Deployment of both high-end and mass market products will be the dual focal points for South Korean cosmetics company Amorepacific in China, a country representing one-fifth of the firm's total revenue and among its fastest growing markets, according to Charles Kao, president of the company's operations in China.
Such a hybrid approach is backed by a continuous digitalization drive, featuring data analysis for product customization and social media interaction to better engage with an army of new and existing consumers, Kao told China Daily in an exclusive interview.
"For new product launches in China, we are moving from 'intuition-driven readiness' to the employment of data that depicts the clear preferences of customers," said Kao, under whose leadership the group has seen nearly 30 percent of revenue generated through online channels.
The company is among earlier adopters of the digital wave in China, whose endeavors are best exemplified by the recent setup of a dedicated office with Chinese internet giant Alibaba in Hangzhou. The aim is to customize products based on the predilections of self-expressive Chinese consumer groups using data analysis.
Under such an initiative, the first batch of two co-created skin care products, banking on data feeds that track people's favored formula and packaging, is scheduled to make debuts in China early next year, Kao said.
Chinese younger generation customers are equally willing to pay extra for quality items and services. "Therefore, we are investing heavily on enhancing immersive experience in the premium product line, such as the SPA services in our Sulwhasoo storefronts," he said.
At the same time, small-town youngsters form a new growth point for the industry with 7.8 percent growth in spending during 2018 when compared to 2017, according to consultancy Kantar Worldpanel. Online sales of beauty products－including cosmetics and personal care－in small towns soared 38 percent in 2018, double the growth rates in big cities.
To harness such a trend, Amorepacific has recently introduced its skincare brand Primera targeting mass market via Alibaba's Tmall site, with the aim of both riding the online wave and meeting the pursuit for natural ingredients in cosmetics, Kao noted.
The rise of small-town youth is visible also in a string of popular apps from social commerce site Pinduoduo to short video site Kuaishou. By tapping into these emerging groups, Tmall reported its sales of beauty products jumped over 60 percent last year, surpassing the industry's average growth rate.
"Still, small-town youth's average spending is still 18 percent lower than young people who live in big cities. The contrast actually represents a huge growth potential for marketers," said Jason Yu, general manager of Kantar Worldpanel China.
Kao hailed the constant improvement of business environment in China, saying opening-up is witnessing "faster pace and bigger strides".
For example, China's adjustment of the import of non-special use cosmetics procedure has effectively shortened the import duration from two to six months to five working days. Kao said this facilitates the company to unveil new products, like smart beauty machines, 3D printing skin masks and tailored mixed-color lipsticks, to the China International Import Expo in November.
"Occasions like the upcoming CIIE and the Nov 11 shopping gala represent a clear vote of confidence of China's pursuit of innovation and welcoming gestures for foreign businesses," he said.
