PCHi Proves: Cosmetics R&D Business is on the Rise in the East

During the Personal Care and Homecare Ingredients (PCHi) show, held March 10-12, 2010, in Shanghai, a record 194 personal care exhibitors including 65 newcomers, the highest number to date, supported what market research has claimed for some time—that cosmetics R&D business is on the rise in the East.

Jason Li, PCHi project manager, said in a press statement, “China will see high growth and low inflation this year, making it possible for the country to experience one of the best years in decades in terms of economic performance.” In relation to this, he added that the show organizers expect PCHi 2010 to springboard its exhibitors to achieve significant results and enjoy greater returns during the year.

Among the show’s exhibitors were members of the China Association of Fragrance, Flavor and Cosmetic Industries (CAFFCI). According to Zhang Tie Chen, chairman and senior engineer for CAFFCI, “Our members are interested in expanding beyond the Chinese market and PCHi provides a venue where they can exchange knowledge and ideas.”

The first day of the show opened with a ribbon-cutting ceremony welcoming nearly 2,300 attendees from around the globe. While some exhibitors highlighted products such as whitening actives, materials derived from traditional Chinese medicine (TCM) and sensitive skin care ingredients, others were present to search for new distributors and gain a foothold in the Chinese market.

For example, Beom-Zoo Lee, president of the Korean company Chemland, noted “75% of our current business [including cornstarch, rice starch, coated powders and TiO2 and ZnO dispersions, among others], is in the Korean and Southeast Asian markets, while 25% is exported to North America and Europe.” Through In-Won Lee, Chemland’s trading team/general manager and interpreter, B-Z added, “We’d like to reach the China market” but he conceded that language difficulties can be a barrier to penetrating further into the region. “Taking part in this show is not about meeting clients,” he added. “For us, it’s about finding a distributor.”

Frank Wang, regional business development manager for China, Northeast Asia and India for Innospec, said, “Most companies think of China as one of the biggest markets.” He added, “We’re interested in setting up a production site in Asia or China.” The company provides a range of materials, from surfactants and actives to aroma chemicals, and Wang noted that business in China is growing quickly—almost too quickly, and that the industry needs to move faster to keep up.

How might this quickened pace affect innovation? In many cases, it has prompted raw material suppliers to innovate with flexibility for the formulator in mind. On the flip side, however, as Loh Peng Keong, senior fragrance manager of sensory and strategy for Sillage Aromatique, a division of Nardev Chemie Pte., Ltd., observed, “[For perfumers], the ability to create from inspiration is being lost. People are simply given direction for [various products]. It is hard to keep perfumery alive.” He added that due to this focus on speed to market, “everyone is trying to create the next big trend; the luxury market especially is obsessed and is creating too many fragrances that smell alike. There’s not enough emphasis on unique scents.”

Considering local vs. luxury brand loyalty in China, Li noted that, almost all major international manufacturers are present in China and that the luxury market naturally centers near the larger cities where incomes are generally higher. However, especially in more rural areas, there is strong support for the smaller, local manufacturers. “Consumers in China often go to local shops to buy domestic, local brands,” said Li. He added that the income of consumers in more rural areas has increased, along with consumer spending on personal care products.

Wang described the markets in China as being divided into tiers, much like the sizes of various cities, and this fact can make it difficult to design and formulate products for the different tiers since the needs of consumers among them differ. However, he added, “People have become more willing to try new things.” With sights set on expansion into the Chinese market, PCHi exhibitors anticipate the 2011 event, to be held in Shenzhen, near both Guangzhou and Hong Kong, which according to the organizers will attract more domestic and international participants from up to three top tier cities to maximize business opportunities. Li added, “The industry is ever-changing, and as the organizers of the largest and most prominent cosmetic ingredient event in China, we are committed to adapting to the changing needs of our customers and supporters.”

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