Mark Tanner

Selling in China at What Cost?

2017/07/12 Mark Tanner
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The glimmering prize of the China market has led many foreign brands to make sacrifices in their pursuit of Chinese wallets. The $50-billion-plus beauty industry is particularly symptomatic – a field dominated by international brands. Chinese females, and increasingly males, are avid cosmetics consumers spending a much larger portion of their incomes on it than their Korean, Japanese and US equivalents – some shelling out as much as 30% of their take-home pay.

Yet to stock your face creams and makeup in the average mainland department store, there are a different set of regulations than Western markets, such as compulsory testing on animals. Such rules have forced cosmetics brands to soul-search about how important the China is to them.

British cosmetics brand Nars recently joined cosmetics companies such as Jurlique, L’Occitane, Yves Rocher and Caudalie in renouncing their stance on no animal testing in order to sell in bricks & mortar stores in China.

It would not have been an easy decision for Nars or any of the brands it followed.  Most successful foreign brands in China have been built on the back of their popularity in home markets.  Brands like Nars can attribute their success in the UK to core values such as anti-animal testing.  As Nars discovered by the streams of protests on social media, many of their formerly-loyal customers at home and in other Western markets will now buy their beauty products elsewhere.

In a bizarre set of double standards, Chinese cosmetics brands do not need to be tested on animals.  We’re hopeful that Li Keqiang’s Summer Davos announcement that China will be “treating domestic and foreign companies on an equal basis,” coupled with lobbying from animal rights groups and the big cosmetics companies means that these archaic regulations won’t be with us too much longer.

In the meantime, there are other options for cosmetic brands that don’t test on animals who want to sell in China – some which can bring a lot of success.  Cosmetics are the top selling category in cross border ecommerce, with 45.7% of shoppers having purchased them according to iResearch.  Forrester Research predicts that cross border will account for 20% of China’s total ecommerce market by 2022.

Whilst brands such as Jurlique have found success in China since forgoing animal testing in 2013, Chinese consumers increasingly consider core values behind a brand in their purchase decisions, and often reward those who stay true to them.

When targeting Chinese consumers, companies should consider the wider implications for their brands.  Tailoring products too much for a Chinese consumer can often estrange other customers, as Hollywood has discovered. Even tourism operators should consider how catering to Chinese visitors could affect their perception amongst their other visitors and in turn their authenticity to Chinese tourists.  It’s about balance, which is something we always consider at China Skinny when providing China branding recommendations and market strategies.  Go to Page 2 to see this week’s China news and highlights.

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