The China Cosmetic market is always likely to be an interesting and attractive prospect to global cosmetic companies, due to the country’s huge population. China’s cosmetic market has demonstrated impressive growth over the past few years, however, the complicated cosmetic regulatory system and its rapid amendments make the cosmetic import business full of twists, turns and difficulties.
It is very important to understand the regulation and permit application procedure in order to work out a business plan and schedule.
Background: marketing status of China cosmetic market
According to the presentation by Mr Mu Min (representative of China Association of Fragrance Flavor and Cosmetic Industries) at the Cosmetic Regulatory Conference at PCHI 2010 in Shanghai, there were 3,189 cosmetic manufacturers in China as of February 2010. Compared to the number assessed in July 2008 (3,734), the figure has dropped by around 15%. For these 3,189 manufacturers, around half of them (1,453) were located in Guangdong Province. Of the others, there were 304 in Zhejiang, 252 in Jiangsu, 224 in Shanghai and 100 in Fujian. More than 80% of manufacturers were located in the south east coastal regions. It is commonly believed that the decline in numbers of cosmetic manufacturers is due to merger and acquisition. Industry consolidation and re-structuring are set to accelerate. Although the number of manufacturers dropped from 2008 to 2010, the annual sales volume of cosmetic end products kept increasing. The sales volume of the China cosmetic market in 2008 was around RMB130 billion. It reached more than RMB140 billion in 2009, which matches the prediction of the Food and Drug Administration that the China cosmetic market would maintain its double-digit growth in the coming years due to the government’s continuous efforts to boost domestic consumption. The annual per capita consumption of cosmetic products in 1988 was only RMB0.33, from which point it increased 300 times within 20 years. The annual per capita consumption of cosmetic products in 2008 reached RMB100. However, it is still far lower than that of developed countries, such as Europe, US or Japan. In other words, it is commonly believed that the China cosmetic market is far from saturation level and still offers investment potential for new cosmetic players. With the growth per capita of cosmetics consumption, the trend for imported cosmetics remains on an incline, both in terms of volume and quantity. At the same time, foreign cosmetic companies have gained a firm foothold in the high-end and luxury segments.
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