Diversified channel

A report from research firm TNS Research International said nearly 70 percent of Chinese consumers believe that looking good makes one feel good, and therefore they won't hesitate in spending time and money in this regard. This attitude fuels the growth of the cosmetics market.

China has made a big leap in the cosmetics market over the past three decades, ranking third largest in the world in 2009, after the United States and Japan, with sales revenues of over 140 billion yuan ($21 billion), according to data from the China General Chamber of Commerce. These were 400-fold the sales in 1980.

Increasing disposable incomes and a surging working population in China will contribute to the industry's 12.3 percent compound annual growth rate during the period of 2010 to 2013, revealed by a report of RNCOS, which specializes in market research consulting. However, an average Chinese person's annual spending on cosmetics equals merely 3 percent that of a Japanese and 6 percent of an American.

A low penetration level and the vast consumer base in China are therefore catching the attention of skincare manufacturers, said the TNS report.

Taking the advantage of the growth in the cosmetics market, traditional Chinese brands begin to use diversified channels to promote their products. Their revival owes much to the Internet. According to China's largest online shopping market Taobao.com, an online cosmetics store sold 2,423 tubes of Pehchaolin cream in a week, which is not easy to do in a supermarket. "Our customer service staff are busy processing deals 14 hours a day, and our products attract a lot of post-80s generation customers," said the online seller.

With more and more females hoping to keep their youthful looks before the onset of aging, consumption has shifted from middle-aged and older consumers to a younger group below 35 years of age, especially the post-80s group.

These time-honored brands can also evoke the memories of the generation's childhood days. The ongoing revival of 1980s-style fashion inspired their strong feelings of nostalgia for domestically-made products, which were the luxury brands back at that time, Yu Hai, sociology professor with Shanghai-based Fudan University, wrote in his blog.

On many online forums, girls shared their experiences of using different brands. Many comments in favor of domestic cosmetics are posted, claiming they are more competitively priced and user-friendly.

"Online shopping is usually a lower-cost business model than shopping centers. Comments spread much more rapidly on the Internet and that helps increase sales," explained Xu Jingquan, Secretary General of the Chamber of Beauty Culture and Cosmetics of the All-China Federation of Industry and Commerce. "In addition, the traditional Chinese brands are improving their quality and making their packaging more attractive to compete with the foreign counterparts."

In the race against foreign brands, domestic skincare firms have a long-term strategy. Using designs and packaging featuring Shanghai 1930s' designs, the VIVE range of goods for women, launched by Shanghai Jahwa last July, made a play to access the country's fast-growing demand for luxury cosmetics products.

The new products didn't come cheap, selling even higher than most other overseas brands in China, but there are consumers now favoring domestically-made high-end cosmetics. Li Jingyi, a 26-year-old TV producer, said, "The price is not the first priority. I would love to try [new high-end cosmetics] if the product is really good."