Attraction that is more than skin deep

Updated: 2014-11-07 11:43

By Liu Lu(China Daily Europe)

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Cosmetics companies in Poland are ready to give China a market makeover

As the look of China has changed over the past 30 years, so has the desire of Chinese to change their looks. While few kid themselves that they will rediscover their young days in potions and lotions, many feel that a little money well spent will have them looking and feeling much better about themselves.

Such hopes have become more pronounced as personal wealth has grown, making dazzling Western cosmetics with fancy names all the more affordable.

The research firm Euromonitor says that in China last year, retail sales of skincare products amounted to 131.4 billion yuan ($21.4 billion; 16.7 billion euros), 9.1 percent higher than in the previous year, and sales of makeup products were worth 18.8 billion, 7.3 percent higher than in the previous year.

Though the growth in China's GDP continues to slow, the market remains one of the world's most attractive for international cosmetics makers. The great bulk of overseas cosmetics companies that have gone to China in recent years has been from the US, France and Italy, but one country that is now going all out to raise the profile of its cosmetics and skincare products there is Poland.

"As the world's third-largest cosmetics market, the beauty industry is undoubtedly a big business in China," says Andrzej Eliasz, councilor of Poland's Ministry of Economics.

"There is obviously a lot we need to do to get Polish cosmetic companies into China. We are putting a great deal of effort into persuading Chinese customers that our products are as good as any made in France and Italy."

The Polish cosmetics industry is one of the most powerful in Europe, he says, and the ministry has nominated it as one of 15 flagship branches of industry promoting the Polish economy worldwide.

The promotion program has been carried out in China, Brazil, Europe, the Middle East and the United States.

In Poland, about 100 big and medium-sized companies produce cosmetics, and more than 300 small and micro ones operate in the market. In addition, there are hundreds of research, chemical and biotechnological companies, laboratories, and packaging and container producers, forming a complete industry chain.

"It enables Polish companies to base the whole production process in Poland, from conception, through testing and research, to production and packaging right until the final product," Eliasz says.

The Chinese cosmetics market is becoming more sophisticated, but the Polish companies are innovative and flexible, he says.

"The fragmentation of the cosmetics market in Poland affects its flexibility," he says. "Small and medium producers can easily adapt to changing market demands because they have short production lines and are quickly able to introduce changes in the production process."

At present, Western brands are still the mainstay of China's cosmetics market, and they have long dominated the high-end market. But Polish cosmetics producers say they enjoy a big price advantage.

"Employment costs in Poland are not only lower than in Western Europe, but also than in neighboring Slovakia or the Czech Republic, which ensures lower production costs," says Jakub Wilsz, director of Norel Dr Wilsz, one of the oldest cosmetics companies in Poland and Central Europe.

Lower prices do not mean lower quality, he says.

"Poland is ranked sixth of cosmetics exporters in Europe by export revenue. There is big demand for Polish products both among traditional consumers in Central and Eastern European countries and in the leading cosmetics markets in Europe, including those in Britain and Germany. The fact that Polish cosmetics are doing well in these demanding markets is undeniable proof of their quality.

"If we enter the Chinese mainland, its consumers will get the chance to buy cheaper cosmetics of premium European quality."

The company is now in talks with several Chinese distributors and hopes to enter the mainland in one or two years, Wilsz says.

"Polish products are not only attractively priced, but the companies making them also boast innovative technologies. We have invested heavily in modern production lines and research programs. Many big Polish cosmetics companies have their own research laboratories. It is not only product quality that has improved, but packaging and market communication, too."

Polska Cosmetics, the official promotion agency of Polish cosmetics, says no Polish skincare or cosmetics products can be found on store shelves in the Chinese mainland, but that will soon change.

Mateusz Mazur, export manager of Oceanic SA, says his company's products are expected to debut in Hong Kong before the end of November, and will enter the mainland very soon.

The company last year launched its products in Cosmoprof Asia in Hong Kong, the largest beauty trade event in the Asia-Pacific region. It attracted a lot of interest from Hong Kong and mainland distributors and has been contacted by a couple of companies, it says.

"Based on that interest we deliberately chose a brand management company from Hong Kong that is now helping us prepare the launch of the brand there," Mazur says.

Hong Kong is a perfect springboard for the company to enter the mainland market. And like Oceanic, instead of directly entering into the mainland market, many Polish cosmetics companies have chosen the special administrative region as a steppingstone to the mainland.

"We know many Chinese mainland shoppers travel to Hong Kong to buy skincare and cosmetics products, which is why we have started from Hong Kong," Mazur says. "We do not want to rush into the mainland market. It is so huge and complicated. We have studied the regulations in China very well and we have hired a Chinese consultant to help us with the registration of our cosmetics brand in the mainland."

While his company is a newcomer to China, its heritage of more than 30 years in business gives it a competitive advantage, similar to that of many French and Italian cosmetics companies.

"We are learning how to make the right product for this market, how to link up with the right partners and how to be a good partner as well. We've really taken time to understand that. But having good partners in China has made things much easier for us."

To help Polish cosmetics companies connect with potential Chinese partners, Poland's Ministry Economics recently invited Chinese distributors from several Chinese cities, including Hong Kong, Beijing, Shanghai and Chengdu, to Warsaw for a market research tour.

Some Chinese distributors have shown great interest in bringing Polish cosmetics and skincare products to China, but they are also aware of the difficulties in obtaining brand registration for foreign cosmetics products in China.

"In China, cosmetics products are regarded as health-related, so the government asks all cosmetics industries to register such products before they can market them," says Li Yuqing, president assistant of Lezhitao Trading (Shanghai) Co Ltd, who took part in the recent tour.

Pre-market registration is done through the State Food and Drug Administration, she says, and foreign companies need to appoint a Chinese company to handle the registration on its behalf.

"The process is often complicated, time consuming and costly," Li says. "The whole procedure is rather cumbersome."

But despite the difficulties, she says, her company is still keen to take more products to China because of its market potential. Her company plans to introduce one Polish skincare brand early next year.

"Although we need to overcome difficulties to export to the mainland market, we are confident about the possibilities. We will work with Polish companies to evolve strategies to ensure that the right product reaches the right customer."

 Attraction that is more than skin deep

Employees of a cosmetics company in Poland at the production line. There are about 100 big and medium-sized companies making cosmetics in Poland. Liu Lu / China Daily

(China Daily European Weekly 11/07/2014 page21)