggest number of potential customers allows China to create good market opportunities for both foreign and domestic producers. In particular, soap market in China is gradually developing and attracts many foreign companies due to its stability and consistency.
Given that soap is a good, which used every day, regardless economic situation of a country or level of consumer income, the market is expected to be stable in the future. With 1.3 billion population, 24 soap bars annual consumption per capita and 0.42 euro unit price, the market is expected to bring over 13 billion annual revenue according to market analysis. Given different data on market growth rate, the average is supposed to be 10% per year. Stability and openness of the soap market in China allows foreign companies to enter. Although there are domestic producers, which dominate the market, demand for foreign soap is considerable.
The market is currently transforming with liquid soap replacing soap bars. Chinese customers are gradually shifting their preferences towards more convenient and enjoyable use of liquid soap.
Two of five soap market leaders are foreign companies
According to market analysis, 5 major companies dominate the market; two of those are originally foreign. They include Guangzhou Liby Enterprise Group, Nafine Chemical Industry Group, Nice Group, Procter & Gamble and Unilever. Guangzhou Liby Enterprise Group was re-founded in 1998 and succeeded to become a market leader due to considerable investment and strategic marketing. The company has both domestic and foreign clients including those from Europe, America and Asia. Nafine Chemical Industry Group is a fast growing company with over 10% annual growth rate and over 5% employment growth rate. The revenue generated in 2013 reached $449.3 million. Nice Group produces one of the most popular soap in China called Diao Pai. It was established in 1968 in Lishui city gradually constructing its factories across China. Now the company produces over 280,000 tons of bar soap. Procter & Gamble, accounts for considerable influence in soap market in China. It produces Safeguads soap, which is thought to be one of the most demanded among Chinese consumers. Unilever, being international market leader in cleaning and personal care products, also was able to attract considerable number of customers when entering market of soap in China.
Shifting pattern in consumer preference
As it was mentioned above, popularity of soap bar is gradually decreasing in China following the European trend, where soap liquid is mainly used. Chinese customers are shifting their preferences towards soap liquid, which is regarded by many as more convenient. Each type has its own advantages and disadvantages and differs from company to company. Some producers add cream into soap liquid to moisturize the skin, thought others put perfume and other additives, which may irritate the skin.
To conclude, soap market in China is supposed to be stable and not yet saturated, what makes it attractive to foreign companies. Indeed, of five existing market leaders, two companies are originally European and American. Given a large number of potential consumers, there is still space for new entrants. As long as Chinese customers are gradually building awareness of quality standards of a product, European goods are in high demand. However, it is crucial to understand trends in consumer behaviour, which is gradually changing. For example, there is currently a gradual shift from bar soap to soap liquid.
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