Why this is important to Wisconsin businesses: E-commerce platforms provide a growing opportunity for international companies to test and market their products to consumers in China.
China’s growing middle class is seeking beauty.
As the living standards of China’s population have risen, so has the desire for beauty and personal care products. High-end and functional personal care products are highly sought, and China’s domestic companies have not been able to keep up with the rapidly increasing demand.
Sales for the sector topped ¥572.6 billion ($82.4 billion USD) in 2021 with a compound annual growth rate as high as 11% over the previous five years. The U.S. has been a major supplier, selling $17.3 billion worth of beauty and skin care products to Chinese consumers in 2020—up 31% over the previous year.
The popularity of international online shopping has made it easier for people in China to buy beauty and personal care products from overseas companies and has accelerated the pace of foreign brands selling into the Chinese market. Many of the foreign brands are able to sell their products in China through Tmall Global, which bills itself as the largest international e-commerce platform in China. In 2021, nearly 1,000 new beauty and personal care brands opened shop on Tmall Global.
Launched in 2014 as part of the Alibaba Group, Tmall Global lets foreign companies sell their goods directly to consumers in China without requiring a Chinese business license. Tmall Global also has factory production that can complete manufacturing of foreign companies’ products that are designated for sale in China.
According to GlobalData, a UK-based data and analytics company, China leads the global e-commerce market, with more than $2 trillion in sales in 2022. The U.S. came in second, with $1.5 trillion in online sales.
Wisconsin companies that are considering exporting to China can take advantage of international e-commerce platforms to test the market reaction to their products and then decide if they want to open a full-fledged shop on one of the platforms.