In 2014 the market stood as the second largest in the world, behind only the United States, with the total volume of retail sales for enterprises with turnovers in excess of RMB20m (US$3m) coming in at RMB172.47 billion, reflecting annual growth of 12.3% according to the latest report from Report Buyer.
Although the enormous growth of the market has brought China to the forefront of the global industry, there are signs that the segment is starting to mature, particularly as the 2014 growth rate was the slowest since 2005.
Tier two and three cities drive demand
However, the report highlights how the unceasing demand of smaller cities and urban areas – known as tier one and tier two cities – are expected to buoy further robust growth in the future, as the market also shows further signs of maturity in the bigger cities.
In view of this, the research shows that the projected value of the cosmetics market in China by 2017 should reach a total of RMB245.3 billion (for companies in excess of RMB20m), representing a CAGR of 12.5%.
Skin care and make-up continues to comprise the lion’s share of the market, accounting for 61.2% of the total market in 2013, and a figure that has the potential to growth further as new sub categories and niches continue to evolve.
Look out for men's grooming!
In particular the men’s skin care market is expected to grow significantly. It accounted for 4.6% of the market in 2013, coming from nowhere a few years prior, and is expected to grow rapidly as new product launches continue to hit the market at speed.
The market also continues to be dominated by international players, who command approximately 86% of the total volume of retail sales for companies with turnovers in excess of RMB20m.
The big names that dominate continue to be France-based L’Oreal, as well US firms Estee Lauder and Procter & Gamble, together with Japan’s Shiseido.
But China-based companies are continuing to carve out bigger revenues as they grow significantly in the tier two and three cities, where names such as Jahwa and Marubi are stepping it up and developing better reputations with consumers.