2008-06-26 – 3:41 上午
China’ s cosmetic exports are on the rise as demand from major and emerging markets continues to grow and makers enhance the quality of their products. Overseas shipments in the line are expected to increase 20 percent to about US$630 million in 2006. At US$150 million, exports in the first four months of the year have already risen 18 percent compared with the previous corresponding period in 2005.
China’ s main export market for cosmetics is North America with overseas revenue reaching US$250 million in 2005. The region accounted for about 48 percent of total exports in the line.
The EU is China’ s second-largest export destination, importing more than 12 million kilograms of cosmetics worth US$92 million in 2005.
Although low-end products still dominate output and exports, intense competition in this industry is pushing many large suppliers to midrange and high-end production.
The following are some of the key trends we see in China’ s cosmetics industry:
• Many suppliers will increase export prices by up to 5 percent through 2007 as raw material costs continue to escalate.
• Export sales will rise by 20 percent or more in the next 12 months as more suppliers focus on producing upscale models.
• In an effort to produce higher-end cosmetics, more suppliers will be using natural and renewable alternatives to synthetic mineral formulations. R&D will also be directed toward unique and more attractive packaging and presentation designs.
• The Middle East and Africa are emerging as major markets, especially for companies that want to export under their in-house brand names.
This report covers the five major cosmetic categories produced in China: lip makeup, eye makeup, nail polish, face makeup, and facial skin care products. For the purposes of this report, the first four categories are referred to as color cosmetics.
Most suppliers focus on just color cosmetics or skin care products, although there are some that offer a range of products across both categories. Companies concentrating on color cosmetics often subcontract the production of nail polish to manufacturers specializing in the product. Suppliers that offer all types of cosmetics are usually large, foreign invested enterprises.
The Products & Prices section in this report details the features and price ranges of cosmetics made in China. The latest trends in packaging and formulations are discussed in the R&D/Design section.
The Manufacturing section explains the processes involved in the production of different types of cosmetics and how these differ in small and large companies.
The Industry Overview elaborates on the industry composition, highlighting key characteristics of the different types of suppliers.
The majority of cosmetic suppliers in China are privately owned and a few are foreign-invested. Almost 80 percent of these suppliers export through trading companies. Reflecting the industry structure, 70 percent of suppliers featured in this report are China-owned while the rest are foreign-invested.
Industry Overview
Keen price competition amid rising material and labor costs is pushing many cosmetic companies in China to shift to upscale manufacture.
The cost of ingredients increased by 20 to 30 percent in 2005 while that of packaging materials went up 10 percent. To keep at bay the labor shortage problem that has affected nearly all industries in China, companies are also paying their skilled workers at least 10 percent more than they used to a year ago.
But with thousands of suppliers in the line, most of which offer low-end and midrange products with little differentiation, companies cannot afford to raise prices too much due to the risk of losing competitiveness.
Intensified price competition and saturation in the low-end market are now prompting some suppliers offering mainly inexpensive cosmetics to move upmarket. At present, a number of makers have already started following GMP standards when refurbishing, building and operating factories and workshops.
In this report, Diefei, Zhejiang Enchant, Fairdale, Yangzhou Zhonghui and JV carry out manufacturing processes in adherence to GMP standards using state-of-the-art imported production facilities. Most products made by these makers meet FDA, EN71, ASTM, FHSA, USP, BP, EP and EEC standards.
Another supplier featured in this report, Zelina, is using more expensive but environment-friendly ingredients in its formulations. Natural sesame and palm oils are used in lieu of synthetic mineral oils. Brazil palm tree and candelilla wax, which are recyclable and come from renewable sources, are incorporated as well, instead of whale wax.
Even so, low-end and mid-range models will continue to dominate China’s cosmetic exports for the next few years. In terms of R&D capability, management systems and manufacturing technology, suppliers are years behind cosmetic companies in France and Italy. In addition, China makers still lack advanced packaging design capability and technology.
Nonetheless, the move toward more upscale production is expected to raise export volume and value by 20 percent in 2006. China exported more than 84 million kilograms of cosmetics worth US$528 million in 2005. The country currently produces about 5 percent of global cosmetics output.
Supplier Profile
Diefei Cosmetics Co. Ltd
ISO-certified Diefei manufactures mainly midrange color cosmetics, exporting more than US$5 million worth of lipstick, lip gloss and eye makeup in 2005. All shipments went to OEM buyers based mostly in the US, Europe and Asia.
The company started construction of a 4,000sqm, three-story facility for nail polish production in 2005, with operations projected to begin by the middle of this year.
Products
Lip gloss and lipstick weighing 3 to 8g are priced from US$0.15 to US$0.20 and US$2 to US$3 per piece, respectively. Six-color eye shadow and blush sets go for US$0.40 to US$0.80, mascara is from US$0.30 to US$0.50 per tube and face foundation is at US$0.50 to US$1. A bottle of nail polish starts at US$0.10 and can go up to US$0.30.
Children’s makeup is also offered but this is priced 5 to 10 percent higher because of more stringent quality requirements.
Diefei also produces cosmetics made of organic ingredients but only for the domestic market.
Prices are expected to increase up to 5 percent due to rising crude oil costs and the possibility of further appreciation of the yuan.
The company does not produce its own chemicals but sources from known suppliers to ensure quality and safety. Up to 80 percent of ingredients come from the US and the UK, from companies such as Croda, Engelhard, Kahl, Merck, Strahl & Pitsch and Sun Chemical. The rest are sourced locally.
Manufacturing
The factory has four buildings, one each for corporate offices, and production of lip, eye and face makeup.
There are two production lines for liquid face makeup, four for powder makeup, and four for lip products.
The mixture for liquid makeup is tested for physical and chemical properties such as stability in temperatures ranging from -10 to 42 C, pH value, color, feel and bacterial content. There are seven machines that check whether the formulations are germ-free.
The preparations are stored in germ-free rooms to stabilize them prior to filling and packaging. For powder-based products, ground and mixed ingredients are pressed into the required shapes and sizes using 20 machines.
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