Lancome in China

Topics: Cosmetics, China, Song Dynasty Pages: 5 (1406 words) Published: April 12, 2006
China puts its best face forward

Shanghai's premier shopping street, West Nanjing Road, may these days style itself as the Fifth Avenue of Asia, but on the busy sidewalks it still throbs with all the color and din of a medieval temple fair.

Until, that is, one steps into the hushed confines of the first Lancome concept store to open anywhere in the world - at which point you might just feel as if you have stepped onto the set of 2001: A Space Odyssey, assuming your idea of a space station features sculpted sofas and ever-so-slightly pink walls.

"We wanted to create an environment that suggests luxury, away from the crowded department stores," boutique marketing manager Gu Yaoji told Asia Times Online. "Our boutique customers comprise a select group of rich housewives and xiaobailing [white collar princesses] - and they want to shop for our products and beauty services discreetly, and in comfort."

The Shanghai boutique opened its doors in 2005; and while Japan may still dominate the East Asian cosmetics industry in terms of turnover, as Gu explains the decision to open first in China recognizes not only the extent to which the Chinese market has developed, but also its potential for growth. According to Datamonitor, a business information service, China's makeup industry last year generated revenues of US$1.5 billion - a figure expected to rise to $2.3 billion by 2009.

It is not only the size of the Chinese market (451 million women between the ages of 15 and 64) that attracts manufacturers - it is also the unusually large chunks of their income individual Chinese women seem willing to spend on beauty products.

Already, 90 million urban women spend 10% or more of their annual income on cosmetics - and, unlike in the West, many Chinese women seem happy to spend as much money on makeup as they do on clothes.

On one level, spending patterns reflect current living arrangements in Chinese cities - unmarried urban young women, for example, most likely live with their parents, perhaps in state-subsidized housing; with mother and father paying the bills, so almost all of the single child's salary counts as disposable income.

At the same time, Chinese society has always placed a premium on female appearance, with the meinu (the beauty) featuring as a stock character in poetry and art; even 2,000 years ago Han dynasty princesses were buried with a bewildering array of makeup dishes, mirrors and combs, carefully laid out for the use of the departed soul. During the Cultural Revolution the Red Guards were hostile to makeup precisely because it was so deeply rooted in Chinese culture.

Anthropologists may debate the origins of the bulging makeup bags of the contemporary Middle Kingdom. But where everyone agrees is that the dowdy days of Maoism are long gone - looking good is once again big business in China, and the major brands have been quick to grab a piece of the action. The two most successful international companies in China currently are Tokyo-based Shiseido and L'Oreal, which recently purchased Yue-Sai, a strongly branded domestic manufacturer based in Shenzhen.

Together Shiseido and Yue-Sai count for a 31.5% market share; meanwhile, L'Oreal's other lines and brands such as Estee Lauder, Proctor and Gamble and Lancome all show healthy expansion. So is the conquest a fait accompli?

Not necessarily, said Lily Xu of homegrown Chinese brand Herborist. With 180 boutiques in 40 cities, her company plans to open a further 100 outlets during this year. It's a division of a state-owned company - but you'd never know it. The brand emphasizes its connections to traditional Chinese medicine and seems to strike a chord with a seam of consumer keen to look beyond the Hollywood pose. "We're the Body Shop of China," Xu said.

One possibility is that a major Chinese player will emerge with the right combination of capitalization, marketing savvy and local sensitivity - or that Chinese medicine will...
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