Skincare Drives Prestige Beauty Industry In China

Skincare products make up 71% of prestige beauty sales in China, followed by makeup at 17% and fragrance at 12%, according to The NPD Group.

Anti-aging and whitening products are the drivers of growth in the skincare arena in China. The prestige beauty industry in China looks much different than it does in the U.S. Nearly three-quarters of all sales in China come from skincare, compared to just a third of sales in the U.S.

Chinese women, just like American women, are willing to spend money on skincare products that contain anti-aging elements. The average price for prestige skincare products is RMB503 and for prestige anti-aging skincare products the average price is RMB687.

"In China, women are willing to pay a premium for anti-aging skincare products and we are watching this category very carefully because we see it as the driver of the prestige beauty industry here," said Edward Wang, manager of China beauty, The NPD Group.

Whitening products are the second most popular skincare product in China, making up about 17% of skincare sales.

"Whitening products are next on our list of products to watch in China's beauty sector. The use of whitening products starts at a very young age in China and continues through adulthood. This is a product that is more popular in Asia and we see this trend continuing to grow and gain strength in the coming years," said Wang.

For the first time, NPD is able to track the trends in the prestige beauty industry in China with the launch of NPD's new, point-of-sale tracking service which tracks products sold in department stores. It complements NPD's existing portfolio of services tracking the beauty industry in the U.S., Italy, and France.

As a category, makeup is an emerging market in China. Sales of makeup were up 17% in the second quarter vs. the first quarter.

"Using cosmetics in China is relatively new; historically women did not wear makeup and so there is very little education on how to use it," said Wang. "Now with more Western influences, women are showing a greater interest in learning how to wear makeup, and there are even TV shows in China that teach women how to apply makeup. More and more department store counters have enlisted sales people to help women use and try makeup, and it's been well-received. We believe there is a lot of growth in this emerging market in China."

Fragrance is the smallest category within the prestige beauty industry in China. It makes up just over 10% of the total industry. Sales of fragrance were up and down over the first six months of this year, but the overall performance was positive.

Women's fragrances dominate the industry in China. Looking at the first half of this year, the women's fragrance market was nearly six times the size of the men's market, but men's fragrances captured more share from January to June. The average price for prestige fragrances in China for the first six months of 2007 was RMB518.

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