LF Beauty: meeting Asian consumers' needs has 'never been more challenging'

By Lucy Whitehouse +, 13-Jul-2016, cosmeticsdesign-asia

The president of LF Beauty, a third party manufacturer and supplier, has spoken of the challenges and opportunities being posed for beauty by the Asia market.

The article outlines that it has never been more challenging, while there have never been more opportunities for brands to satisfy the customers’ needs. According to Raymond “Asian beauty is now setting the pace for the world”. China’s customers have a rising demand for K-beauty products, whereby Korean brands face the challenge of acting with insider knowledge of the Chinese market.

Indeed, the Korean International Trade Association found out that Korean companies accounted for 22.1% of China’s imported cosmetics in 2015, closing the gap with the French who have a market share of 30.6%. During the first seven months of the year, China’s imports of cosmetics products rose 36.1% to $1.67 billion.

[READ THE ENTIRE ARTICLE]

Ethnic skin care: the way forward or outmoded concept?
By DSM Nutritional Products, Ltd 16-Jun-2016, CosmeticsDesign-Europe.com

Whilst the power of beautiful skin is undeniably universal, skin care needs vary widely from person to person. Men’s skin is not the same as women’s; younger skin has different needs than older skin. Skin may be dry or oily. And skin – the largest organ in the body – differs in another way: it comes in a beautiful range of tones which are visible links to our genetic and ethnic heritage.

So what are the broader influences behind consumer choices when it comes to skin care products?

Skin: an evolving story
In many regions of the world – China being a case in point – the population is still fairly homogeneous and people may have quite specific skin care needs based on cultural as well as biological factors. DSM Consumer Insight researchers who went to that country found that definitions of beauty in China often differ widely from those cited in many Western countries. They also found that Chinese women had different anti-aging skin care priorities, tending to be less worried about wrinkles than about loss of skin elasticity, enlarged pores and uneven tone.

For manufacturers of skin care products this presents both challenges and opportunities.
A DSM Insights team that conducted a field study in Los Angeles and New York among mothers, daughters, aunts and friends obtained a myriad of rich insights into their notions regarding ethnicity and skin care. Many interviewees declared their opposition to the idea of categorizing people by ethnic group, believing that this simply isn't consistent with people's views of the world today, or their view of themselves.

The take-away message from consumer insights is therefore that the need for multifunctional skin actives which work equally well for all skin tones and types is set to grow.
In their study DSM investigated the global applicability of a peptide ingredient amongst three different ethnicities (Caucasian, Asian and African), whereby they discovered new cosmetic properties.

• Multifunctional anti-ager for all skin tones
• Visible reduction of the signs of aging and shiny skin
• Improved skin smoothness and appearance resulting in younger-looking skin

The peptide therefore has applications as a global anti-aging cream and serum, and as a skin beauty maximizer mask. It is China-listed.

[READ THE ENTIRE ARTICLE]

[VIEW THE PICTURES ON FLICKR]

Conference « Luxury and China: insights and perspectives for 2016 and beyond » [06/30] Sharing the event’s most important moments [#promiseconsulting @adetem]

On Thursday, June 30, 2016, at the Café l’Adjugé in Paris, Promise Consulting hosted a conference on "Luxury and China: the challenges and perspectives for 2016 and beyond”.

In total 40 people, professionals from top luxury brands, journalists and consultants in the world of luxury, fashion, beauty and tourism, participated in the breakfast conference initiated by Promise Consulting at the prestigious Parisian auctioneers Drouot from 8:30am to 10:30am.

Continuing a series of lectures on trends and perspectives regarding the development of the world luxury market, Philippe Jourdan, founding partner and Chunyan Li, Senior Consultant and China specialist, combined their expertise and presented together a broad overview of the opportunities and challenges of the Chinese luxury market:

- On the one hand, the cyclical factors were isolated from the structural ones to discern the growth opportunities in a certainly more "bumpy" economic context. Additionally, the conference outlined new and interesting opportunities for Western luxury brands.

- On the other hand, the enriching insights of the specialist in Chinese culture took into account the emergence of new expectations, especially of those of younger generations, vs the ones of the luxury goods generations.

THEY ATTENDED THE CONFERENCE AND SHARED THEIR OPINION 

"UN GRAND MERCI POUR LA CONFERENCE CONCERNANT LA CHINE, AS ALWAYS INSIGHTFUL, INTERESTING, IN DEPTH AND EASY TO UNDERSTAND" - BENJAMIN, LUXENDREAM

"MERCI ENCORE POUR HIER. C'ETAIT TRES INTERESSANT, D'AUTANT PLUS QUE LA CHINE REPRESENTE UN DE NOS PLUS GROS MARCHES.  REMERCIEZ POUR MOI CHUNYAN ET PHILIPPE POUR LEUR PARTICIPATION" - LUCAS, LACOSTE

"JE TENAIS EGALEMENT A VOUS REMERCIER POUR L'ORGANISATION DE CETTE BELLE CONFERENCE OU NOUS AVONS APPRIS BEAUCOUP GRACE A UNE PRESENTATION TRES CLAIRE" - CAMILLE, CHANEL

"GRAND MERCI POUR CETTE CONFERENCE TRES INTERESSANTE QUI M'A DONNE UN AUTRE REGARD SUR BIEN DES SUJET. ELLE FUT RICHE EN ENSEIGNEMENTS ET TRES CONVIVIALE. BRAVO POUR LE TIMING CAR LE FAIT QU'IL N'Y AIT PAS EU DE DERAPAGE M'A PERMIS DE PROFITER DES CONCLUSIONS" - VINCENT, KPMG

THE SPEAKERS' POINT OF VIEW ABOUT THE CONFERENCE

 CHUNYAN LI

Philippe Jourdan

CHINA: AN ECONOMY IN TRANSITION

Both speakers started with a reminder of some important economic indicators which are necessary to develop and establish a healthy Chinese economy in the World: a slowing but still positive growth, the recent devaluation of the Yuan but with forecasts that should take into account the political will of the Chinese authorities to reduce their dependence of the dollar (and primarily of the US debt).

Based on this perspective, the Chinese economy is in the transition from a "Made IN China" through a "Made BY China" to a "Made FOR China" culture, although the share of GDP devoted to domestic consumption and expenditure of the Chinese government is still behind compared to those traditionally reserved for investment and net exports.

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A LUXURY ECONOMY WHICH IS VERY (TOO) DEPENDENT OF CHINESE TOURIST PURCHASES

In 2000, 10 million tourists traveled the world. During the year 2020, 200 million Chinese tourists are expected to travel abroad. In 2015, they were nearly 105 million to move beyond the Chinese borders. Of course, the first regional destination remains by far Asia. However, while the movements and trips to Hong Kong have recognized a slow-down (in response to the sinophone manifestation of the residents of Hong Kong), the Chinese tourism presents a good performance in France despite its unfavorable security environment. In the end, nearly 77% of the Chinese luxury goods purchases ("personal luxury goods") are realized abroad (24% in Asian countries nearby and 53% outside this sphere).

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CHINA: "IT IS ALL ABOUT DIGITAL, IDIOT"

With more than half of the connected population (50.3%), nearly 3h45 spent on average per day on digital networks and 594 million Chinese connected to their mobile phones, the Internet plays a vital and inescapable role regarding the Chinese communication and information research methods. And we go even one step further: with an increasing tendency, the Chinese are getting more and more likely to realize online purchases to such an extent, that the online US trade is expected to be exceeded by the end of 2016 (forecast: $ 371 billion of Chinese purchases against $ 326 billion for the US).

The Chinese digital landscape has obviously its specifics and is very different from the one of the Western countries. For each type of digital application developed in the West (search engines, social networks, networks of micro-chats and micro-blogging, etc.) there exists a Chinese version, which is far away from just being a clone of its Western counterpart. In particular, among all social networks, Weibo, the Chinese Twitter, and WeChat, a combination of Facebook, WhatsApp and Skype, have become the companies’ most preferred promotion tools. They have respectively reached the 222 million and 650 million active users in 2015.

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THE CHINESE CULTURE: BETWEEN GUANXI AND MIANZI

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According to a Chinese proverb, “Just as a tree needs bark, someone needs his face". The culture of Mianzi ("face") attaches great importance to the various forms of respect, social acceptance and recognition. Everybody lives in and through the eyes of others: a trend of the Chinese elites is therefore to systematically compare themselves to others in terms of both criteria, professional and personal success. Luxury goods subsequently allow the wealthy Chinese to materialize and demonstrate their social status and financial situation to others and thus shape the image they wish to send to those around them (...).

In China, "the formality must be mutual". Indeed, the Chinese highly value social relationships within their close circle, also known as the famous “Guangxi”. Having a good "Guanxi" allows the Chinese to benefit from mutual support and to proceed or solve problems faster. Finally, the favor – also called "RenQuing" in Chinese - can be a real credit or a true debit. Seen from this perspective, offering a valuable gift, no matter if it is a product or a powerful experience also enhances the "face" ("Mianzi") of the interlocutor (…).

THREE GENERATIONS OF LUXURY BRANDS CLIENTS IN CHINA

Nowadays there are three clearly identified generations of luxury goods consumers in China, which strongly differ in terms of their profile, expectations and their luxury experiences.

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The first generation is the one of the Baby Boomers. Born between 1950 and 1964, they fully lived in the era of President Mao, wherefore their state of mind is marked by nationalism and idealism and their life shaped through the frugality they recognized during their youth. The Cultural Revolution presents for them a strong reminder of the sustainable weakening of traditional and ancestral values ​​of the Chinese society, whereby some of them reminisce still about the great famine of 1958 to 1961. Being in the position to make decisions and confident about their power, they combine both, power and wealth, which enables them to get everything they want, and of which they were deprived in the first part of their lives.

The second generation is the Generation X (1965-1979). The children of the economic reform, initiated in 1978, were educated by MAO and trained by Bill Gates. This high tension has caused confusion and a certain sense of insecurity among them. This fact represents the reason for their opportunistic behavior and their search and need for material security. They were among the first to consume luxury goods, whereby 60% of them purchase these products to increase their self-esteem. Approximately 80 % of the Chinese private companies are run by representatives of this generation.

The third generation is the Generation Y (1980-1995).  Since their early childhood, people of this generation benefited enormously from the economic reform, without having gone through very difficult times. Generation Y is confronted with a wide variety of consumer choices, wherefore their behavior and habits westernize, although they kept their Chinese roots. Ordering a Big Mac at McDonalds' or a coffee at Starbucks, using the iPhone or iPad to connect themselves to the Internet and chat with strangers, or buying products on WeChat or e-commerce websites, became part of their daily lives.

 THE FRENCH LUXURY BRANDS THAT REMAIN VERY APPRECIATED

The Conference concluded with the presentation of the results of the Barometer Front Row, jointly conducted by Promise Consulting and Exane BNP. This barometer measures for different countries the Exclusivity and Desirability of Luxury Brands in the world of fashion (ready-to-wear, bags and shoes) as well as for the domain of Cosmetics (perfumes, skincare and makeup).

 [TO VISUALIZE THE COMPLETE RESULTS CLICK HERE]

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Do you want to know more? Do you have a project on China? Do you want to know our offer on international studies in the segments luxury brands, beauty and selective distribution?

ABOUT PROMISE CONSULTING

Promise Consulting is a company specialized in marketing studies and consultancy, issued from the merge of Promise Consulting Inc., JPL Consulting and Panel on the Web.

Promise Consulting integrates services of market research and marketing consultancy delivered with a high added value. We created an innovative measuring methodology of a brand’s performance and its return on investments (ROI): the “Monitoring Brand Assets ©”. This methodology, deployed in nearly 50 countries, has surveyed 250 brands in multiple sectors, totaling over 1,5 millions questionnaires. 

Established in Paris, New-York and Casablanca, Promise Consulting conducts studies and services of consultancy in the whole world. Promise Consulting is mostly known for its expertise in measuring a brand’s value from the clients’ perspective.

Promise Consulting has developed innovative techniques and models, was awarded 7 times in 10 years, by its Peers nationally and internationally. It provides insights and recommendations to the most notorious brands in luxury, cosmetics and retailing sectors, helping them develop on national and foreign markets. It is also active in several sectors of the industry, every time the brands are looking for an effective growth strategy in order to better understand the market, to reach their customers, attract them and, finally, keep them.

Pr Philippe Jourdan, CEO of Promise Consulting, is the editor-in-chief of Adetem’s journal, the French Journal of Marketing (Revue Française de Marketing, RFM), since 2011. He publishes in academic journals internationally on the problems of the valuation of the brands in luxury, beauty and selective distribution. He also publishes in the economic press and news media (such as Le Monde, les Echos, le Figaro, l’Opinion, la Revue des Marques, etc.). Philippe is a university professor, researcher at the IRG (CNRS) and laureate of the Best Article of Research AFM 2000. He holds a certification in social media.

According to McKinsey (March 2014), by 2022, middle class in China will change considerably, mainly geographically.

Tier 1 cities (Beijing, Shanghai, Guangzhou, Shenzhen) might see their share of urban middle class decline (from 40% in 2002 to 16% in 2022) while it should be rising in tier 2 and tier 3 cities (for the latter, from 15% to 31%). This middle class could reach up to 630 million people in 2022, which is accounting for around half of the population in China, thus making China a middle class country.

Since they are now spreading, brands looking for customers will have to focus more on tier 2 and tier 3 cities and especially on middle class customers.

Source: Mc Kinsey

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FROM THE JING DAILY - APRIL, 20, 2016 - JENIIFER JAPP

Recent consumer surveys show that Chinese shoppers are more focused on premium everyday necessities, which is influencing how they make purchasing decisions abroad. A survey conducted by the FTConfidential Research unit at the Financial Times found that Chinese shoppers are more likely to avoid discretionary spending, especially when it comes to high-end fashion accessories like handbags, jewelry, and watches. This marks what the FT calls an “upheaval” in consumer spending patterns overseas, which is happening in tandem with changing habits at home.

According to an article published in FT last month, there was “a 10.2 per cent year-on-year growth in retail sales in the first two months of the year, down from a full-year 10.7 per cent in 2015 and 12 per cent in 2014.” Their survey asked 1,318 overseas Chinese tourists about their spending habits, and while they reported “they were less likely than previously to buy big-ticket items such as luxury handbags, jewelry and watches while traveling abroad,” they expressed interest in spending on cosmetics, clothing, electronics, and souvenirs, similar to results from a year before.

FT’s explanation for the reduced discretionary spending on high-end items like jewelry, watches, and handbags abroad is, in part, the rising reliance on cross-border e-commerce coupled with the fact that domestic prices for these goods are not as high as before. But the playing field is ever-changing—tax hikes on cross-border e-commerce announced early this month have thrown luxury industry professionals and shoppers for a loop.

Still, when Chinese shop abroad, they are increasingly focused on a different type of shopping spree. This includes an emphasis on looking for homegrown luxury brands, such as Coach in the United States, according to a recent survey. But with a bigger focus on health and quality products domestically, Chinese shoppers are also searching out more premium everyday necessities that are difficult to come by at home, and some of these shopping patterns are also molded by the latest safety concerns and unmet demands for new lifestyle trends.

After Chinese New Year, Xinhua reported on some of the most coveted items for Chinese consumers, broken down according to the various regions they were traveling to. To mitigate safety concerns, Chinese shoppers were buying items like high-end rice and sanitary pads in Japan—many consumers don’t trust the ones at home, as reports surfaced two years ago that some pads made in China contained a chemical that causes cancer. Chinese shoppers also bought condoms manufactured by the leading Japanese brand Okamoto, dodging the fakes pervading the market in China.

Meanwhile, Chinese consumers are seeking out products that will meet heightened standards for health and wellness, like protein powder from the United States. The Wall Street Journal said GNC’s sales rose almost 43 percent last year as an interest in hitting the gym swept Chinese shoppers. Chinese consumers are also buying more electric toothbrushes—a favorite purchase in Europe according to the Xinhua survey—and taking advantage of access to basic over-the-counter health care products like painkillers and vitamins in Japan. In Australia, a Chinese firm acquired supplement maker Swisse Wellness in part due to huge demand from overseas Chinese travelers.

These shifting shopping strategies are propelled by a group of outbound tourists whose spending outside of China is quickly rising (they spent $215 billion last year, up from $140 billion the year before), and overseas brands are clearly taking note.

[READ THE FULL ARTICLE]

Chinese consumers in the age group of 50 (or above) tend to make less online purchases than any of the other age groups. We can assume they are not technology-driven users, though it is actually not the case.

According to a report by KPMG (2015), Chinese consumers over 50 years old are barely buying products online, even though 45% of them are quite well-off (RMB 50 000 and higher). Furthermore, 73% of them seems to never purchase products online.

However, they are more likely to make online purchases of services such as hotel reservations (47%), restaurant bookings (35%) or domestic trips (32%), which shows that they are still quite a good niche.

KPMG highlights an issue on that matter: older generations are overlooked by brands in their marketing strategy, although they might be a meaningful niche, especially regarding services.

Source : KPMG

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