To establish a successful and sustainable business in this sector, Hong Kong business people should consider adopting the principle of “Safe Cosmetics, and Healthy Body Shaping” plus an integrated 3-prone SBU model, comprising of Products, Services & Education.
Each of these SBUs, highly inter-related and integrated, can make good money by itself, while supporting the needs of the others.
Product Distribution – sign up exclusive distributorship of world-class professional cosmetics, import and distribute them in the China market. Although there are more than 20,000 cosmetics brands in the market, almost all of them are produced locally with unsatisfactory quality control measures & standards.
The balance, about 800 of them claimed to be “imported” brands which could actually mean one of the following four categories:
Only the concept is imported. They claimed to be originated from an overseas country. The raw materials and production are actually done locally.
The formula could be imported. Materials are sourced locally and production is also done locally. (a) & (b) accounts for 600 – 650 of those so called “imported” brands.
Products of the third group (about 100+ brands) are manufactured overseas and then imported into China in bulk containers. Bottling and packaging are done locally in the Mainland. The products are exposed to contamination and quality control issues.
Only the fourth group, which accounts for less than 50 brands, are real imported brands 純進口品牌. The finished products are manufactured and packed overseas, and imported through customs into China Mainland.
Middle/up consumers are willing to pay 400% as much to purchase these real imported products. I have a preference to import them from EU countries, such as France, Italy, Spain and Germany, with Free Sale Certificates and also put them to lab examination authorized by the China SFDA (State Foods & Drugs Administration) and obtain Health Permits for each.
Quality, safety and efficacy of the products are guaranteed. As the sole agent and exclusive distributor of these real imported brands, we can make good money out of this business line. It is also the foundation of our three-pronged business model.
Spa & Skincare Services - set up beauty salons or spa centers to provide professional services to the middle/up consumers who had been chasing after quality products in the last few years.
In fact, our company has already opened a 650 sqm spa, inside a resort hotel, which is the largest (50,000 sqm) in the city area of Shanghai, offering Skincare, Body Shaping, Anti-aging and Pearl Spa services.
Gross margin of this operation is very high (75-85%). The key is having the right team – from shop managers to beauticians. The successful model shop could then be duplicated and eventually build up into a chain (franchised or direct-owned) around the country.
Beauty Education – a talent recruitment, training & development business to be operated in conjunction with tertiary education institutes. Because of the short history of this industry in China Mainland, there is a serious shortage of skilled and qualified beauticians and shop managers.
Even the owners and entrepreneurs here are looking for good training programmes to enhance their business management skill - another big gap in the market.
The talents so developed would be critical in supporting the development of our chain of spa centers, as well as becoming a significant supplier of quality professionals to other high-end salons.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Hongkong Business. The author was not remunerated for this article.
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Samson Tam, spent the last 25 years, working with MNCs and SMEs, at C-Level positions, in China Mainland, Hong Kong, Taiwan, Thailand, Singapore, Malaysia, US, and other overseas places. He devotes his time and resources in the Beauty, Spa & Cosmetics sector and found out in an indepth study that there is an enormous demand but with rare quality supply for this industry in HK.