How Covid-19 became a fertile ground for the development of National Brand preference

Across countries, one of the effects of the Covid-19 crisis was to reinforce protectionism and nationalist sentiment. That was the case in China too, probably even more than anywhere else, but in a slightly different way, as the government played a significant role.

 

To help local brands through these trying times, the Chinese government has taken measures in various fields. One of these measures was the new features of China Brand Day (中国品牌日), rolled out online on May 10th 2020. China Brand Day was designed to encourage domestic brands’ “brand building” in all sectors, with a view to accelerate the transition from ‘Made in China’ to ‘Created in China’, from ‘China speed’ to ‘China Quality’, and from ‘Chinese product’ to ‘Chinese Brand’.

 

How did it translate into concrete actions?

  • Massive promotion of Chinese brands’ stories on mainstream media. Over 1,300 national brands participated in the China Brand Day Online Expo this year.
  • The launch of Chinese National Brand Expos in several provinces, where brands from sectors ranging from manufacturing and services to culture or technology, gathered to demonstrate their history and innovation power, and present new products and services.
  • The international forum of China Brand Development, where discussions were held about future policies aimed at further accelerating the development of Chinese brands and changing their image.

 

This year, CCTV participated in the Reinvigorating China Through National Brands project (品牌强国工程) via a variety of promotion events.

  • Over 30 national brands went on Yang Shi Ping (a 5g video app, developed by CCTV) to promote the new products of domestic brands such as Lenovo, Hisense, Wanda or Ping An insurance.

 

  • Austin Li (Li Jia Qi) teamed up with famous CCTV host, Zhu Guang Quan, for a livestreaming on the night of Chinese Brand Day (May 10th). They hosted an online sales event for a variety of quality national products and promoted domestic brands. One example of very positive outcome was Mercury home textile’s sales result of 3.3 million yuan following the livestreaming session.

 

These government initiatives definitely play a significant role in influencing Chinese consumers purchase behaviors.

 

The National brand preference trend is present across sectors such as technology (Xiaomi, Huawei), home appliances (Gree, Haier), food & beverages (Yan Qi Sen Lin, Mengniu) or Sport & Outdoor (Li-ning, Anta).

 

It is also accelerating in the beauty sector, especially in the mass and masstige segments.

 

As a result, a great number of C-beauty brands have been soaring and this trend will definitely continue in 2020 & 2021. Consumer patriotism, an aesthetic shift, and a hyper-digitized retail reality — all of which grew during the COVID-19 pandemic — have made conditions favorable for C-beauty brands over the long term.

 

Tmall has launched its spring thunder initiative, starting with the goal of helping 1,000 emerging beauty brands achieve over RMB10 million ($1.41 million) each in annual sales in the coming year.

 

In the last June 18 Shopping Festival, 4 out of top 10 best-selling beauty brands were C-beauty brands, including Perfect Diary, HomeFacial Pro, Winona and Huaxizi (source: Tmall sales data).

 

On China Brand Day, Li Jiaqi, one of the Top KOLs, has named 23 quality C-beauty brands in his livestreaming. Bouncy Red Ginseng Essence Beauty Cream, newly launched by Marie Dalgar, was the only base makeup product in the selection. The ‘bun’-like design of its applicator generated hot discussion on social media.

 

 

Consumers’ interest in C-beauty brands specializing in Chinese herbal ingredients was triggered due to the heavier usage of Chinese herbal formulas during the pandemic. For example, Inoherb recently launched its new premium line “Inoherb Tang”, which brings back the power of an ancient formula through modern technology. The main claim is that the amount of Chinese herb ingredients in the products reaches 60%.

 

 

This is a new challenge for accessible foreign Beauty brands that will have to adapt, and find a way to display a deeper commitment to, and understanding of, Chinese culture.

Livestreaming during the coronavirus crisis accelerated the transformation of many sectors

In the past 10 years, the combination of State policies towards high-tech investment, buoyant startup scene and unique consumer appetite for new technologies has lead China to become a world leader in daily use of digital solutions. The Covid19 crisis further accelerated digitalization in a number of in sectors and it may be indicative of what will happen in Western countries in a next stage too.

 

More specifically, boosted by the lockdown and the need to find new ways of doing business with consumers, a number of sectors turned to livestreaming e-commerce, a new form of retail which was already well developed in the beauty and personal care field and really took-off in other sectors thanks to the specific benefits offered in such a crisis situation.

 

Healthcare is a sector that was obviously under enormous pressure during the pandemic. While online consultations and digital scheduling of appointments were already becoming commonplace in China, the coronavirus outbreak has seen a sharp rise in the use of digital platforms and an explosion of online doctor consultations. JD Health, one of the leading providers of such services, has seen its online daily consultations jump from 10,000 in January to 150,000 in March. Baidu Health, another leading healthcare platform, now has over 100,000 doctors from across China offering online consultations around the clock. The platform was made accessible free of charge to those with pneumonia symptoms during the pandemic and had handled over 55 million enquiries by the end of April. While the virus started to spread across the world after the China wave, several Chinese platforms started offering free online coronavirus consultations in English to people abroad. A good way to develop their client base to prepare a global expansion while also sending a message about China’s willingness to contribute to fighting the consequences of the pandemic abroad.

 

Also during the coronavirus crisis, the city of Shanghai launched 11 internet hospitals affiliated to offline public hospitals. An interesting sign that the handling of patients is on its way to becoming a combination of online and offline approaches.

 

In the field of retail fashion, live-streaming was a way to make up for the closure of stores during the pandemic. Labelhood is a platform for emerging fashion designers in China which has a boutique in Beijing and another one in the Shanghai French concession. While these brick and mortar locations remained closed during several weeks founder Tasha Liu launched a WeChat store so that people could shop through the app, and started offering life-streaming in order to show potential clients new arrivals from designers’ collections. In addition, WeChat video calls were offered as a way to develop a bespoke one-on-one approach with customers, one that is very suitable to the tailored, personal dimension of designer brands’ business. The Covid 19 crisis has been an accelerator in embracing digital, one that has pushed retailers and brands to adopt a new way to talk to customers, created a new type of personalized connection… without the unique “offline” benefit of being able to touch fabrics though. It also provided boutiques with access to consumers well beyond the city, spreading business opportunities across new geographies and population segments, enlarging their client base at a the very time it was threatened to shrink dramatically.

 

 

Live-streaming also helped farmers* across the country survive the pandemic by completely transforming their business model. Last February the nationwide lockdown left growers of flowers, fruits and vegetables with no logistics and therefore no access for their products to stores and markets. A number of these producers, who had traditionally had no contact with end clients, started using live-streaming to reach consumers. With just a mobile phone they could broadcast directly from their farm, tour their facilities, show-off products and answer questions from potential buyers. On the other side of the country, in urban areas, consumers stuck at home were eager to shop online. Live-streaming, combined with the shipping services of e-commerce giants JD.com and Alibaba, helped the two ends meet and completely redesign the market. Consumers could receive at their doors products that were no longer available in stores, and farmers benefited from a new stream of revenue. On Taobao Rural Livestreaming, one of the main platforms for that type of broadcasting, about 2000 rural participants now generate a monthly income of over RMB 10,000 i.e eight times the rural average. By connecting producers directly to consumers, live-streaming has changed the way business is done, created a new bond between producers and consumers, and has been a catalyst for local development.

 

 

pineapple-livestreaming

 

 

Beyond these examples of how digital is changing business in a broad range of sectors, the development of 5G will soon generate new opportunities and changes as it will promote even more interactive content and seamless e-commerce features via a dramatic increase in internet speeds. As China is already more advanced in this field than most Western countries, global brands will have to quickly grasp the new interactive features of the China market to stay relevant in the years to come.

 

*this section is based on an article published by MIT Technology Review on May 6, 2020 “Live-streaming helped China’s farmers survive the pademic. It’s here to stay”.

 

 

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How Covid-19 became a fertile ground for the development of National Brand preference

Influence marketing blends the lines of human and digital

Influence marketing has been very developed in China for years and KOLs (Key Opinion Leaders) are an important part of most brand strategies in this market. Famous influencers such as Austin Li or Viya in the field of Beauty draw millions of followers on Weibo, WeChat or XiaoHongShu and generate sales in millions of dollars at every online event they participate. A number of KOLs have developed their own brand, leveraging their awareness and influencial power to their own benefit.

 

Micro-KOLs are lower-tier influencers with smaller followings who also play an important role in the Chinese marketing ecosystem as they are able to create a closer bond with followers, who are in turn more likely to trust and act on their recommendations and endorsements.

 

The Covid crisis and related lockdown period has pushed further consumers’ digital behavior and accelerated the development of new forms of influence:

 

KOCs (Key Opinion Consumers) are real buyers of products who share their opinions and recommendations with their social circles. A growing number of brands try to capitalize on them to develop reputation and sales via “private traffic” i.e private discussions taking place in closed social environments such as WeChat groups (quite similar to Whatsapp groups) or discussions on social e-commerce platform Xiao Hong Shu, 小红书 where consumers exchange tips on buying foreign goods. Beauty brand Perfect Diary has been able to disrupt the China market and rise among its leaders by leveraging KOCs to target older millennials and generation Z consumers and disseminate news and promotions through their own private channels.

 

Examples of consumers posts about Perfect diary :

 

 

Also the recent heath crisis and weeks of closed stores have been an opportunity to blend further the offline and online retail experience and influence. Key Opinion Sales Associates are spreading. These are traditional sales staff working in stores who also sell online, through social networks, products from the brand they work for. They represent a sort of new channel providing brands with swift, continuous, personal communication with clients. Louis Vuitton for example built a fully omnichannel platform which relies on sales associates to communicate with clients on WeChat to amplify and monetize marketing initiatives.

 

Longchamp is another example detailed below:

 

The first 2 pictures below show the personal account of a sales associate from a Longchamp store in Shanghai. Her personal account is created under the Longchamp corporate WeChat account (it shows the brand name, sales associate  name and her position). The sales associate sends clients information about new products and discounts, as well as strengthen connection with customers through greetings on holidays or birthdays. The next 2 pictures show the account of the Longchamp store where the sales associate works for, this store account will introduce the products in the store and the discount information. Customers will place their orders via the sales associate. So the whole sales process is digital and it has a human and very personalized dimension through the intervention of the sales associate.

 

 

 

 

 

Lately VOLs (Virtual Opinion Leaders) have started to emerge. Originally a product of the ACG culture (Anime, Comic and Games) in China there is a trends towards virtual idols now having the very appearance of real persons.

 

These Virtual Opinion Leaders are non-human, digital art characters created through computer generated imagery (CGI) and artificial intelligence. Brands may find it effective to work with a virtual influencer as they can reach and leverage very targeted, connected and engaged audiences. The first Chinese VOL with human features was released in May 2020. She is already very active on Weibo and has been seen wearing Chloé and Vogue.

 

 

 

Also, M.A.C cosmetics launched a “Honor of Kings” (a MOBA game by Tencent) make up line endorsed by the virtual boys band Wu Xian Wang Zhe, 无限王者团 composed of  5 characters in the game. The new collection includes lipsticks, eyeshadow palettes and pro-palettes presented in colors associated to individual members of this virtual band.

 

 

 

 

All in all, the current period accelerates the blending of digital and human, personalized influence. It provides brands with new opportunities and challenges to embark consumers on a new journey to discover and interact with their latest offers. This is well illustrated in the latest Dior ad which blurs the lines between human, virtual and anime worlds: in this video, anime KOL Xue Fei Nova morphs successively into different forms of identities to tell a story about the brand and connect with young consumers.

 

 

 

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Livestreaming during the coronavirus crisis accelerated the transformation of many sectors

Safe & Clean: a Key Driver In Consumer Goods

Consumer always trade-off between several criteria when choosing a product. Beyond habits, brand or product availability, several dimensions are taken into account, consciously or unconsciously. In food for instance, taste, format, meal destination, origin, ingredients, price or value for money matter. In cosmetics, efficacy, sensoriality/pleasure, convenience and value for money will all play a role in choosing a product. And across all consumer goods categories, safety plays a significant role.

 

The quest for safe products has been on the rise worldwide for a couple of years and, even more so in China, due to safety issues that occurred in the past years in several industries (e.g., the milk formula scandal, concerns around fresh food quality, fake personal & skin care products, etc.)

 

The Covid19 crisis definitely accelerates the need for reassurance on safety across categories. However, for consumer goods, safety (安全) that literally translates as harmless (“no harm to health & wellbeing”) is a broad concept. It can be associated in consumers’ minds to a wide range of aspects, such as product composition (clean ingredients, no/limited number of additives such as preservatives or artificial flavoring, but also naturalness, with or without organic certification), product origin, manufacturing practices, packaging (basic hygiene and safety, of course, but also more sophisticated expressions of safety such as the trend for touchless products), certifications or seals, shelf-life. To name but a few.

 

Giants in different sectors have already laid out plans in response to growing safety concerns.  2 examples in the food & cosmetics industries:

 

 

  • Consumers’ interest in “plant-based” meat is predicted to increase in China. In China, the Covid-19 has been associated with ‘animal mismanagement’ and concerns about meat safety have increased during this period. Veggie products have developed quickly since the beginning of the year.

 

 

HeyTea partners with startup Starfield to launch Veggie burger

 

 

 

  • In cosmetics, clean beauty brands are developing quickly. Drunk Elephant (acquired by Shiseido at the end of 2019), though still an emerging brand in China, has recently gained awareness. The communication of Drunk Elephant by KOLs & KOCs on social media like Red or Weibo focuses on ‘clean’ skincare formulae without the so-called ‘Suspicious 6’ (essential oils, silicones, chemical sunscreens, SLS, fragrance and dyes, and drying alcohols), which may cause harm to the skin.

 

 

Even though safety is confirmed to be a key purchase driver for many products, today and tomorrow, reassuring on safety will not be enough to convince and build loyalty among Chinese consumers, who are looking for a mix of safety reassurance and positive inside benefit.

 

Brands will have to be both rational & pragmatic on this dimension, while at the same time creative, daring and emotional, to stand out in an atomized market.

 

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Influence marketing blends the lines of human and digital

The multiple facets of Wellness & Wellbeing in China

The Covid19 pandemic has definitely reinforced the conscious need for Wellness & Wellbeing all around the world, and even more so in China.  The recent events have modified the Wellness concept both in its nature and in its range of applications. Lifestyle, beauty, sport, food, home furniture, technical appliances – all are concerned by these changes.

 

  1. Wellness through the quest of a new home atmosphere, or the evolution of the ‘Zhai’ culture

Chinese people are clearly eager to invest more time, money and efforts in building a comfortable, happy, pampering & smart home. The pandemic has further accelerated the quest and usage of intelligent appliances, new cozy home furniture, smart health products, interior design pieces, ambiance fragrances, etc.

 

 

 

The TMall Live Chic campaign, “The chic-ability of your home” encouraged young people to share their chic interior design to showcase their taste and imagination, as well as the lifestyle they pursue.

 

 

  1. Physical & Mental Wellness Through Fitness

The Covid-19 pandemic has boosted the fitness trend in many major cities. The use of fitness apps has soared during confinement and is projected to continue doing so in the mid-term.

 

 

 

The number of users of the ‘Keep’ training app has significantly increased in the past 6 months. It now registers over 200 million users and 3.6 billion user exercise data entries.

 

 

 

 

During the lockdown, NIKE has launched a breakthrough channel dedicated to “Exercising without leaving your home”. By collaborating with Tencent Kandian Live Streaming, Nike launched weekly live training courses via Kandian Live Streaming mimi program on WeChat. Users can enjoy the interactive experience of a professional fitness guidance at home, turning their living room into a gym.

 

 

 

 

  1. Wellness through Pampering and Taking Care of Oneself

Although still quite new to China, the self-care concept is certain to evolve further post-Covid. The anxiety triggered by the pandemic remains high 3 months after the end of lockdown and has fostered the need for self-pampering and little treats, in order to escape from a troubled daily life.

 

Social isolation caused by quarantine created loneliness and stress. Caring for one’s skin became a physically and mentally healing moment that made people feel self-love. Consumption of facial cleansing products, facial masks, toners and lotions soared. Among these, the use of facial masks has increased the most, reaching +12%. (Research data by CBNData)

 

“Put down your phone and get to know yourself” is also an emerging trend boosted by lockdown. Creativity has been on the rise, as a potent stress-reliever. 

 

 During self-quarantine I spent quite some time at home mending old things or finding new uses for them. Used clothes became a washing machine cover; glass bottles were turned into wind-bells. I enjoyed the process of “creating things”, because it gave me a pleasure and a sense of accomplishment that I cannot get from the virtual world. I can truly feel myself in this real world.” – male, 32, Shangdong province.

 

  1. Wellness For the Skin, Through Healthier Diet

The pandemic has reinforced the link between nutrition & health, and between skin health and nutrition. What has changed is that ‘food that is good for health’ is getting more integrated in Chinese eating habits.

 

Searches on keywords such as “immunity, nutrition and health, coarse grains” have increased significantly. Healthy and functional snacks is gradually becoming a hot consumption trend among young people.

 

 

 

The newly launched “collagen peptide dry fruit” snack is BESTORE’s (良品铺子,Liang Pin Pu Zi – a well-known high-end snacks brand in China) first attempt to enhance nutritional elements of snack. Collagen peptides, being relatively small molecules, are easier to digest and absorb, and have beauty-enhancing benefits.

 

 

  1. Wellness Through a Better Balance Between Professional Success & Immediate Happiness

In China as elsewhere, quarantine was an opportunity for many to take a step back and really think about the meaning of life and work. More and more people started considering finding meaning and fulfilment elsewhere than in their job. As working ‘like a robot’ became less appealing, many started to wish they could create something different.

 

“Youth Losers’ farm” in Chong Ming Island (part of Shanghai) is a group of young Chinese citizens which left big cities to set up a farm. They learned agricultural methods and live on the product of their crops. Since the end of the lockdown, some of them have decided to live a “half farmer, half X” life, and some of them plan to definitely leave the city behind and stay on the farm for several years.

 

 

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Safe & Clean: a Key Driver In Consumer Goods

Being vogue in a sustainable way

Studies show that Chinese people are among the most concerned worldwide about the environment. They are particularly worried about pollution and its impact on health. And they want to play a role, have a positive impact through consumption.

 

The covid19 epidemic motivated young Chinese people to further think about the relationship between human and nature, and explore more possibilities of a sustainable life. It brought change to what they use & eat and to how they live. When it comes to fashion, they no longer want to choose between a responsible behavior and a joyful and stylish attitude: more and more young people look to being vogue in a sustainable way.

 

Bottloop (抱朴再生)is a fashion brand from Beijing who addresses these expectations. It combines a modern lifestyle with fashion pieces that are all made of recycled products, using plastic bottles and organic fabrics to manufacture trendy, urban clothes. Beyond materials, the brand blends fashion and sustainability by joint design, art exhibitions and public benefits activities. It has developed collaborations with artists as well as famous brands such as Mercedes and Mars Wringley. In April 2020, Bottloop invited 10 well-known graffiti artists to design eco-friendly, colorful raincoats based on the stories and memories of the epidemic. They were exhibited and launched as a new line of products at K11 Shanghai.

 

A number of other initiatives such as the collaboration between Nike and Reclothing Bank, a Chinese independent designer brand focused on upcycling old garments and “letting fashion be reborn”, are combining a sustainable approach with high creativity.

 

The covid crisis has accelerated this blending of fashion with sustainability. It has pushed consumers to further expect that brands take a stand, express values, and implement concrete actions in real life in addition to demonstrating inspiration. It has also shown that the pandemic period, now a common heritage to all consumers, is a material that brands can leverage if they are willing to give it a positive, creative tone.

 

If you are interested in the China market, contact us.

 

 

 

IN THE SAME SERIES:

The multiple facets of Wellness & Wellbeing in China

Beauty trend in China 2019 : What are local brands doing that is proving so successful?

After discovering the 3rd part of our expert’s interview on the evolution of Physical Retail Environment, Here is the 4th and last part of the interview of our Beauty Ifop Asia expert, on local beauty companies. The following findings are based on Ifop’s research experience in beauty category and social listening on various online channels (e.g. social media, shopping sites, etc.), and they are mainly reflective about Chinese women in higher tier city.

 

Local brands have a talking point for some time, but really seem to have taken off in the past year in terms of the number of new brands hitting the market and the quality of products they are offering; is this your view too? What are local brands doing that is proving so successful?

 

1. C-beauty’s reputation is set to change from a cheap alternative to an industry trendsetter.

 

  • C-beauty brands have seen their sales soar in the past several years thanks to their high price-to-quality ratio and consumers’ “buy-Chinese” attitude as an expression of national pride. Yet compared to international brands, most consumers still thought of C-beauty as having inferior branding and a lack of cachet. And C-beauty was mostly known for producing ‘copycat’ versions of premium international products at a much lower price.

 

  • Yet, nowadays, a wave of new-gen C-beauty brands is challenging the old “cheap, unoriginal” norms of C-beauty by offering a value upgrade, and China’s young and urban population is its biggest advocate. User data from the lifestyle platform Little Red Book showed that entries of “C-beauty” rose 116 percent year-on-year in the first half of 2019, while over 5 million users shared positive reviews of C-beauty brands. According to CBN Data’s report, 70 percent of C-beauty consumers are age 18-25 and from top-tier cities like Shanghai, Guangzhou, and Hangzhou.

 

  • Local brands are often able to familiarize themselves with the Chinese market and communication trends faster. Brands can leverage diversified marketing strategies such as social networking, KOL, variety IP, etc. to achieve rapid growth in sales.

 

  • Local brands put more emphasis on combining cultural elements, and it is easier to resonate with consumers and build emotional connection. According to Tencent Gen Z Research Report, over 50% of Gen Z think that foreign brands are no longer a bonus, and strong national pride and self-esteem drive Gen Z to be more willing to support local brands.

 

  • The product development and update cycle of local brands is shorter than that of international brands. Local brands could quickly adapt to consumers’ changing needs, and provide a brand new consumer experience. As an example, Marie Dalgar will launch new products every month, and the time from new product development to product launch is generally about six months, which makes the brand rapidly spread in the market.

 

 

Some C-beauty brands are tapping into the power of traditional Chinese medicine to win over the support of consumers. For instance, the Shanghai skincare brand Inoherb is famous for incorporating Rhodiola Rosea, a plant that was used by ancient Chinese to make skincare goods, into its formula. According to the report, there are respondents who believe C-beauty fits the skin conditions affecting Chinese people the best, while foreign brands are seen as using chemical ingredients that damage their skin.

 

 

2. Which kinds of local brands are doing well? Is it just KOL brands with a ready digital following or is the offer more qualitative?

 

  • Perfect Diary was established in 2016 in Guangzhou. This chic beauty label boasts minimalist, sleek products that are affordable without compromising on quality. Perfect Diary’s products are designed to be easy to apply, so they’re perfect for anyone new to makeup. Each product is tailored towards Asian skin types and marketed to keep up with China’s ever-changing beauty trends.

 

  • It’s remarkable marketing mix contributed to its success:
    • Its price-value proposition and unique branding campaigns. Perfect Diary sells unique products that cost one-fourth that of foreign brands; most items are priced under 100 RMB (US$14), making it affordable for most Chinese consumers.
    • Make use of new format of social media marketing to increase brand exposure and build new consumer connection: One key factor for the rise of a group of cutting-edge local brands is to abandon traditional advertising strategies and transfer to social media, and then make the brand flourish. Perfect Diary invested a lot in the content marketing on Red at early stage to raise brand recognition and generate buzz.

 

  • a twelve-color eyeshadow palette collaborated with Discover channel. Through creativity, practicality, as well as rich and bold color matching, the brand is deeply loved by makeup enthusiasts and novices. It also promotes Perfect Diary to one sales peak after another. (It is estimated that there are over 110,000 posts about this palette shared on Red)

 

  • Judydoll

Judydoll is an affordable brand boasting adorably-packaged makeup in a wide range of colors. They frequently release fun, new products, always staying one step ahead of China’s makeup trends. Judydoll is extremely popular—their famous single eyeshadows, which come in 171 colors, have over 700,000 sales per month.

 

  • MAOGEPING

Mao Geping is a makeup legend in China and he is also the founder of MAOGEPING cosmetics, one of China’s major domestic brands. His makeup range was inspired by Chinese classical poetry, paintings and costumes that reflect the country’s rich history. As such, the product packaging is luxurious and classy, with Chinese-inspired accents. MAOGEPING is a bit pricier than Judydoll and Perfect Diary, but his products are great basics that cosumers will end up using every day.

 

 

  • Outstanding visual appearance of local brands attracts consumers’ attention (combining cultural elements, cross-border cooperation, IP),thus establishing unique brand image and personality to attract young consumers. Innovation on visual appearance breaks down the inherent impression on local brands.

 

  • Local skincare brands: Core ingredient is the key to the success of various local skincare brands. Local skincare products that specialize in popular ingredient are gradually well known and recognized by the public. Natural raw materials are also the main selling point of some traditional local brands. Pechoin and Chando have always adhered to the concept of “from nature”. For example, the “Herbal” series of Pechoin and the “Himalayan Glacier Water” of Chando.

 

3. What impact are local brands which have been acquired having on the market, (eg Magic of Yue Sai by L’Oréal)? How will these brands evolve?

 

  • Positive impact: Expand target audience through creative and localized marketing strategy:
  • Dabao SOD lotion, was an essential skincare product for almost every Chinese family in 1980s. After it was acquired by Johnson& Johnson, it was gradually marginalized by the market and even disappeared for some time. Recenly, Dabao has started brand transformation by innovating packaging, cross-industry collaboration, creating male-focused product line, and so on.

 

Dabao SOD lotion Vs. Chinese traditional cartoon, Huluwa

 

 

Dabao launched male skincare series.

 

 

 

  • Negative impact: Unclear market position:

After Yuesai was acquired by L’Oreal, the brand position was vague at the first place. It was degraded from semi-selective local skincare brand to mass brand, which is similar to Maybelline and L’Oreal Paris. But the result turned out to be unsatisfactory. Now Yuesai changed its market potion into premium skincare, and update its marketing strategy by collaborating with KOLs and exposing in e-commerce live streaming. It has gained increasing recognition. However, it is still a long journey for the brand to reach the same level as other foreign premium brands, which have rooted and stable status in consumers’ perception.

 

4. What kind of distribution strategies are the new local brands adopting?

 

  • Compared with a large number of local brands’ offline channels in the past, recently, local brands have begun to make efforts through e-commerce platform combined with offline channel at later stage. With consumer orientation, they have begun to invest more in brand marketing.

 

  • Most of the local brands created in recent years started with online platform. Through various internet social media marketing methods, brands created high-quality promotional content, including graphic, video, live streaming and other forms to generate buzz, and directly trigger online sales. Coupled with the relatively low price of local products, consumers’ trial-and-error costs are low, and it is easier for them to accept direct online purchases. In addition, online sales have directly shortened the distance between brands and consumers, and let brands communicate directly with consumers through social and e-commerce platforms, in order to understand the pain points of product and make timely improvement.

 

  • When the number of online fans is reaching a peak, it is the time to expand new consumers through offline channels for those local brands. Meanwhile, offline stores have become an important channel for new local brands to enhance interaction and experience.

 

  • Winona is a special case, which starts from offline. As a brand mainly focused on medical skin care, Winona is promoted offline at first, based on professional academic research capabilities and doctor recommendations. Through the counters of pharmacies and hospital usage, it builds consumers’ awareness and reputation of the brand. Then, it began to enter to online channels to spread to wider targets.

 

5. What is the market share of local beauty brands and how do you see this evolving?

 

  • According to the Tmall (one of major e-commerce platforms), local brands takes over 1/3 of market share among 55 beauty brands which exceeds 100 million RMB sales on 2019 Nov. 11th Online Shopping Day.

 

  • Among the Top 20 makeup brands sold in January-November 2019 on Tmall, the performance of all brands was above 200 million; the number of Chinese brands accounted for 40%, including Perfect Diary, Huaxizi, Zeesea, Carslan, Chioture, Meiking, Marie Dalgar. This performance is slightly better than skincare; Perfect Diary won the championship with more than 1.5 billion sales. It is also the first local brand to win the Tmall Nov. 11 cosmetics sales champion.

 

  • Among the Top 20 make up products sold on Nov. 11, 6 products on the list are from local brands, taking over 30%. Powder from Huaxizi is on the top, exceeding 500 million sales.

 

  • Compared to the era when prices determined consumption power ten years ago, nowadays more consumers are willing to pay for quality and personalization. Brand differentiation has become an important factor to leverage premium power. In addition to innovation in product packaging, product forms and concepts, local brands should also go deeply to focus more on product research and development to improve product quality, thereby increasing consumer stickiness.

 

  • In addition, C-beauty brands still have more hurdles to overcome before taking the global stage. To gain a foothold in the competitive market, C-beauty brands have to focus more on the product research and development, rather than communication, and try to build a higher level of consumer trust through product with a sustainable vision.

 

Find all the articles here :

 

1. BEAUTY TREND IN CHINA 2019 : HOW ARE CHINESE BEAUTY CONSUMER HABITS CHANGING ?

2. BEAUTY TREND IN CHINA 2019 : HOW ARE BEAUTY COMPANIES RESPONDING TO THE NEW CONSUMER DEMANDS?

3. BEAUTY TREND IN CHINA 2019 : HOW IS THE PHYSICAL RETAIL ENVIRONMENT FOR BEAUTY EVOLVING ?

Beauty trend in China 2019 : How is the physical retail environment for beauty evolving ?

After discovering the 2nd part of our expert’s interview on consumer habits changing, Here is the 3rd part (out of 4) of the interview of our Beauty Ifop Asia expert, on the evolution of Physical Retail Environment on beauty companies. The following findings are based on Ifop’s research experience in beauty category and social listening on various online channels (e.g. social media, shopping sites, etc.), and they are mainly reflective about Chinese women in higher tier city.

 

How is the physical retail environment for beauty evolving? Particularly when looking at saturated Tier 1 and 2 cities compared to the lower tiers where consumption power is growing but physical retail has been underdeveloped? 

 

  • Despite the convenience of online shopping, there’d still a case to be made that brick-and-mortar stores will never be eclipsed because they offer an all-sensory experience that by definition a digital retailer cannot provide. physical stores still occupy an indispensable position. According to research data, over 50% of consumers think one of the reasons they like to go to offline stores is to swatch and try new products. In addition to test lipstick colors, about 50% of respondents will go to physical stores of their favorite brands to experience new products. Therefore, brands are taking effort to upgrade physical stores to inject brand vitality and attracts younger consumers by creating unique and immersive shopping experience.

 

  • Consumers in Tier 1 and Tier 2 cities have more opportunities to experience novel and diversified offline retail environment, which emphasizes on fun and immersive experience with entertainment and high technology. Other than boutique stores, brands also launch pop-up exhibitions and pop-up stores in big cities to engage with more consumers. (E.g. Nars 25 Anniversary Exhibition, Charlotte Tilbury Pop-up store)

 

 

  • Makeup collection store is another new form of offline store. It is like fast-fashion makeup store, focusing on mass or niche brands, including foreign and local trendy beauty brands. Traditional beauty advisors have been removed from the store. It mainly targets on young consumers who value shopping efficiency while pursuing cost-effectiveness. Such stores start opening in Tier 1 and Tier 2 cities, covering large population of young and trendy consumer.

 

  • The Colorist, an emerging makeup collection store, opened the first store in October, and planned to open over 50 stores in one month, covering 20 top cities in China.

 

 

  • ARMAY, is based on contemporary fashion and aesthetics, born as online cosmetics collection store, now adopts new retail strategy and set offline stores in Hongkong Shanghai Beijing and Chengdu. It conveys the concept of beauty and beautiful life. Covering first well-known international cosmetics and skin care brands products, global unique boutiques, and HARMAY’s own products, including skin care and lifestyle, minimalist in sensibility and industrial in aesthetic, all Harmay stores swap glamour for mystery, transforming the shopping experience from a browsing activity to a journey of discovery.

 

  • Open physical retail stores in low-tier cities would be next stage for successful new local brands. After Internet breaks down the barriers to information transmission, residents in low tier cities can already access the same fashion and beauty information as urban residents on Weibo, Red, and Douyin. Compared with international brands, local brands are better able to seize the sinking offline market through the initial high-intensity online marketing and interaction as well as cost-effective advantages. Since Perfect Diary opened the first physical store in 2019, the number of offline stores has exceeded 40. In the next three years, 600 offline stores are planned to cover 100 cities, covering low-tier cities.

 

 

  • Open physical retail stores in low-tier cities would be next stage for successful new local brands. After Internet breaks down the barriers to information transmission, residents in low tier cities can already access the same fashion and beauty information as urban residents on Weibo, Red, and Douyin. Compared with international brands, local brands are better able to seize the sinking offline market through the initial high-intensity online marketing and interaction as well as cost-effective advantages. Since Perfect Diary opened the first physical store in 2019, the number of offline stores has exceeded 40. In the next three years, 600 offline stores are planned to cover 100 cities, covering low-tier cities.

Beauty trend in China 2019 : How are beauty companies responding to the new consumer demands?

After discovering the 1st part of ou expert’s interview on consumer habits changing, Here is the 2nd part (out of 4) of the interview of our Beauty Ifop Asia expert, on Beauty Companies in China and beauty consumer demands. The following findings are based on Ifop’s research experience in beauty category and social listening on various online channels (e.g. social media, shopping sites, etc.), and they are mainly reflective about Chinese women in higher tier city.

 

How are beauty companies responding to the new consumer demands? What kinds of products are they bringing to market that are proving successful?

 

1 – More foreign brands are considering e-commerce platform as first entrance to break through Chinese market.

 

Some western, Japanese and Korean makeup brands, and some fast-fashion niche beauty brands have opened Tmall overseas flagship stores and achieved good sales (e.g. Fenty Beauty, 3CE, etc.).

 

L’Oreal’s 3CE online flagship store opened in February 2019 for trial operation on Tmall, and its single-day sales exceeded 14 million RMB on Tmall Super Fan Day.

 

 

2 – Accelerate product upgrade and improvement (including but not limited to ingredients, packaging, format, and concept)

 

With the help of fast-growing wave of social media and e-commerce, brands could easily track with consumers’ behavior and feedback. In the meantime, consumers are well educated and quickly absorbing new knowledge. Therefore, brands need to keep up with the market pace and offer timely response through product upgrading and technical development.

 

Premium brands have led the way in the new formatted launches that have appeared in the market, as they have looked to tap into the upmarket shift in demand. Lancôme released Teint Idole Ultra Wear Valueset, a new stick foundation series, providing eight different colours for consumers to choose from.

 

3 – Create emotional and cultural resonance with consumers

 

Simple cross-industry collaboration is not enough to be standing out in competition. In order to trigger consumers’ interest and improve brand loyalty, brands have put efforts on integrating cultural and trendy elements (e.g. Chinese classic fashion, palace concept, entertainment IP, etc.)to build emotional connections with consumers.

 

Huaxizi launched limited edition for new year, named “百鸟朝凤” (birds pay homage to a phoenix), which is from Chinese traditional fairy tale, meaning happiness, joy and pursuing beauty of nature. The eyeshadow palette has delicate embossed patterns.

 

 

4 – More interactive and creative content and format when collaborating with KOLs

 

Consumers are exposing to beauty information in more diverse forms and richer content from KOLs, for example, plog, vlog, live streaming, product sharing, tutorials, and so on. Interesting and immersive collaboration with KOLs could contribute to increase awareness and boost sales.

 

5 – Products claiming on new technology development attracts consumers’ attention

 

On the basis of ingredient-savvy, consumers are paying more attention to the scientification of skincare. They are eager to learn as much as possible about their own skin in order to obtain customized and targeted skin care products. Bio-chemical ingredients and high-tech beauty tools are raising public attention.

 

6 – Professional on functionality on specific product or product line

 

As consumers are more sophisticated on product choice, they are refining each step of skincare routine to focus on targeted functions. Consumers are no longer looking for all-in-one products to satisfy skincare needs.

 

SkinCeuticals has been popular recently due to emphasis on targeted efficacy for each product type (color correction, reducing fine lines, whitening, removing spots, and so on). Consumers are educated to add on different serums in usage for stronger and more accurate solution.

Beauty trend in China 2019 : How are Chinese beauty consumer habits changing ?

Discover the 1st part (out of 4) of the interview of our Beauty Ifop Asia expert on Beauty trends in China and beauty consumer habits. The following findings are based on Ifop’s research experience in beauty category and social listening on various online channels (e.g. social media, shopping sites, etc.), and they are mainly reflective about Chinese women in higher tier city

 

How are Chinese beauty consumer habits changing? What kinds of brands and products are they interested in? How does this differ from the previous year or two and how will this evolve?

 

  • Skincare

 

Heavier usage of sun care

With increasing awareness of the harm of overexposure to sun on skin health and ageing, a great number of Chinese women start to form new sun care habits. Their usage of sun care products has been beyond the height of summer or when they go to the seaside on holiday, whereas, it is increasingly becoming a year-round essential item for daily use in their skin care regimens. Putting sunscreen during the winter and wearing sunscreen to work in an office turn to be common practice among Chinese beauty consumers. New sun care product launches in China with ‘long-lasting’ claims or high-SPFs have grown significantly, in addition, mom women pay regard to ease of re-application, and try to look for more convenient and easier to use format of sunscreen so that they can apply at all times.

 

“Overnight” skincare product is thriving in response to the need of “night animals”

In line with their social value and behavior, young consumers are looking for more advanced skincare solution to compensate their unhealthy and indulging lifestyle. According to “2019 Citizen Health Insight Report”, about 70% of post 90s generation go to sleep after 11pm.

 

Overnight beauty hacks, such as sleeping facial masks, overnight powders, and LED facial devices, have seen soaring consumer interests in China recently. L’Oréal’s Revitalift Filler Renew Anti-Ageing & Replumping Night Cream is marketed as a “zero o’clock cream (零点霜)” today in China. Guerlain’s Midnight Secret Serum, on the other hand, is marketed as a “Stay-up-late cream (熬夜霜).” Both nicknames, strategically adopted by the brand’s local marketing, target the Chinese millennials who are seeking control of their skin in their increasingly sleep-deprived lifestyle.

 

Cosmeceuticals brands are longer confined to problem skin

Being constantly educated by the ingredient savvy KOLs, beauty salons and various cosmeceuticals brands, a great number of Chinese women focus their attention on cosmeceuticals brands, which is deemed to be more powerful in terms of prevention, protection and correction of skin concerns, as well as more compelling for being backed by science. They try hard to understand those ingredients and the evidence-based efficacy.

 

This offers an explanation of the robust growth of Skin Ceuticals in 2019, as it is perfectly aligned to cash in on this major trend. It’s signature products, H.A Intensifier, Discoloration defense, Phyto corrective, are highly appreciated by many young women. And the use of ingredient content and ingredient function labeling are major product differentiators that have a massive impact on consumer preference.

 

“Phyto Corrective,” which is designed to hydrate and soothe irritated or sensitive skin. On its Tmall flagship, the sales of “Phyto Corrective” was high at 16,000 pieces in the last 30 days, compared with “CE Ferulic High Potency Triple Antioxidant” and “Phloretin CF High-Performance Broad-

 

 

 

 

Action Antioxidant,” which sold 1,000 pieces and almost 2,000 pieces respectively. Voolga敷尔佳 is developed from Heilongjiang Huaxin PharmaceuticalCompany, with pharmacy experts and professors. It launched repairing skincare for post-cosmetology treatment, and the product is used in cosmetology hospitals.

 

 

 

Ultra-Luxe skincare is on the rise

Super premium beauty and personal care in China recorded robust double-digit current value growth in the past 2 years, mainly thanks to the expanding middle class in China.

 

Facing tremendous social pressure to maintain their youthful looks, Chinese women, see anti-ageing skincare as a priority and are willing to invest in products that deliver results. They are looking outside those premium classic premium brands, such as SK2, Guerlain. In recent years, they have started looking into foreign niche, ultra-luxe brands abroad for more exclusive offerings, such as Valmont and La Prairie from Switzerland, Natura Bisse from Spain.

 

Natural, organic, safe & clean products are becoming the norm.

Millennials women demonstrate high interests in natural, herbal or organic ingredients and biotech products. Not only do they look for transparency and traceability of product ingredients, but they are also curious about where ingredients originate and how products are made.

  • Skincare & Makeup

 

Innovative products cater to technologically aware consumers in China

Consumers are no longer confined themselves to studying ingredients, products with innovative characteristics, now seems more closely meeting demand from technologically aware consumers. Many brands utilize a series of intelligent, innovative features in their products. As an example, the time match powder can be used to absorb the gloss of the skin intelligently in line with the sebum level of the skin, to reduce the oxidation and yellowing of the make-up. In addition, the unique Super Bio-Moisture Network can keep the skin moist for a long time by sensing the skin’s condition, so as to achieve “intelligent” hydration and natural transparency.

 

  • Makeup

The rise of new aesthetic trends

Chinese beauty buyers are flocking to domestic and Western brands, from K-beauty. This change in consumer trends strongly relates to a search for authenticity, and consumers now want products that allow them to express their identity and individuality rather than the uniformity promoted by K-beauty.

 

Niche professional makeup brands have been penetrating into to consumers’ recognition.

Along with consumption upgrading and promotions of Daigou, consumers are not limiting to well-known brands and hot products when it comes to product choice. They are discovering more professional and differentiated brands to satisfy with specific makeup needs as well as show their personality. (E.g. Pat Mcgrath, Glossier, Romand, Natasha Denona, etc.

 

Glossier became popular on Instagram and Youtube. It is discovered by local KOLs recently, and exposed on local social media, such as Red.

 

 

“Watch it, But it” Livestreaming e-commerce, make their purchasing decision more easily

Livestreaming is the “go-to” option for Chinese consumers when seeking out new products and deciding on what to buy. It serves not only as a tool to showcase and deliver information about products, but also as a customer engagement channel in which shoppers can interact with the host. As consumers can ask questions about the products, post comments to the hosts and even send virtual gifts as a token of appreciation while watching the livestream.

 

2019 is a year of livestreaming in China. For instance, Taobao Live, Alibaba’s dedicated livestreaming channel, generated sales of RMB 20 billion during Alibaba’s Singles’ Day 2019 shopping holiday on November 11. This accounted for around 7.5% of the company’s total Singles’ Day sales of RMB 268.4 billion

 

  • Kim Kardashian collaborated with livestreaming influencer Viya to sell 15,000 bottles of KKW Beauty perfume on Singles Day.

 

  • On 2019 March 8th Women’s Day, Li Jiaqi (Austin Li) sold 10,000 bottles of facial cleanser in 10 seconds; sold 15,000 lipsticks in 15 minutes; and made 3.35 million RMB sales in 5-and-a-half-hour online live streaming

 

 

Chinese consumers’ makeup routines evolved rapidly

Consumers in China are becoming ever more sophisticated in their daily makeup regimens. Eye shadow was notable amongst the expanding areas of colour cosmetics in the past 2 years.

 

According to Grand View research, the value of the global eye makeup market is expected to reach US$21.41 billion by 2015. Eye shadow products are expected to be the fastest growing category with an average annual growth rate of 6.2% between 2018 and 2025.