Market information provider TNS says its TNS Worldpanel China shows that China's cosmetics sector has grown by 17% over the latest calendar year, rising from US$1.9 billion at the end of 2005 to US$2.2 billion by the end of 2006.
TNS is predicting growth of between 15% and 20% of China's cosmetics market during 2007, 2008 and 2009. If China achieves the 20% level of growth for the next three years, its cosmetics market will be worth about US$3.8 billion, eclipsing the US cosmetics market in the skincare and make-up sector, which was worth an estimated US$3.6 billion at the end of 2006 and which grew by less than 0.2% in 2006 compared with 2005.
A range of factors are driving China's market, including rising prices, consumers trading up to more expensive products, growing demand for anti-aging products, and the official relaxation in 2006 of an earlier ban on direct sales. On prices, for example, TNS Worldpanel China data shows the average price increase in China of make-up for 2006 versus 2005 which was 15.7%, while prices of facial cleanser and skin moisturizer increased by 9.7% and 8.4%, respectively.
China's recent liberalization of direct sales is having a major impact on the country's cosmetics sector. China put a moratorium on direct sales in cosmetics in 1998. But the government issued a new law in 2006 that allowed direct sales on the back of tighter regulation. Major foreign brands now have fresh opportunities in what is expected to become the world's largest cosmetics market. TNS data shows the share of spend from the direct sales channel in China has shot up, rising 82% in 2006 over the previous year for skin care products, and 92% for make-up.
The first direct sales player granted a license to sell at national level in China was Avon, with brands targeting a range of affordability levels. Mary Kay is also permitted to undertake direct sales and was one of the fastest growing brands in 2006. Amway is another direct sales player, with its Artistry brand.