Since the Japanese cosmetics market has been anticipated to shrink in upcoming years, the development of the cosmetics industry in the region ought to hinge over how to develop sales in China, where the prominent players of Japan may be benefited on their fortes. Key participants within Chinese market include companies of South Korea, whose native market had alike characteristics. As per the Customs Service of Korea, cosmetics export value has beaten the value of import ever since 2012. Also, previously it reached almost 3.3 times than that of the latter in 2017. Seeing on the cosmetics imports of China through trading partner, South Korea exceeded France as well as went at the top positi
Since the Japanese cosmetics market has been anticipated to shrink in upcoming years, the development of the cosmetics industry in the region ought to hinge over how to develop sales in China, where the prominent players of Japan may be benefited on their fortes. Key participants within Chinese market include companies of South Korea, whose native market had alike characteristics. As per the Customs Service of Korea, cosmetics export value has beaten the value of import ever since 2012. Also, previously it reached almost 3.3 times than that of the latter in 2017. Seeing on the cosmetics imports of China through trading partner, South Korea exceeded France as well as went at the top position in 2017. Within the market of skincare products in China, Shiseido had lost stake whereas major rival of South Korean- Amorepacific had gained stake.
Moreover, cosmetic companies of South Korea have a number of strengths. Firstly, they have got tremendous marketing competences. They are very much successful in creating an image that their products provide worthy cost-benefit performance, as well as are constantly looking forward to introduce new categories via focusing over current trends however a few concepts have been explored & developed by a German dermatologist in the 1960s, and cushion foundation, for instance BB (blemish balm) cream. Industry giants operating in Europe, American as well as Japan have added such innovative types of products to their product portfolios that are made by the companies of South Korea. This is another key strength in their development speed.
South Korean corporations take a reduced amount of time for developing an idea along with launching new products as compared to the companies of other nations. Thus, some people have termed the region as “fast beauty”, also “fast fashion” due to the big brands in apparel industry like ZARA & H&M. Then, third major strength is supportive government policies. The South Korean government has aided the cosmetics market to flourish. For instance, as soon as the EU-Korea FTA got into power in the year 2011, their government made certain to augment its backing in region where imports from EU were projected to upsurge. Furthermore, cosmetics was amongst one such regions where the government stepped up their R&D & exports support as well. Also, the South Korean government organized an initiative to export TV dramas, Korean music as well as other contents. As a result, these contents have successfully become popular in Asian region that have lifted up the exports of cosmetics.
Moreover, within South Korea, manufacturing as well as development of evolving cosmetics brands are maintained by OEM contract manufacturers. Although a prominent cosmetics corporation Amorepacific observed its sales momentarily declining in 2017 owing to lesser sales of high-end products at nontaxable workshops. On the other hand, 2 prominent OEM corporations in South Korea, specifically Cosmax & Korea Kolmar, enjoyed a healthy progression of approximately 17% & 23%, respectively. Moreover, overall sales of two corporations arose to around 1.7 trillion won that was almost 30% of the sales of Amorepacific’s. Since the cost of sales of an OEM product is just 1/4th of that of a ultimate merchandise (retail price), it has been projected that the production at these two giants OEM contract manufacturers have by now already outdid that at the leading cosmetics corporation in South Korea. The augmentation of OEM contract manufacturers has hastened since they are successfully tapping into demand and that too not only from brands of South Korea but also from China.
The market of skincare products in China arose to almost 27.6 billion dollars in 2017 that was more or less 1.5 times that of the market of United States as well as valued for approximately 30% of the international market. Consumers’ wants has been moving towards added high-worth objects that also included products with anti-aging assistance. China’s entire cosmetics industry was approximately 53.5 billion dollars as well as valued for more than 10% of the international market. This recommends that there is potential growth opportunity for makeup merchandises. On the other hand, Chinese corporations that used to emphasize over low- as well as middle-priced cosmetics, are getting towards the market of high-end products.
It is held that a number of Chinese customers who are fascinated towards purchasing products that are made-in-Japan are anxious regarding the safety of these Chinese products. Though, if the major brands from China establish satisfactory quality management as well as assurance systems in every single process, right from the development of origination to manufacturing of end products within their country, they would probably earn customers’ trust in terms of safety & security. The desirability of the products made-in-Japan may perhaps not be as prodigious as they are at the present. Moreover, in order to stand competitive contrary to the competitors in South Korea as well as China, Japanese cosmetics market necessities to strengthen its process of constituent procurement, process of formulation development, plus production method.
In the meantime, Japanese OEM contract manufacturers might take a novel approach -- trading directly with the brands of China that are coming towards the high-end market as well as looking for higher quality. Furthermore, OEM cosmetic corporations have augmented by intensifying their consumer base from the cosmetics corporations to emergent brands. Lately, there are instances in which international businesses commend production to the OEM vendors of Japan, to offer “made-in-Japan” products.
Moreover, in Japan a number of players in the cosmetics industry, from the manufacturers of ingredient to cosmetics corporations, have functioned together, also experiencing robust growth. Thus, OEM companies frequently extended in a foreign country as subcontractors of Japanese cosmetics corporations. Thus, moving ahead however, there may perhaps arise added opportunities for them to manufacture products for the local cosmetics businesses as well as evolving brands in China, along with Japanese quality. In such instance, it is significant to get involved not only in production nevertheless also in development of formulation & design of concepts- that is ODM function. ODM functions are not covered by Chinese OEM vendors. While the rivalry with Korean OEM/ODM businesses will probably be severe in terms of cost as well as development speed, there is a potential for healthy growth for Japanese OEM/ODM businesses.