The Chinese cosmetics market is worth $26 billion a year and is expected to rank the fastest-growing market for beauty products in the world from now until 2018 with eight percent growth, according to research firm Euromonitor International. India, and Indonesia and expected to rank fourth and fifth respectively.
Little wonder then that top brands from L’Oréal to Sisley, Clarins, Gucci, Dior and Dolce and Gabbana are rushing to sell their perfumes, skin-care, hair-care and color cosmetics to Asian consumers seeking to look fairer and younger.
But getting the products to the end consumer in the diverse Asian market is an art in itself.
“These are high-value products and they need high levels of service”, says Antoine Martin, regional key account manager for SDV Asia Pacific, based in Singapore. SDV manages a range of services for the world’s leading perfume makers and cosmetics companies including labelling, packaging and distribution. SDV has enjoyed 10 percent growth in the cosmetics business in Asia over the past year, Martin adds.
It ‘s important to have specialist knowledge of the regulatory requirements in each country. For example, importers of cosmetics in India must label each product with the sales price and ingredients in the local language, says Martin. Sprays, meanwhile, are classed as dangerous goods (UN 1950) in all countries of the Asia-Pacific region and require special permits.
How cosmetics and perfume companies approach logistics in the region depends on their experience of the market, Martin continues.
Many of the long-established groups there have centralized logistics in countries such as Singapore to profit from efficient inventory management.
“Having a regional hub gives companies more flexibility and fast deliveries to individual markets”, says Martin. “It also helps them keep costs down because they have to store less stock in each country.” The Body Shop, part of France’s L’Oréal, for example, sends its products from the U.K. and the Asia-Pacific to Singapore by boat and centralizes its stocks there.
SDV then packs and labels the goods for local markets and dispatches them to retailers in the region. The volumes are impressive. In 2012, SDV labelled 750,000 products a month for the Body Shop before they were dispatched to countries including Japan and India.
Another French cosmetics group and retailer Sephora, part of the LVMH group, is newer to the Asian market and has a less centralized approach. Since 2013, Sephora has shipped its products from France, Italy and the U.S. to SDV’s distribution centres in Singapore and Thailand. From the beginning of next year, they will also be distributed from Malaysia.
“For companies such as Sephora the time to the market is very important”, says Martin. “This is the beginning of their growth in the Asian market and they are developing their logistics network.”