Much of the beauty industry focus is now on Asia, even from major global
brands. China alone is expected to be the largest beauty market in the world
by 2018, according to data from Morgan Stanley,c and everyone is vying for
the purchasing power of the 400 million millennials there. A testament to
the potential for explosive growth lies in Kantar Worldpaneld research that
found that makeup adoption by Chinese women in their 20s is 53% behind
their counterparts in Korea.
Chinese millennials alone outnumber U.S. and European millennials
combined by a factor of 24: 1. The broader ASEAN region boasts another
200 million millennial consumers who are at various stages of newfound
affluence, compared to 92 million in North America and 91 million in Europe.
Critically, in spite of the greater purchasing power in the West, Asian
millennials feel more upwardly mobile and optimistic for a better future,
whereas Western millennials feel much less so. This translates into a greater
propensity to spend on status-signifying non-essentials.
The K-beauty wave is particularly strong with millennial generation in
China and Korea, which is far more plugged into livestreaming content,
social media and ecommerce than its predecessors. K-beauty rituals have
found enormous popularity with the emerging middle class in China and
have transcended any cultural differences.
As a result, there is newfound demand for skin perfection, hair expression
and makeup prowess. This may be because China’s own economic evolution, occurring in almost the same way as Korea’s earlier transformation, is
roughly one generation behind Korea, but catching up lightning fast.
It took Korea 25 years to evolve from an agrarian to an industrial to a
consumerist culture, with prosperity increasing along the way. This process
is occurring much faster in China and even faster yet in the ASEAN markets
of Indonesia, Philippines, Thailand and Vietnam.
The Hallyu (“Korean wave”) experience resonates with Chinese millennials
because it taps into the same hopes and aspirations that are found in an
emerging economy. So, you end up with same beauty practices for the same
Pollution and other environmental stressors are huge concerns in China,
and the sun is avoided at all cost. Sharing the same desire for flawless
beauty as their Korean counterparts, these consumers are embracing the
K-beauty way to get there.
While China’s nascent middle class is settling down into Korean-style
multi-step nightly skin rituals, millennials in both markets are simultaneously
scaling back the number of products they are using. Indications are that this
is led by marketers, who have combined two or more products into one as
a new story. As this example illustrates, brands look for any edge to gain
attention—even if, in the end, it means minimizing the category overall.
New Marketing Paradigms
With the advent of smart phones roughly 10 years ago, traditional meth-
ods of advertising, promoting and merchandising products in Korea (and
elsewhere) started becoming obsolete. Fast forward to today, where you now
have everything from mobile apps and advertising to popular Korean dramas
that are heavy with product placement.
For example, Amorepacific’s Laniege brand placed its Song Hye-kyo
Lipstick at a pivotal point on the K-drama “Descendants of the Sun.” Named
for the show’s lead actress, the brand still struggles to keep the shade in
stock. Marketers have even begun developing their own dramatic content.
For example, Carver Korea’se brand AHC (Aesthetic Hydration Cosmetics),
produced its comedy-drama series called “My Lawyer, Mr. Jo” with the lead
actress Kang So-ra, thus assuring its own platform to promote their products.
Mobile Commerce-first Retail
Korea, the real innovator in mobile transactions for the last decade, now
has close to 60% of its beauty transactions conducted via smart phonesf.
And China’s mobile beauty transactions recently climbed to 26%. This is still
light years ahead of anything in the West.
Today, the region’s consumer is more prone to mobile purchases, with
younger consumers having less historical exposure to beauty on a physical
retail shopping basis. As a result, there has been clear cannibalization of
brick-and-mortar retail transactions throughout Asia—particularly a stark
decline department store sales.
While global brands are just now getting their digital act together, Korean
brands are well-experienced. These brands have developed proven situational care stories for effective marketing micro-moments. In this way, the
K-beauty dynamic is fertile ground for startups that can develop focused,
cost effective campaigns on digital media.
Famous K-vloggers, such as You Tube superstars Pony and Lamuqe, still
rule the communications worldwide with their sophisticated productions of
tutorials and celebrity-inspired tips. But now, Chinese Weibo vloggers such
as Jiujiu Meimei, Hong Kong’s Katy Beauty and Pearypie from Thailand are
coming fast on their heels, with followers numbering 5 million.
With the fast-growing popularity of beauty apps such as Meitupic, Pitu
and Makeup Plus, which enhance social media photos and can use existing
product shades from participating brands, it’s easy to imagine a mash-up of
apps and vlogging to make augmented reality a very powerful tool to drive
engagement of the consumer. n
eRecently acquired by Unilever for 2. 27 billion euros
f Yonhap News May 4, 2017; http://english.yonhapnews.co.kr/news/2017/05/04/
ASIA’S NEXT BOOM MARKETS