China Becomes Raw Materials Powerhouse

Jun 6, 2006 | Contact Author | By: Katie Schaefer
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Title: China Becomes Raw Materials Powerhouse
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China has become a top competitor in the cosmetics and toiletries industry, according to a new study conducted by Kline & Company. The study indicated that China now holds 9 percent of the US$3 billion global market in specialty raw materials and is continuing to grow. The reason for the growth, according to the report, is China’s ability to provide quality products for lower prices.

“When we examined the Chinese market just four years ago, the local suppliers were just starting to make an impact on the global stage,” said Gillian Morris, industry manager of the Chemicals & Materials practice for Kline & Company’s research division in the report.

Conditioning polymers, emollients and skin whitening agents are among the top products to show a growth rate in China, according to the study. Each was found to have grown nearly 12 percent. At the top of the list were skin whiteners, as consumers in the region idealize a lighter complexion.

But the Chinese market is not the only country in Asia with booming growth in the cosmetics and personal care industry. Its neighbor Japan joins the United States and Western Europe in representing 80 percent of total consumption of specialty raw materials, according to Kline. The annual growth of the three powerhouses added together, however, did not rival that of China. Western Europe saw a 3 percent gain, the United States saw a 2.5 percent gain and Japan saw a 2 percent gain.

Japan is reported in the study to be rising in raw materials for the industry. Morris attributed this growth to a high level of disposable income in addition to successful per capita spending on personal care products. China and Southeast Asia make up the remaining 20 percent of the total consumption of raw materials.

“Some very good companies like Shiseido and Kao are really at the forefront of innovative personal care products, particularly for anti-aging technologies, and this is where raw material firms will need to focus in order to remain competitive with the advancing Chinese suppliers,” added Morris in the Kline study.

The study projected the market for personal care raw materials to grow nearly 10 percent annually over the next five years. Selected categories in specific raw material product are estimated to grow 15 percent to 20 percent on an average annual basis, according to the study.

Kline & Company maintains that other global suppliers, in order to remain competitive with such growing markets as China, must continue to provide innovative products while offering value-added specialty products.

-Katie Schaefer, C&T Magazine