Perfume makers scent good future

A woman carrying an armload of international perfumes and other cosmetic products makes her way toward a cashier at a duty-free shop in Sanya, South China's Hainan province. Foreign fragrance makers control 60 percent of the Chinese perfume market. [Photo / China Daily]

Foreign products have faith in Chinese market but see slow sales pace as problem

BEIJING - Xu Yue just bought a new bottle of fragrance last week, his fifth this year.

The 28-year-old IT engineer in Beijing has spent more than 4,000 yuan ($625) on fragrances every year since he started working in 2008.

"Fragrances make me feel energetic," Xu said, "I used to just try to hide my odor, when I was a soccer player at high school."

The peak season for fragrances starts in the summer and lasts until February.

The small market share of international perfume companies hold does not shake their confidence in doing business in China - after all, it is a growing consumer market for cosmetic products.

But every time they plan to launch a new product or a brand in the marketplace, they have to first train consumers.

China is Asia's second-largest cosmetics market, and the eighth in the world, but perfume makers get only a tiny slice of that market because fragrances are not considered a basic necessity in Chinese beauty care.

The cosmetics industry saw an 88.9 billion yuan turnover in 2010, and the figure is expected to exceed 100 billion yuan in 2011, according to the National Bureau of Statistics. But fragrances account for only 1 percent of that.

According to Euromonitor International, a London-based company that conducts strategy research of consumer markets, China had a 3.77 billion yuan fragrance market in 2010.

A report released by Horizon Research Consultancy Group in 2010 said that Chinese consumers bought only 1 percent of the fragrances in the world - but the Chinese market has grown by 15 to 25 percent each year since 2008.

Foreign perfume makers, who control 60 percent of the Chinese market, see the slow pace of consumption as their biggest problem.

"In our consumer research, we found that lots of consumers love the design and the scent of fragrances, but they're not in the habit of using them every day," said Ghislain Devouge, general manager of P&G Prestige Greater China.

Devouge, whose company owns perfume brands including Gucci, Dolce and Gabbana and Hugo Boss, attributes the low rate of usage to a lack familiarity with fragrances.

"We try to address the lack of category knowledge via our in-store brand ambassadors and online activities," Devouge told China Daily.

The company also organizes workshops about the history of perfume and usage tips, he said.

However, business insiders say physiological factors play a larger role in the Chinese people's less frequent use of perfume.

Westerners use fragrance to hide their body odor, and it is a daily necessity in the West, but the situation in China is different, said Wu Zhigang, chief marketing consultant of Shengshi Chuanmei Consultancy Co.

"Fragrances do not have as long a history in China as in the West," Wu said.

The Chinese began using scented soap in the early 20 century and fragrances from the West came to China in 1980s. The original function of perfume in China has been lost, and fragrance, which is important in daily life in the West, is dispensable, he said.

"Foreign perfume companies should find a strategy suited to the market, if they want to develop the business in China," Wu said. "They should pay more attention to consumers' preferences," he said.