Overview 

	2006	2007 (estimated)	2008 (estimated)
Total Market Size	726	861	1054
Total Local Production	56	57	58
Total Exports	541	552	563
Total Imports	1211	1356	1559
Imports from the U.S.	145	155	167

(Exchange rate: US$1 equivalent to HK$7.8)
Source: Hong Kong Trade Statistics

Imports dominate Hong Kong’s supply of cosmetics, toiletries, and skincare products as there is very little domestic manufacturing.  China was Hong Kong’s largest supplier of the USD726 million market in 2006, with a 16% market share. The U.S., France and Japan were the other major suppliers.  Hong Kong imported USD145 million worth of cosmetics, toiletry and skincare products from the U.S. in 2006.  Imports of cosmetics, toiletry and skincare products will likely grow at between 12-15% in 2007 and 2008 given strong local demand from continued economic growth and strong tourists’ spending on these products in Hong Kong.

Hong Kong is an important launch pad for marketing cosmetics and skincare products into the Mainland Chinese market; it acts as a showcase for the millions of Chinese tourists (an estimated 15.5 million in 2007) that annually visit Hong Kong to shop.  For local retailers and distributors of cosmetics, toiletry and skincare products, increased sales in the next few years are expected to come from the Mainland Chinese tourists who are attracted by retail prices that are lower than prices on the Mainland.  Part of the reason for this price discrepancy is the 15-22% tariff that the Mainland imposes on cosmetics as well as the VAT and registration costs. 

There are no import duties on cosmetics, toiletry and skincare products in Hong Kong and registration is not required for cosmetic products. The market is very competitive, with the top ten brands accounting for about 70% of the market.  Appointing a local distributor and working closely with that distributor to promote the brand, adapting the products to include whitening ingredients, packaging, and product sizes to suit local tastes are important to remain competitive.  U.S. cosmetic and toiletry suppliers are, however, known for being innovative in product development, and for producing high quality, safe products at competitive prices.  Many U.S. brands are market leaders through continuous brand-building activities and advertisements, adaptation of products and competitive pricing

To assist U.S. exporters, the U.S. cosmetics industry organizes a pavilion at the annual Cosmoprof Asia Show.  U.S. companies have had tremendous success at this show.  Hong Kong is an important entrepot for regional trading of cosmetic products, especially for re-exports to China and some S.E. Asian countries.  Many U.S. companies sell their cosmetics and skincare products to China through their Hong Kong distributors.

Best Prospects/Services 

Products with the best sales prospects in Hong Kong are:

• Complete line of facial whitening and anti-aging products
• Hair coloring and treatment products
• Color cosmetics for eyes, lips and face including permanent make-up for eyes
• Nail colors, nail-care products, and artificial nails
• Skin treatments, slimming treatments and massage products for use in spas and professional skincare salons or under dermatologists’ supervision.
• Skincare, and personal care products made of naturally-derived and organically-grown ingredients
• Chirally-formulated make-up and skincare products

Opportunities

Several international cosmetics brands chose Hong Kong as the first overseas market or for launching new products in Asia citing its open regulatory environment as the attraction.  There are no tariffs on imported cosmetics and toiletries.  Hong Kong accepts U.S. product labeling and there are no local mandatory labeling or registration requirements on cosmetics.

Demand from tourists accounts for about 30% of Hong Kong’s total retail sales of cosmetics, skincare and toiletry products.  According to the Hong Kong Tourism Board, about 80% of the Mainland Chinese tourists who visited Hong Kong “went shopping” and cosmetic and skincare products were among their top three shopping purchases.  There are therefore tremendous opportunities for U.S. cosmetics and skincare products’ suppliers to export to Hong Kong as these retailers and distributors are eager to increase the brands and types of products that they can offer to Mainland Chinese shoppers.  The number of Mainland Chinese tourists in Hong Kong is expected to grow at an average annual rate of 6.9% to 20 million by 2011.  U.S. cosmetic products enjoy an excellent reputation among Chinese consumers.

The mega and luxury casino resorts in Macau that will be opening in the next few years will feature facilities such as spas and skincare treatment centers for the many casino and MICE (meeting, incentive, convention, exhibition) visitors.  Macau received an estimated 27 million visitors in 2007 (compared with an estimated 28 million for Hong Kong), an increase of 23% compared with the previous year.  Demand for high quality skincare and body treatment products and spa management services will increase in Macau.

Resources

Major trade show:  Cosmoprof Asia 2008; total exhibitors: 1,258 in 2007 (highest in 11 years), and total number of visitors in 2007: 37,078.

This is Asia's largest, most comprehensive and international beauty industry trade show for the past 11 years.  It is the Asia version of the world's best beauty industry trade show, Cosmoprof, held annually in Bologna, Italy for the past 39 years.  The trade show features equipment, products (skin care, cosmetics, personal care products, nail products, perfumes & toiletries, cosmetic raw materials) packaging, and training services in the beauty industry: hairdressing, spas, beauty and skincare salons.  Website for the show: http://www.cosmoprof-asia.com.  Under the U.S. Department of Commerce’s “Asia Now” program, U.S. exhibitors at this show receive free market research and can enjoy the buyers’ matching and counseling services of 15 U.S. Commercial Service offices in the Asia Pacific region.  At Cosmoprof Asia 2007, the U.S. Commercial Service offices in Singapore, the Philippines, Korea (South) and Taiwan, recruited 85 buyers to meet the U.S. exhibitors.

The Cosmetic & Perfumery Association of Hong Kong Ltd.
http://www.cosmetic-pefume.com

A listing of the Association’s members comprising contact details of importers, distributors, wholesalers, and retailers is available at this website.

Hong Kong Cosmetic Technical Resources Centre
http://www.hkctr.com

Provides consultancy on regulatory requirements and assistance with product registrations in Hong Kong and China, technical support on product development, product testing and quality control services, provides customized technical training for cosmetic practitioners, and assistance in setting up laboratories.

For more information about this industry sector, please contact U.S. Commercial Service:

Ms Swee-keng CHEONG, Commercial Specialist
Email: swee-keng.Cheong@N0SPAM.mail.doc.gov
Tel: (852) 2521-5233; Fax: (852) 2845-9800