Letter from Shanghai by Kevin Chen |
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Kevin Chen is a Chinese national living in Shanghai. He previously worked in different parts of China for multinational firms including L’Oréal and Fuji film, and later moved into the publishing field as a Marketing Director, Vice President and Editor-in-Chief for local magazines. He is a columnist and freelance writer and his popular “˜Letter from Shanghai’ column appears regularly on The Moodie Report.com. He can be reached by email on kevinck@vip.sohu.net |
CHINA. 2004 was an extraordinary year for the international beauty industry in China as the market continued to accelerate with incredible speed. But while this consumer locomotive continues to be driven by cosmetics, fragrances are increasingly becoming a force in their own right.
Simultaneously reflecting and driving that trend, Chanel, Christian Dior, Lancôme and numerous other international beauty houses are spending heavily on television advertising spots to promote their fragrances.
The television blitz confirms the rapid rise in revenues and the great perceived potential of the market. The big budgets pouring into the sector underline the widespread faith among brand house concerning the long term vitality of the Chinese market. And the coverage tells us that fragrances are becoming a mass consumption item.
Perfume is a unique consumer item. It’s a personal symbol and it is often intertwined with culture. Its growing popularity mirrors many changes in Chinese lifestyle and mass culture.
Over the past ten years, the Chinese fragrance market has risen from nowhere to a sizable though still underdeveloped consumer sector. It has never boomed as such but grown steadily. But in rapidly modernizing cities, the number of perfume wearers is growing fast.
To get a better feel for the level of consumer acceptance and some of the market’s subtleties, I asked a range of friends and contacts about their preferences. The results were fascinating.
I interviewed about 30 people who are city-dwellers aged 20 to 38. About 85% were women. Salary wise, they draw between 2,500 RMB and 30,000 RMB monthly (US$302-US$3624). The locations of their workplaces are diverse – stretching from Beijing to Shanghai to Guangzhou. Most are university graduates and seven are Editors of fashion magazines.
Asked “˜What perfume do you use?’, the average answer was too detailed to include here. Four respondents listed 30 different fragrances, with an average usage of two to three bottles per year. Even those least partial to perfume had at least two bottles.
Whether consumers are likely to possess more or fewer fragrances tends to depend on their interest in the product. However, it is clear that those making more than 15,000 RMB (YS$1,800) a month are likely to use more.
Generally, the most-quoted brands were as follows. Women’s: Dior, Chanel, Lancôme, Burberry, Estée Lauder, Clinique, Guerlain, Kenzo, YSL and Anna Sui. For men: Boss, Calvin Klein, Burberry, Armani, Dupont, YSL, Dunhill and Givenchy.
Judging by this informal survey, there are currently plenty of popular brands in China. But the one which stands out is Chanel No 5. Why? For Chinese consumers it’s because it evokes a legend while the glamorous packaging leaves a very deep impression. Almost all respondents, including those who do not regularly use perfume, recognise the brand – and its characteristics.
Next came Dior’s products, and Lancôme, Armani, CK, L’Eau d’Issey and Kenzo, often because their ads or product designs have caught the consumers’ eyes.
Those doing well are usually international brands. Fragrances sharing the same brand name as popular fashion labels or cosmetics would generally receive wider attention, for example, Dior, Chanel, Lancôme and Estée Lauder.
Nowhere is the fashion to fragrance link potentially stronger than with Armani – its perfume has not really been pushed hard in China but the designer has a strong reputation here. As a result, Chinese men who are concerned about taste and image don’t want to miss out on the fragrance line. Hence they will snap up these products in duty free shops abroad.
The same applies to L’Eau d’Issey – “˜a lifetime of water’. This beautiful concept is very Eastern and is hard to forget even if the consumer has never sampled this type of fragrance before.
Naturally magazine editors have a better understanding of perfumes than others. But even their attention still tends to focus on those brands already well-established in China, especially brands with a particularly strong advertising presence – notably Chanel, Dior, Lancôme, Estée Lauder and Boss. For many magazines, the fragrance brands represent the biggest advertising clients.
In 2004, magazine editors paid special attention to the following new entrants: Estée Lauder’s Beyond paradise, Chanel’s Chance, the same house’s newly revamped No 5, YSL’s Cinema and Guerlain’s L’Instant.
What about local competitors? A distinctly Chinese brand is Shanghai’s Chinf & Chinf and it has launched lower price range perfumes such as Cocool. But to date it is relatively undeveloped and frankly I do not see any Chinese fragrance brand becoming a top label of choice among Chinese consumers.
Different scents for different occasions
To Chinese consumers buying fragrances is a particularly complex phenomenon. Many of those surveyed basically used their senses and moods to pick out their perfume. They stress that they will use a completely different fragrance for different occasions.
“I hope to give people different impressions, so I wear different clothes, and my perfume has to be matching,” said a 30 year-old General Manager in the media business.
Therefore, those who use perfume for self use rarely buy just one brand or one individual fragrance. Brand loyalty is often shown by opting for several lines from a single house. Someone who buys Chance is likely to buy No 5 sometime later.
Consumers from an artistic, design, media or multi-national industry pay more attention to designer brands and the style and design of a product. Hence the popularity of Anna Sui, Paul Smith, JPG, Armani, CK, Issey Miyake and Kenzo among creative circles.
The following feedback left a deep impression on me. Several girls told me about a young Chinese female author who had written a novel about a girl who loves Kenzo perfume. This led 18-26 female readers to fall in love with the brand.
The choice of scent is a complex question and there are conflicting responses. Media is clearly important yet many of those surveyed insisted that perfume is deeply personal and that they are unlikely to be swayed by ads or by recommendations from others.
This may be true for perfume connoisseurs. But for most consumers other influences come into play. Firstly, many felt that the nature of the scent itself was the key factor, but later admitted that when making their choices, they choose from the brands they know.
Secondly, even though they say that scent is important, in reality scent acceptance crosses a broad spectrum of motivations. Hence several of those surveyed possess many different types of perfumes. Thirdly, advertisements are very effective. Even those respondents who do not acknowledge the influence of advertising on their own choice, talk about its role when it comes to discussing others’ tastes.
But there are some broad trends. Chinese are choosy towards scent. Most like lighter, softer, elegant scent, as well as sweeter, floral and fruity ones. Men like refreshing fruit-led scent. About a quarter of respondents admitted that the more they come to like fragrances, the greater their choice becomes, as they tend to be more receptive towards stronger and more stimulating styles.
By general consensus northern Chinese prefer stronger, more sensual scent, whereas southerners prefer refreshing and lighter styles.
Among those surveyed, about 30% do not buy perfume over the counter within China. They have an opportunity to travel at least once a year to Hong Kong or further afield and that’s where they buy. Duty free shops in Hong Kong or abroad are popular, so is leading discount chain Sasa. Shopping centres outside of mainland China are also considered a good bet. On such occasions, travellers often buy both for themselves and for friends, leading to a lot of multi-purchases.
Many Chinese now give fragrances as gifts. In leading mainland department stores domestic counters are set up for this purpose. Based on a survey of Shanghai retail counters, consumers are 70% women – the men who buy are mainly purchasing women’s fragrances for their partners. Many women also buy for men. Overall, the gift-buying market is very important.
A counter supervisor told me: “I feel that about 80% of those who buy do not really understand perfume. Or maybe 40% learnt about it through a newspaper recommendation or ads. Mostly they just know some brand names.” Those who buy are mostly 23-35 female white-collar workers.
She added that whether a perfume will sell or not is determined by a combination of its smell, design, packaging and price. Design and packaging have become increasingly important. She noted increasing instances of people buying simply because they are attracted to the bottle design – these days consumers increasingly like unique, modern designs.
In terms of price – or value – gifts with purchase are considered a big help in pushing sales. That’s an important factor in developing a brand strategy as fragrances are increasingly viewed as appropriate gifts, whether bought for or by companies or friends.
Most fragrances are not bought for personal use, an important reminder to manufacturers to avoid giving easy discounts. Instead they should focus on gifting as the consumers often keep the gifts for themselves – and the brand’s price integrity is maintained.
The women interviewed in our survey said that the use of skincare still far surpasses fragrances. “Skincare is a daily morning and night regime, it never stops. Whereas fragrances are used only for certain occasions,” said a 27 year-old accountant.
On this point, Chinese women (like South Koreans and Japanese), place a strong emphasis on fair, smooth skin as an important dream. A university student, 20, said: “If I had only 500 yuan (US$60), I would not hesitate to buy skincare products. But not so for fragrances. Because your complexion is more visible.” This is despite the fact that, at 20, she has a flawless complexion.
Fashion magazine editors also believe that fragrances are a “want” not a need. Whether they will become an essential part of Chinese consumer lifestyle depends very much on the individual’s socio-economic status. But there is no doubt that the market is gaining volume inexorably. And once they start using fragrance, few will stop
The role of advertising
My respondents also discussed advertising (and public relations) in its myriad forms – fashion column recommendations, billboards, television and road signage are all common. Over the past 12 months numerous brands have started big-budget campaigns.
Not surprisingly, those spending most are the big players – Chanel, Dior, Lancôme, Boss, Burberry, CK and even Adidas. It’s money well spent – I’ve always believed that advertising in China cannot be neglected, whether your product is a new entrant or whether it is already well established. Heavy as well as intelligent advertising is a sure conduit to sales. Remember that most of those who use perfume have already accepted media influence in their lives.
For now the real market boom seems likely to take place in duty free and local market perfumery stores abroad – where the brands are plentiful, authentic and cheaper. But within the next five years China’s domestic fragrance market will expand dramatically.
Factoring in current local consumption with overseas domestic and duty free sales, the Chinese are already a major force in the fragrance business. But they’re about to become much bigger. Today, a girl who just found work bought herself a bottle of perfume. Tomorrow, she will reward herself with another. A boy who just began dating stopped in front of a perfume counter. Next time he will bring the subject of his charms to the same counter to buy a set of his and her fragrances.
And for international readers, remember this. The Chinese history of using fragrances far surpasses that of Europe. Our habit was broken 100 years ago. Now it has returned.
PREVIOUS LETTERS FROM SHANGHAI
Letter from Shanghai – Can Chinese brands make the grade on the global luxury stage? – 19/12/04
Letter from Shanghai – living the Chinese luxury dream – 09/11/04
