Hong Kong is recognised as Asia’s distribution, trading and services hub for a wide range of consumer goods, a theme at Hong Kong business seminars held in Australia this fall. Asia household consumption expenditure growth is higher than North America and Europe and the expanding China consumer market has seen consumer goods imports grow 45% a year in 2012.
Hong Kong is not only Asia’s lifestyle and trend setting hub, it has strong fundamentals and the rule of law is important for all business, says Ms Margaret Fong of the Hong Kong Trade Development Council. HK operates under a common legal system and its laws are forceable on mainland China. Within this scenario, more skin care and cosmetics firms have used or are using Hong Kong as a starting point to enter the huge Chinese consumer market, from Australian organic brand Jasmin Skincare to UK organic retailer Neal’s Cosmetics firms favour Hong Kong for China entry Yard Remedies and U.S. direct-selling giant Mary Kay.
Mary Kay, bases its Asia- Pacific operations in Hong Kong and the company’s biggest Asian subsidiary by far is in the Chinese mainland, where the company has seen extraordinary growth despite an increasingly crowded market, according to the Hong Kong Trader newsletter.
Mary Kay entered the mainland in 1995, opening a plant in Shanghai and in 2013 Mary Kay (China) Cosmetics Company Ltd became the company’s biggest subsidiary, overtaking the US in sales.
KK Chua, Mary Kay’s President for Asia-Pacific says, “you do have to constantly be building the brand”. As Internet use widened, Mr. Chua says the company’s sales model was easily adapted to e-commerce. Being one of the early adopters of the online business positioned the company to grow further with the rise of mobile commerce.
Across Asia, consumers are more open to buying products produced in the East, not just Western brands, particularly cosmetics, says Mr. Chua. Asian customers are also increasingly interested in the ingredients and technology that go into producing the goods.
Mr Chua says building an Asian hub out of Hong Kong was an obvious choice. A clean business environment and accessibility to other parts of the region are some of the city’s advantages, along with the ability to tap the Englishspeaking workforce.
And the Top 5 premium beauty players are moving into Asia. Estée Lauder Companies is putting on a Chinese face. The U.S. skincare brand has developed Osiao, a line specifically for Asian skin. The product was designed in Hong Kong, with Hong Kong actress and singer Miriam Yeung as its spokesperson.
French beauty firm L’Oreal has offered to buy Chinese skincare company Magic Holdings International for US$843 million, as China represents its fastest growth market.
Major brands are using Hong Kong to open showcase boutiques as an entry point. For these companies and many other international fashion and cosmetics brands targeting Asia, Hong Kong, with its high exposure and low tax structure, is a pivotal entry point.
Healthy tourism arrivals from the Chinese mainland make Hong Kong an increasingly attractive place for lifestyle brands to launch.
Young women on the mainland, like those in Hong Kong, are increasingly paying greater attention to their appearance, a trend that has attracted some of the world’s leading brands.
This year’s new beautymarket entrants include Japanese cosmetic brand Pola and UK organic skincare brand Neal’s Yard Remedies. And popular Korean beauty brands Etude House, Innisfree, and Coreana Cosmetics’ organic brand Zeniswell have also entered the Hong Kong market.
In response to market awareness and demand for organic and natural products in the region the Asian edition of the exhibition and conference Natural & Organic Products will debut next year August 27-29 in Hong Kong. The event is following the ongoing success of NOPE in the UK and the launch of Natural Products Scandinavia in 2012.