From the 1st of May, China’s regulatory requirements on cosmetics being sold in the country changed. Cosmetics imported into the country no longer require animal testing as long as they meet the requirements set out by China’s NMPA (National Medical Products Administration). Prior to this change, foreign cruelty-free cosmetic brands were limited in the ways they could sell in China, either selling via cross border e-commerce platforms such as Tmall Global or through bonded warehouses in Free Trade Zones.
Although cosmetics are one of the most popular categories sold online in China, physical retail still accounts for the majority of beauty sales in the country. In addition, since the beauty market is so experiential, brands with a physical presence have a real advantage as they have tangible touch points providing the ability to build brand awareness and allow customers to experience the products. So what does the relaxation to the requirement for animal testing mean for foreign cosmetic brands and Chinese consumers?
With China’s beauty and personal care market valued at USD 75.35 billion, there is rightly an expectation that an influx of foreign brands will look to enter the market over the next few years and capitalise on this growing opportunity. A well thought out omni-channel strategy utilising both online and offline channels is what brands entering the Chinese beauty market need to consider. However, before companies rush in and open a number of brick-and -mortar stores, brands need to do their research to understand their customers and recognise the diversity in their needs and profiles. This allows them to differentiate themselves in the crowded marketplace, offer relevant products to suit their customer’s requirements while educating the target consumer on the advantages of cruelty-free cosmetics.
What needs to be remembered is that for some of the more prominent cruelty-free brands such as Aesop and The Body Shop, they have already spent considerable time and money engaging with the local customer, have cultivated a loyal local following, and have experienced strong sales both on Tmall Global as well as in other international markets from the travelling consumer. Their official entry into the market with a physical presence will likely only increase sales. However, lesser known cruelty-free companies entering China will face an uphill battle, not just from other international brands but also strong domestic players such as Perfect Diary and Chando.
As with all new brands entering the market, they will encounter a completely different landscape with consumers having differing expectations and requirements to what they are used to. In addition to navigating the still complicated regulatory landscape in China, brands will most likely not be able to rely purely on their cruelty-free or vegan identity to market their products initially as this remains a very niche market sector in China. Consumers in China associate these terms with products that have more natural and healthier formulas and not its implications in regards to the environment or ethical animal practices.
At present, Chinese consumers place little importance on whether a product is tested on animals. While this may vary between different city profiles, overall it is not a feature which influences the purchase decision. There are local Chinese beauty brands like Florasis (Huaxizi) which don’t test on animals, but they rarely use that as a selling point, showing just how unimportant it is in the purchase decision. Chinese beauty consumers are more focussed on the ingredients and what they are actually putting on their skin. The purchasing drivers for beauty products in China relate more to functional benefits rather than abstract ideas like sustainability and ethics. Catesby believe that to stand out and cut through the noise, new beauty brands entering China will initially have to highlight the practical and clinical benefits of their products.
That being said, the tide may be turning. We are seeing a shift with Chinese consumers becoming more aware of sustainability and ethical consumption. This is being seen not just in cosmetics but across multiple categories. Sustainable products and lifestyle choices are becoming increasingly trendy, and while ethical purchases are not as developed in China compared to other markets, this is quickly changing especially with younger consumers. The Covid-19 pandemic has led Chinese consumers to become more thoughtful around their consumption choices. With social isolation, it has also accelerated an affinity for pets which will likely result in more empathy towards animals.
Cruelty-free cosmetic brands entering and expanding in China should be optimistic with this turning of the tide, but they need to take a long-term view and put in considerable effort to enlighten the consumers. In order to succeed, Catesby believe brands will have to educate Chinese consumers about ethical beauty, promote it, and induce fundamental change in the way customers view this issue so that they can see the appeal in choosing to buy from cruelty-free brands. This stance will likely gain popularity as more new brands enter into the market and may even spike a trend for cruelty-free cosmetics.
However until that time when there is a fundamental shift towards ethical beauty products in China, foreign cruelty-free brands will need to provide a way to stand out in the oversaturated beauty market. Companies who can offer Chinese consumers a compelling brand identity or story together with unique products will win customers and market share.