The beauty industry is seeing robust growth thanks to China, according to a recent report by financial services company JP Morgan. As of 2018, China accounted for 14 percent of the global market, with demand for luxury products growing at a faster pace thanks to the country’s burgeoning middle class.
China’s beauty market
According to the report, China’s beauty sales grew by 12.9 percent in 2018, which is almost three times that of America’s sales growth of 4.6 percent. By 2023, China is predicted to overtake the U.S. as the top beauty market in the world even if growth were to slow. Luxury brands like Estee Lauder, L’Oreal, and Shiseido are reaping the biggest benefit from this boom. Estee Lauder had grown almost 67 percent in 2018. As of the first half of 2019, the company’s growth has already clocked over 40 percent.
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“What makes these companies so attractive is that they’ve been investing a lot more in digital over the past few years… There’s also the fact that they have an aspiration aspect or quality, which makes it more attractive,” Andrea Teixeira, senior equity research analyst at JP Morgan, said to CNBC. The ability to buy high-end beauty products is seen as a sign of status and class in China. As such, the growing middle class is spending a good chunk of their earnings to buy such items.
Another report, prepared by Morgan Stanley and AlphaWise, predicts that China’s share of the beauty market could grow by 66 percent over the next five years. This would translate into a sales increase of US$38 billion, which would be almost 50 percent of the global growth. The research also found that social media played a tremendous role in making Chinese women more conscious of beauty. In a survey, it was found that more respondents in the age group of 16-24 were spending money on these products compared to the older generations when they were of this age.
“Around 75 percent of those active on social media have started trying new or niche brands because of social media and buying a greater number of products… Nearly a third of respondents also said that social media is currently the biggest influence on their purchasing decisions; two-thirds indicated that social media would have the biggest influence on their beauty-purchasing decisions in the near future,” Dara Mohsenian, an equity analyst, said in a statement (Morgan Stanley).
China is undergoing a tremendous change in beauty standards, practices, and preferences. A big shift has been a move away from South Korean products. The introduction of South Korean drama, pop, and fashion created a craze for such products from South Korea for the past several years. However, the sales growth of such products saw a sharp decline in 2018.
“K-beauty is about conformity and collectivism. It’s about always having the same: the same face, same eyebrows, same look… Chinese consumers followed that for quite some time, but now more Chinese go abroad for their studies, travel and cultivate a strong sense of individuality … They are transforming from a more collective self-image to a more authentic one that dares to express themselves,” Emily Guo, a researcher at Cherry Blossoms, said to Inkstone News.
American beauty standards are becoming more popular in the country, as evidenced by the rapid sales growth of U.S. products. As long as both countries do not engage in bitter trade conflict and resolve their disputes as early as possible, the preference for American styles, especially West Coast beauty standards, is expected to keep growing.