According to Euromonitor figures, the Personal Care market in China is valued at $41 billion and has enjoyed mid-double digit growth rates over the last ten years.
However this has not been without its troubles. Growth in the third quarter of 2013 slowed to 7.1% on par with GDP, and Revlon and Garnier have both announced they will be exiting the market.
According to the latest Digital IQ Index by L2 Thinktank, foreign brands have enjoyed a lot of success in the market and dominate to some extent; however they all suffer from the same dilemma: how to continue to grow while protecting their rear flank from local brands in a market with tepid IP protection and requiring highly local marketing.
The New York-based information company says that digital commerce may hold the key for global brands to crack the China market as e-commerce’s share of retail in the personal care space is four times greater than in mature markets and domestic brands struggle online.
Local Chinese personal care brands registered the lowest average IQs for native brands in any L2 Digital IQ Index to date.
“With Personal Care e-commerce up tenfold in five years and some categories registering 25% of their sales online, they are going to have to figure it out,” says L2.
With Garnier and Revlon both saying they are exiting China to refocus their efforts elsewhere, it is clear that competition is severe; and this is seeing brands set up flagship stores on native e-tailers and collaborating with global e-taliers to broaden their retail footprint online.
Rapidly improving online payment and fulfilment infrastructure also signal continued growth. For example, Walmart-backed e-tailer Yihaodian has introduced Sina Weibo delivery tracking, one hour delivery windows, and electronic invoice service e-tapiao in Shanghai.
In April, China’s biggest e-commerce platform , Alibaba, purchased an 18% stake in leading microblogging platform Sina Weibo, which now provides centralized social login and targeted advertising opportunities across its ecosystem.
L2’s latest Digital Index also explains that mobile social platforms, including WeChat, leverage mobile payment and loyalty programs to blur the line between online and offline sales.
The new study quantifies the digital performance in China of 73 global and local brands across six key Personal Care categories: bath and shower, mens grooming, oral care, hair care, tissue and hygiene and deodorant.