Cosmetics sales in China continue to boom, despite global down-turn

By Simon Pitman

- Last updated on GMT

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Latest data from the Chinese government show that the market for cosmetics has continued to grow in excess of 17 per cent for the first nine months of 2009.

Figures from the National Bureau of Statistics of China show that in September the national retail market for cosmetics grew by 13.7 per cent to reach CNY 6.52bn (€637m), while in the nine months ending in September the figure rose 17.6 per cent to CNY 52.8bn.

The figures compare favourably with the country’s GDP growth, which was up 7.7 per cent in the first nine months of the year, to reach CNY 21.78 trillion, showing that growth rose 0.6 per cent in the third quarter, compared to the first six months of the year.

The cosmetics industry has long been tipped as an area of significant potential, and in September its growth was only outpaced by four other retail categories: car sales, which rose 44.5 per cent; Chinese medicines, which rose 23.6 per cent; furniture, which rose 34 per cent and apparel, which grew by 19.1 per cent.

Cosmetics sales outpace retail growth

Overall sales of consumer retail goods in China rose by 15.1 per cent during the first nine months of the year to reach CNY 8.96 trillion.

Likewise, in line with the upward trend in both the country's economic growth and retail sales, the bureau pointed out that the decreasing price trend witnessed in the first six months of the year has now been reversed.

Overall the consumer price index decreased by 1.1 per cent in the first nine months of the year, but breaking this figure down, prices for health and personal care products kicked the trend, rising by 1.0 per cent during the period.

Consumer prices recover in latest quarter

Although the bureau did not break down the consumer price change in the quarter ending in September, it said the consumer price index for this quarter rose by 0.45 per cent.

In the cosmetics category, growth has been driven by strong demand in the hair care and skin care categories, with men’s grooming products proving ever-more popular, alongside premium and luxury products.

Despite the China economy slowing due to the effects of the global downturn on heavier export industries, Chinese consumer spending has remained robust, with growth tailing off very slightly in the first six months of the year.

Incomes fuel consumer spend

Indeed, the bureau’s statistics show that incomes in China are continuing to rise at a world-leading pace, with per capita disposable income increasing by 9.3 per cent in the first nine months of the year, backed by a rise of 10.2 per cent in salaries during this period.

On the down side, much of the growth has been focused on urban areas, where many factory workers have been affected by falling demand from export markets.

To address this problem the Chinese government introduced a stimulus plan to concentrate on the development of domestic infrastructure projects.

Investment from that plan is now beginning to be withdrawn, leaving the economy more exposed to global economic conditions.

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