Chinese women are increasingly looking to cosmetics with natural ingredients for their healing and energising properties as well as for improving consumer safety, as Wang Fangqing reports from Shanghai
The demand for skin care products based on natural ingredients has been growing so fast in China that both multinational and domestic cosmetics companies are pouring new products onto the market to attract consumers, both male and female with different levels of income. At the high end of the market, French brand Lancôme launched a new line in China in July, Énergie de Vie (EDV), which includes lotion and day cream products. According to parent company L’Oréal, the new products feature extracts from three plants: the antioxidant gentian root, arctic root for accelerating metabolism and wild yam to nourish skin.
“The EDV products will help women get the naturally energetic, healthy look they are pursuing,” said a Shanghai based Lancôme spokesperson.
“In China, people always talk about ‘qi se’, which connects facial colour to mood and health. That’s why every Chinese woman wants to be told in good qi se. This is the idea which inspired the EDV products,” she added.
Priced at RMB520 ($82.10) for the lotion (200ml) and RMB630 ($99.50) for the day cream (50ml), EDV is specifically developed for (wealthier) Chinese women and now is available in China, Hong Kong and Taiwan.
Lancôme is not alone. In June, another French brand Sisley opened its 80th counter in Ningbo city, Zhejiang province, a megacity with 7.5 million inhabitants. According to a Sisley communiqué, the company expects to “bring... natural, safe and effective products to… local consumers”. The new counter provided an outlet for Sisley’s new whitening product set for summer, which includes eight products such as facial soaps, lotion, essence and moisturiser, all labelled with “precious natural ingredients” such as rosemary, ginseng, centella and horsetail and is priced at RMB5,800 ($916.30) per set ($758.30 online).
And while Chinese companies in general are staying in the mass market, Shanghai Jahwa is an exception. For the past 14 years, this leading Chinese cosmetics company has been successfully marketing Herborist, an expensive product line based on traditional Chinese herbology (TCH). Herborist now has more than 1,000 stores in China and is available in Sephora stores in several European countries including France, Spain and Turkey, according to the company.
One of the major reasons for the boom in natural ingredients based cosmetics are concerns generated by the poor safety performance of China’s food industry, said Xu Feifei, brand strategy director at Shanghai based consulting firm Labbrand Enterprise Management Consulting.
“We have had so many food related scandals and people are eager for things [that are] natural and safe, and this generates the same demand in the cosmetics industry,” Xu said. However, it does not necessarily mean those lines labelled ‘100% natural’ can generate more sales, she added.
“It depends on which part the products are being used. If it is for the body, most women don’t care too much about the ingredients and they don’t want to spend too much money on it. But when it comes to facial products, they want to use good things and are becoming less price cautious,” Xu said.
The same goes for the mass market, where Chinese brands dominate the natural ingredients based skin care products subsector. The leading company here is Shanghai based Inoherb Cosmetics, which earned RMB1.3bn ($205.3m) in sales in 2011, up 78.1% from RMB749.7m ($118.4m) in 2010. It also filed paperwork in June this year for an initial public offering in Hong Kong.
To meet thriving demand, the company invested about RMB150m ($23.3m) last October to build a new plant in the Shanghai suburb of Baoshan. Inoherb is known for its variety of TCH based skin care products and has gained credit by working with Shanghai University of Traditional Chinese Medicine.
On 29 June, Inoherb launched a collection of masks branded as ‘Fu Shi Tong Yuan’ exploiting traditional Chinese herbology by accentuating the close ties in Chinese culture between beauty, health and food. The collection includes four masks (red bean, red date, red ginseng and goji berry) with respective effects of whitening, nourishing, firming and moisturising, according to the company, which sets the price at RMB69 ($10.9) per box (six pieces).
Comments left from customers at its online store have been generally positive so far, such as “I feel my skin is healing”, although there have been grumbles about pricing, such as “I would buy more if it was cheaper”.
Other widely sold Inoherb products include a silk based whitening lotion and a glossy ganoderma based eye cream, monthly sales of which have both topped 4,000 units.
All of these products could be developed by overseas majors but usually they are not. Labbrand’s Xu said one major reason that there are few foreign brands competing with Chinese brands in this particular sector in the mass market is that multinationals have a different strategy.
“Foreign brands in the mass market are known for advanced technologies instead of natural ingredients and they don’t want to compete with themselves by introducing a ‘natural’ labelled product line,” she said. Neutrogena, for example, has been only too keen to stress its high tech manufacturing over trading, with labels promoting its ‘helioplex’ processing for sunblocks available in Chinese supermarkets.
This of course gives Chinese companies a huge opportunity to grow, especially those based on TCH, which according to Xu, provides Chinese personal care product companies with a great advantage in gaining and holding onto local consumers.
“It’s the cultural affinity that helps attract local consumers, as the Chinese believe deeply in traditional medicines,” she said, adding that China based companies were not so different from European rivals who target their home market. “It’s the same as European companies who like to market their products with European herbology or minerals.”
And if Chinese companies develop technical expertise to go with their traditional Chinese medicine (TCM) grounding, they could be tough to beat, noted Chen Chuxin, professor at the College of Pharmacy of Wuhan University which has teamed up with Fujian Haichuan Pharmaceutical Development Co (Haichuan) to develop tea extract based skin care products. “We are using completely different ingredients from foreign brands like Vichy and we are also different from other Chinese herbal cosmetics manufacturers as we are more innovative instead of just following the TCM theory,” Chen said.
He gives an example of products promoting detoxification, an idea which in TCM theory helps women cleanse their inner body, thereby creating more external beauty, a tradition widely believed by Chinese women. “The TCM formula for detox is using safflower and motherwort but we would also add astragalus because its properties could enhance detox. This is what I call innovation,” he said.
He noted that ingredient supplier Haichuan (a TCM research company under Fujian Zhaonong Group, a pharmaceutical group based in Nanping city, Fujian province) owns an organic TCM farm in Nanping. It covers 20,000mu (3,296 acres), growing expensive herbs such as glossy ganoderma (lingzhi in Mandarin), as well as Tibetan safflower. “Pesticide pollution is one prominent problem with Chinese herbs but with our organic farm we don’t have to worry about it,” said Chen.
The company’s first product line has been developed for Chinese children. Named Cha Wa, meaning ‘tea baby’, it was launched in December 2011 and covers a series of products including creams and lotions to treat heat rashes featuring tea leaf extracts as ingredients. “We will add more product lines in the future for women and men,” he added.
And men’s grooming markets in China are also increasingly featuring natural subsectors. According to research company Euromonitor International, annual growth in the Chinese market value for men’s grooming reached 20% in 2011 in China, slightly up from 19% in 2010.
Many brands in premium and mass markets, including Biotherm and Mentholatum, have launched men’s products in the past year. Euromonitor predicts continued fast growth with consumption in smaller cities growing particularly quickly, in the wake of the increasingly mature markets of China’s megacities.
Labbrand’s Xu said demand for natural ingredients based products is surfing on this wave of growing sales for men’s products. “In China, a lot of guys’ personal care products are purchased by their wives or girlfriends who pay close attention to ingredients. For those who do buy the products themselves, they tend to be well educated and informed so if the media says natural ingredients based products are better, they will go for them,” she said.
Indeed, Inoherb’s honeysuckle based facial soap for men, priced at RMB20 ($3.10) per bottle (120ml), is one of its perennial popular products. According to the label, the product can “balance oil production and shrink pores”.
Looking ahead, there might be a limit to the scope for innovation by natural ingredient based producers in China. Apart from the widespread knowledge of certain TCM and internationally known materials, such as pearl powder for whitening and aloe vera for moisturising, Chinese consumers may know little about some of the more obscure ingredients listed on labels. They tend to believe whatever the advertising says, said Xu. “This is of course an opportunity for companies to sell new products. However companies shouldn’t just look into exotic or expensive ingredients, because Chinese consumers care about the function first,” she said.
While price always plays a key role with Chinese consumers and with China’s economy slowing down, the mass market will lure more consumers, Xu said. Consumers used to premium products are not likely to lower their standards. “We don’t think the economy will affect the high end market that much,” she commented. “After all no one wants to risk his or her face.”