China's hair-care market powers ahead
Updated: 2011-01-17 10:57
By Yu Tianyu (China Daily)
A local government official teaches primary school pupils how to identify fake brands of shampoo and other care-hair products in Shijiazhuang, the capital city of North China's Hebei province. The market for care-hair products in the country has great potential considering the nation's current per capita use of these kinds of products stands at about $2 annually. [Photo / China Daily]
ompound annual growth rate expected to increase to 15.5 percent between 2011 and 2013
BEIJING - Hong Kong heartthrob celebrity Andy Lau used to say in a hair-care product TV commercial in the early 1990s: "The girl of my dreams should have beautiful, pitch-black hair."
Uttered in his mellow voice, this simple message kept his admirers spellbound. It also marked the start of the booming Chinese hair-care product market.
It was at that time that major hair-care brands started to make their appearances in this huge market - Rejoice in 1989, Pantene in 1992 and L'Oreal Paris in 1996.
According to a report by market research company RNCOS, the Chinese hair-care market is expected to grow at a compound annual growth rate (CAGR) of 15.5 percent between 2011 and 2013.
Statistics showed that about 20 percent of Chinese people wash their hair every day while 75 percent of them do so every three days. The market value of shampoo is about 30 billion yuan ($4.5 billion) while the market value of other hair-care products is worth about 20 billion yuan.
On a per capita basis, the Chinese spent just $1.79 a year on hair-care products in 2009, according to Datamonitor Industry Market Research.
Li Shulin, a marketing expert based in Beijing, said: "Although the Chinese hair-care market has been dominated by international players, there is still scope for them to move forward as well as allowing newcomers in."
Procter & Gamble Co (P&G) has a 55 percent market share in terms of hair-care products, followed by Unilever, and is the world's largest consumer goods company by volume, said Li.
Last year, P&G announced it would invest at least $1 billion in China over the next five years and also launched an innovation center in Beijing with an investment of $80 million.
Richard Chen, director of the P&G Beijing Innovation Center, said: "Chinese consumers' major requirements for hair-care products have become more specific, which is where the major competition in the Chinese market is based."
Chen said technology development and innovation has always taken a large proportion of P&G's total budget to meet consumers' changing demands.
In China, shampoos accounts for 78.9 percent of products in the hair-related market. Conditioners make up 11.6 percent of the market and all other hair-care products combined account for the remaining 9.5 percent, according to Datamonitor.
The RNCOS report said that specialized shampoos and conditioners for moisturizing, repairing, dandruff treatment or straightening effects were widely adopted by Chinese consumers.
Last September, P&G launched Pantene Hair Care Science Institute in an effort to combine the research results of Chinese consumers' demands and P&G's global hair-care expertise.
In 2009, Peking University First Hospital and Pantene launched research involving 600 consumers in Beijing, Shanghai, and Guangzhou.
Yang Shuxia, an expert at Peking University First Hospital, said that about 88 percent of respondents in Shanghai and 70 percent in Beijing think their hair has been badly damaged while Guangzhou ranked No 3 with 58 percent.
In response, P&G's Pantene brand has launched many products focusing on repairing hair damage caused by styling and color processing.
Chen said that, for example, "leave-on" products in addition to daily shampoo and conditioning have become a trend. Pantene Clinicare Split End Fuser, a new member of the Pantene hair-care brand, is an example.
Jeni Thomas, a senior scientist at Pantene, added that another important aspect in the company's research is night-care products to provide deep and intensive treatment while people sleep.
In 2009, BaWang International (Group) Holding Ltd, China's largest herbal shampoo maker, undertook an initial public offering in Hong Kong, raising HK$1.55 billion ($199.5 million) for the company, which attracted much attention because Chinese traditional prescriptions were for the first time being adopted in modern personal care products.
Thomas said: "Chinese traditional prescriptions emphasize the value of nature. And, Pantene also highly values the application of natural ingredients.
"We have spent a lot of effort on maximizing the effect of nature through technology. And you can find our Nature Fusion Collection in the global market. The products are a great combination of hair-care technology and the power of nature to give gorgeous results."
According to RNCOS, there are nearly 3,500 domestic cosmetics players in China, but the majority of them operate on a small scale. Big foreign and domestic cosmetics players will adopt the merger and acquisition route to attain growth in the market.
In 2010, Unilever Group agreed to acquire Alberto Culver, the world's sixth largest hair-care manufacturer, for $3.7 billion, which is expected to boost the company's presence in the hair-care market, globally as well as in China.
In 2007, Beiersdorf paid 269.45 million euros ($354.5 million) for an 85 percent stake in China-based C-Bons Hair Care as the cosmetics giant looked to penetrate deeper into the fast-growing market.
Euromonitor International said that countries such as China, where premium product penetration is low, will see the premium products outperforming cheaper rivals even during the economic downturn.
Chen of P&G emphasized that the high-end market is definitely important in future development.
P&G's Vidal Sassoon has been one of the most important members in the company's high-end category. L'Oreal SA, the world's largest cosmetics company by volume, launched L'Oreal Paris Absolute Repair in 2009. This is regarded as another representative in China's high-end hair-care market.
Japan-based personal care giant Shiseido announced early last year that it is planning to step up the distribution of its two core professional hair brands - Shiseido Professional and Joico - throughout China, focusing on the luxury professional hair-care market.
The company will be initially targeting 700 leading luxury salons in Shanghai and Beijing.
The market for professional hair-care in China was estimated at $13.2 billion in 2007, while the luxury professional hair-care market is currently estimated to be worth 50 billion yuan with an annual increase of 10 percent, according to Shiseido.
Sam McKnight, the world-renowned stylist, said: "Healthy looking hair is the basis for creating beautiful and stylish looks."
About 68 percent of Chinese consumers agree that spending time and money on their personal appearance is an important aspect of someone's sense of well-being, according to a report by international consulting firm TNS.
Judy Zhu, a manager specialized in the high-technology sector at Career International Consulting Ltd, a leading Chinese integrated recruitment provider, said: "Appearance accounts for 20 to 30 percent of your total performance when you are going through a job interview. It is not the most significant part, but when all candidates are comparable in terms of ability, good looks seem to become a key decider."
Showline Chang, a renowned psychologist and best-selling author, said: "Having clean nails, well-cut hair or decent clothes at least indicate that you are a person who is responsible, competent and reliable, as well as full of affinity. Professionalism is actually composed of such details."
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