Turkish Cosmetics Sector Enters Chinese Market

Within the scope of "Market Research" conducted to increase our export share in target countries determined by the Export Master Plan of the Republic of Turkey Ministry of Commerce, the "People's Republic of China Cosmetics Sector Market Research Report Presentation Program" hosted by the Istanbul Chemical Substances and Products Exporters Association (İKMİB) shared opportunities in China's cosmetics sector with exporters. Hosted by the Istanbul Chemical Substances and Products Exporters Association (İKMİB), the "People's Republic of China Cosmetics Sector Market Research Report Presentation Program" was held with the participation of Deputy Minister of Commerce Gonca Yılmaz Batur and İKMİB Board Chairman Adil Pelister and was broadcast live from İKMİB's YouTube account. At the event where Trade Experts Ahmet Melih Horata and Özgün Özenci from the Directorate General of Foreign Representations and International Events of the Republic of Turkey Ministry of Commerce shared market research results regarding China's cosmetics sector, exporting companies were also provided with information on entering the Chinese market through e-commerce.

The presentation covered the current structure of the Chinese cosmetics market and market outlooks, market entry methods, tariff and non-tariff regulations in market entry, and cosmetics legislation in detail.

China, the world's second largest cosmetics market with USD 64 billion in volume

Deputy Minister of Commerce Gonca Yılmaz Batur, providing information on Market Research carried out by the Directorate General of Foreign Representations and International Events of the Republic of Turkey Ministry of Commerce, stated that they conducted Market Research to ensure market diversification in exports and to develop opportunities for exporters to enter foreign markets, and to increase our export share in target countries determined by the Export Master Plan.

Within this scope, Batur stated that the Ministry of Commerce carried out a Market Research on the People's Republic of China in line with the Export Master Plan targets, in the cosmetics sector which reached a global value of USD 500 billion as of 2019, and spoke as follows:

"Within this year's Market Research scope for target countries and sectors, in our work on our cosmetics sector, we conducted market research on China as the third market after Mexico and Russia markets. The Chinese cosmetics market is the world's second largest cosmetics market after the United States, with a volume of USD 64 billion in 2019. China, the world's largest importer of cosmetic products, had cosmetics imports of USD 17 billion as of 2019. There has been continuous growth in cosmetic product imports over the past 10 years. Between 2016 and 2019, there was an average annual import increase of 38 percent, and since 2016 it has been in a net importer position. Retail sales through e-commerce in China reached a volume of USD 1.5 trillion as of 2018, this development also manifested itself in the cosmetics sector, and e-commerce's share in distribution channels rose to 30.3 percent in 2019. Chinese consumer preferences are evolving from price-focused to brand or quality-focused characteristics. Recently, customs tariff reduction and pilot zone policies designed for cosmetics imports have started to be implemented to facilitate imports. Our goal with the Market Research is to capture the potential of our cosmetics exports to China, the world's largest cosmetics importer and the world's second largest cosmetics market. I hope that the research results will be useful to our cosmetics sector exporters in their planning."

Nine-month cosmetics sector exports reached USD 968.4 million

Istanbul Chemical Substances and Products Exporters Association Board Chairman Adil Pelister, sharing export information regarding the cosmetics sector, said: "In our chemistry sub-sectors, exports under the heading of essential oils, cosmetics and soap reached USD 133,477,000 in September 2020. In this sector, our total exports from January to September 2020 reached USD 968,429,000. According to the data on cosmetics exports for the first nine months of 2020, "soap" ranks first, "shaving body deodorants - toilet preparations" ranks second, and "color cosmetics" ranks third. Due to the Corona pandemic, the disrupted global economic chain caused negative consequences in our country as it did throughout the world. As a result, the production and export cycle also contracted. However, as the chemistry sector, we are showing signs of quick recovery. During the pandemic period (April-May-June), all sectors in our cosmetics sector experienced contraction except soap compared to the same period last year. During this period, since domestic needs had to be met, some cosmetic product exports were made subject to prior approval. Therefore, this situation caused a partial decline in exports. However, with the removal of prior approval for exports again, as of June our cosmetics sector exports started to show an increase. What worries us is the possibility of a second wave of the pandemic in the winter months, and we hope this does not happen. Looking at the data for July-August this year, we predict that the cosmetics sector will rise rapidly," he said.

"We are targeting a stable export growth in the 10-15 percent band in the sector"

Pelister, pointing out that long years of accumulation and recognition in the soap sector, which has deep-rooted and traditional production, creates a competitive advantage, stated: "Our country holds an important place in world soap production. Color cosmetics and hair care product sectors also hold an important place in our exports. The aerosol sector, which also has significant production capacity, is one of the areas where we are strong. Our cosmetics sector's serious production potential gives hope for the future. In particular, advances in essences providing raw materials to the sector will have positive effects on production. We are targeting stable export growth in the 10-15 percent band in the sector. As an export vision, alongside main markets consisting of neighboring countries, we are trying to diversify by targeting Far East, China, and Latin American countries, and we attach importance to this. As İKMİB, which knows China and has organized the China Import Fair in Shanghai, we pay particular attention to China. In recent years, quality competition in China has preceded price competition. This situation could be advantageous for our cosmetics sector. I would like to note that our sector is in a good position to compete on quality in world markets with ease," he said.

Pelister: "Digital commerce specific to China has increased more than twofold in the last 5 years"

Pelister, emphasizing that tradition has changed in global consumer behavior and this has elevated the green economy, stated: "Accordingly, I believe we need to advance nature-friendly cosmetic products further and place emphasis on production in this direction. Due to the genetic structures of countries, we also need more niche product and country-focused production. The new world order is becoming more digitally-focused. Central banks of the United States and the EU have even put digital dollars and digital euros on their agendas. This situation necessitates creating a new digital commerce and digital export platform that also includes its own payment system. The fact that digital commerce specific to China has increased more than twofold in the last 5 years can be seen as evidence of a digitally-focused commercial future. New digital reality and digital future economy affect economic positions and social positions. Therefore, it requires the creation of new marketing strategies for our cosmetics sector to offer consumers a 'lifestyle.' In short, a new world, a new economy, and a new social life are ahead of us. We believe it is necessary to develop this trinity well and to be a game changer. At this point, I would like to state that we are open to all kinds of cooperation and collaborative working models to create the future world together with our ministry. In the new world order, with regard to the Belt and Road Initiative starting from China, we believe there is a need for new frameworks in both logistics centers and economic cycles. Specific to China, the end of animal testing as of the new year and the beginning of tests under Western conditions will provide our Turkish cosmetics sector with more export opportunities, we believe," he concluded.