Skin Care Market Shanghai

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Skin Care Market Shanghai

Skin Care Market Shanghai

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Skin Care Market Shanghai

I lived in Hong Kong and Singapore in the late 90s and early 2000s. This marked an amazing opportunity to become entrenched in the Asian culture.  I also had the opportunity to visit Beijing.  During the WPP visit, Deepender Rana coined a phrase ‘A different Kind of Youth’.  The WPP executive described how the youth are self-absorbed, and focused on pursuing their dreams. This a vastly different from the culture I experienced when living in the region.  The business culture is also different from what I remembered in Hong Kong.  Hong Kong is focused on maintaining business relationships with the western region versus what I experienced during our Global Study Tour.  I would like to write about creating a beauty company and how the visits to Johnson & Johnson, WPP, and Alibaba impacted the way I would approach as an entrant into the beauty market in China.

The beauty industry’s growth has been tremendous over the past decade.  The current and future generations are embracing new beauty products, treatments, and services. Companies are leveraging technology distribution channels to market customers in innovative ways.  There are many factors that an investor or company must consider when introducing a new beauty service or product. The subsequent sections will explore the introduction of a concept beauty company ‘Black Swan’ from Market trends and consumer profile, the ‘Perfect location’, human capital, distribution channel, intellectual property (IP) rights strategy, and government policies and regulations.

Market Trends and Consumer Segmentation

The Chinese Communist party unifies the country from a geo-political sense, socially, and economically.  Foreign companies must delve deep to under the disparity and fragmentation of the markets to see that this is not a uniform and homogenous market(s). The irregular economic growth rates in the various Tier 1 versus Tier 2 versus Tier 3 cities exacerbate the economic and social differences that have existed for centuries.  Despite this fragmentation, China is one of the largest markets for U.S personal care and cosmetics exports.  Chinese consumers are more sensitive to their life quality, and health (South China Morning Post, 2016).  WPP coined a phrase ‘A different Kind of Youth’.  The younger generation wants to see features in their body and skin care products. The wealthier segment of the population will be able to purchase the luxury brand skin care products, and will crave a more ‘bespoke’ experience.“With an estimated $50 billion in domestic sales in 2015 and 7% to 10% annual growth predicted in 2016 and beyond, China is projected to become the largest market for personal care and cosmetics products globally in the next five to ten years.” (U.S. Department of Commerce, 2016) Within 10 years, China has the potential to become the largest market for U.S. exports.   Today, most of the consumption of cosmetic products are in the tier 1 cities.  Once penetration occurs to the tier 2 and tier 3 markets, the revenue will increase remarkably.  Traditionally companies have focused on women, but another segment to consider are men.  Investors are commenting that the cosmetic industry in China is like a cash money machine. “There is a rising opportunity in the male cosmetics market, which is growing at a faster rate than the female market.” (Cosmetics China, 2016)