Skin care products can be divided into types of skin cleaning, caring and treatment by production process and form, targeted ones of daytime and nighttime by time period, and specified ones for ladies, gentlemen and children by user. They can also be classified by function. Another classification refers to professional (mainly sold in the beauty salon) and daily skin care products (mainly sold through common channels) by way of sales.
According to CRI, the skin care product market in China is the leading emerging one in the globe for the economy and population. The sales value of skin care products increased from over CNY 90 billion in 2011 to CNY 130 billion in 2015 with the CAGR of about 9.1% exceeding the growth rate of GDP during the corresponding period.
The consumption value of skin care products per capita increases yearly in China. First, the consumption ability and willingness are enhanced with the attention to health, beauty and material life. Second, the overall expenses of consumers increase with abundant varieties and functions of skin care products in China. However, the sales of skin care products are stimulated by various sales promotions on online platforms with the development of the e-commerce industry.
Skin care products are large in number and intense in competition. According to CRI, the aggregate market share of top 5 skin care product manufacturers was less than 24% in 2015, which indicates the stage of free competition of this industry. However, barriers to entry in the skin care product market remain high for new enterprises and brands. It is mainly because the maturity and stability of sales channels are of great importance for enterprises of such fast moving consumer goods. Barriers are higher for skin care products to entry in retail terminals such as department stores, hypermarkets, supermarkets and franchise stores due to the intense competition. Large-scale supermarkets and hypermarkets particularly charge higher entry fees and other selling expenses in accordance with the scale, coverage and influence. New brands cannot cover costs without certain sales volume as supporting. Generally speaking, new enterprises of skin care products need large pre-investment in sales channels, funds, construction period and it is difficult to form channel advantages within a short period.