But this week, we are looking at cosmetics in China. Coming in the top 100 are the four familiar cosmetic and skin-care brands, OLAY, Maybelline, L’Oreal, and Amway.

Of these four brands, OLAY, L’Oreal, and Maybelline are globally recognized in the make-up and skincare areas. But Amway’s non-traditional direct sales model and high quality perception has allowed it to increase sales dramatically in China. China is currently Amway’s largest market with gross sales of over 2.5billion USD in 2008.

But why are these brands seeing success and other are not? Well, according to CLSA’s Head of Consumer Research, Robert Bruce, the answer lies in a shift in values from price to quality:

“Consumer emphasis is already shifting from price to quality, which will allow companies who deliver on their brand promise to increase price, in turn increasing profits, and thus providing the ability to innovate and propagate through R&D and distribution.”

Quality is surely becoming more important for older and wealthier Chinese consumers who are attracted to luxury brands, but what about Chinese youth consumers who do not always have high incomes or strong purchasing power?

For our hypothesis that we will testing this week through our primary and secondary research methods, we believe in three key factors that cosmetic brands must keep in mind to attract Chinese youth consumers. These are:

• Cosmetic brands attention to customer service.
• An open forum to discuss cosmetics, whether it is through online BBS’, SNS’, etc, with friends, or with customer representatives.
  
• Cheaper and convenient online shopping methods.

Pay attention to our final analysis report at the end of the week to see if these hold true!