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Opportunities in the cosmetics industry in Hong Kong and China

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Introduction

OPPORTUNITIES IN THE COSMETICS INDUSTEY IN HONGKONG AND CHINA Prepared for Ms Laura Lee President Elegance Ltd, New York Prepared by Jerry Lo Sales Manager Elegance Ltd, Hong Kong April 29, 2003 Analysis of Hong Kong market Demand of cosmetics of Hong Kong market The main products of cosmetic market are Skincare product, Make-up product and Perfume. The sales of them are showed as the following graph. Fig.5 source: http://www.cosmetic-perfume.com/statistics.htm ,The Cosmetic and Perfumery Association of HK LTD. In the past three years, from 2000 to 2002, skincare products dominated the cosmetic market, the second runner-up was make-up product and the following was perfume. Both of the three products recorded a decline in 2001. The decline was settled down and the sales of skincare products in 2002 (1320 millions) is higher than that in 2000(1267 millions). The growth rate of skincare products is higher than the rest products in the cosmetic market. Also, it is the only cosmetic product to show a positive growth rate within the last 3 years. The market for skincare product is highly competitive due to the profitable sales. Perfume and make-up products are still in the downturn after 2000. The sales of perfume in 2002(223 millions) is just one-third of that in 2000(603 millions). The sales of make-up products in 2002(426 millions) is two third of that in 2000(686 millions). The growth rate of Real GDP and real wage index in Hong Kong The growth rate of real GDP and real wage indicates the purchasing power of customers. ...read more.

Middle

In 2001, as 80% of cosmetic demand came from women aged between 30 years old to 54 years old. So, cosmetic industry is most affected by women. However, in 2031, the population pattern will vary a lot, the male and female population above 45 years old have a significant increase. There is 45% increase in the whole population of age group between 45 years old to 79 years old. The female population has 23.5% increase from 2001 and is larger than the male counterparts. All of these show that there is more women in Hong Kong and there will be a potential demand for them on cosmetic. It is measured that the sale of cosmetic product will increase further and there will be a 28.56% increase in the total sale of cosmetic industry, especially and female market. So, the future population pattern will affect the demand of cosmetic industry directly as women population will increase by 4.67% a year. Analysis of China market SALES The past and predicted sales of cosmetic are summarized as the following graph: Cosmetic sales in China (billion$) Source: Hong Kong Trade Department Council The sales of cosmetic product kept on increasing since 1982. There was a greatly increase of cosmetic sales from last 10 years and it is expected that sales of cosmetic product will grow every year. Figure ( ) shows that cosmetic sale in China are increasing from year 1982. The growth rate is increasing every 3 years. ...read more.

Conclusion

Promotion: A series of big promotion will be carried out to make our products become popular within the first 6 months in HK and mainly in China. Besides sponsoring a number of big fashion shows in the coming year, holding cosmetic workshops and skin consultations regularly, our products will also be advertised on different kinds of mass media including newspapers, magazines, TV, radio and Internet. We will invite a number of superstars to be our products' representatives and our first proposed target is Miss Maggie Cheung Man Yuk. On the other hand, there are also some pricing strategies to encourage larger amount of consumption. Place: Our production plants will be shifted to GuangDong with technologies and skills transferred from USA so as to lower the production cost. On the other hand, products should be sold in large shopping malls like Sogo and Time square in HK, as well as in our retailing shops nearby our fashion department stores and our special counters in some beauty salons and beauty schools. I suggest our company to establish a large consultation center in China. It is because the cost of establish a large center in China is lower than HK. The large consultation center will provide value-added services, such as make up demonstration and professional advice on skin care. Market: Our market will focus on the middle to high income group with monthly income of $25000 or above in HK and $5000 or above in mainland China who are more trendy, higher educated, more aware of appearance and willing to spend on cosmetics. Our target group will be aged around 25 to 60. ...read more.

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