Chloé Goncalves | Exfoliating China's Cosmetics Industry

Topics Discussed and Key Points:

● A general overview of the cosmetics market in China

● The most popular beauty products in China compared to the rest of the world

● The popularity of live streaming in the beauty space

● A primer on Key Opinion Consumers (KOCs)

● How consumer behaviors in China differ from those in the West in the cosmetics market

● Hero products by the largest cosmetics brands in China

● Why there are significantly more male consumers for beauty products in China than in the West

● Advice for cosmetics brands looking to enter China

● Cutting-edge marketing tactics particular to China

● What up-and-coming companies are doing to compete with large, even global, brands

● How COVID-19 has affected the Chinese cosmetics industry

● L'Oréal’s China strategy

Episode Summary:

Today on The Negotiation, we speak with Chloé Goncalves, Asia E-Commerce Manager at L'Oréal. Previously, she served at Alibaba as a Digital Marketing Manager, working up to the role of International Business Development Manager for Tmall Global before leaving the company in January 2021 to work with L'Oréal.

The cosmetics market has grown exponentially for the past several years, and today is the second-largest in the world after the U.S, with an estimated revenue of $22 billion—an amount that is expected to triple by 2024. 25% of sales take place via E-Commerce, and this number has been rising faster than ever thanks to COVID-19.

Chinese women generally have a more extensive skincare routine than those in the West. Skin whitening products are also a staple in the market. Also, because of the high pollution problem alongside high-stress lifestyles, Chinese consumers tend to seek products that address specific problems, including blemish, wrinkle, and acne removers. Finally, there has been a rise in the popularity of male grooming, which includes makeup, in China.

Live streaming is hugely popular in the beauty industry in China. The country is the largest live streaming industry in the world today, with the pre-COVID number of over 500 million live streamers having no doubt skyrocketed in the past year.

Chloe mentions that Chinese consumers use E-Commerce not only to save time but to spend time. That is, even without the intention of buying anything, they visit platforms like Taobao or Tmall to watch live streams or read blogs not just from Key Opinion Leaders (KOLs) but, even more so, from Key Opinion Consumers (KOCs). There are now more than 100 apps and platforms in China that offer live streaming features.

For foreign brands looking to enter the Chinese cosmetics market, Chloé’s first tip is to find great local partners to take care of operations, marketing, and logistics. Her next piece of advice is to home in on ten key, hero products that would best fit China’s particular market instead of bringing in its entire suite. Her final tip is to invest in a marketing strategy that will help the foreign brand cut through the noise that is made up of countless existing brands as well as countless existing E-Commerce and content creation platforms.

Key Quotes:

“What’s really interesting in China is that consumers use E-Commerce not to save time, as we would do in the West, but to spend time. So, even though they don’t want to buy anything, they would connect on Taobao and Tmall to watch live streams and videos and read blogs and articles.”

“[For brands looking to enter China,] the first tip would be to find the right partner; especially if you’re a small brand and don’t know the market well, you really need to have a local partner that will help you do all the operations, the marketing, the logistics, etc.”

“China is a long-term journey. In terms of investment, we usually advise brands to invest 20-30% of their annual sales target in marketing to make sure that they can achieve their sales forecast and sales goals.”