China steadily increasing presence in C&T raw materials
are facing increasing competition from China, while Japan continues
to offer innovation, says a new report from Kline and Company.
The new study, "Speciality Raw Materials for Cosmetics and Toiletries, Vol. 1: Asia-Pacific 2005", reports that nine per cent of the $3bn global market is now provided by Chinese companies, with growth in the sector predicted to increase by 10 per cent every year for the next five years.
"When we examined the Chinese market just four years ago, the local suppliers were just starting to make an impact on the global stage," said Gillian Morris from Kline & Company's research division.
"Now, when we look at the top suppliers in the top five specialty raw material product categories in China, the Chinese suppliers are moving in on the multinationals. There are Chinese suppliers in every product category, from hair fixative polymers to UV absorbers."
Conditioning polymers, skin whitening agents and emollients are said to demonstrate the continued highest growth rate, at more than 12 per cent each, which actually outpaces the overall growth for the industry. The Chinese association that a lighter complexion is more beautiful means that skin whiteners are leading the pack.
While the Chinese market for both finished cosmetic and toiletry products and raw materials is growing steadily, the Japanese market offers different kinds of opportunities and challenges to raw material suppliers.
"The Japanese population has a high level of disposable income, and it spends more per capita on personal care products than any in other country in the world, but the finished products and raw materials markets are mature, offering very low growth rates in comparison with China. Still, we see some of the greatest innovations coming out of the Japanese market," said Morris.
Eric Vogelsberg, senior vice president and head of Kline's Chemicals & Materials consulting practice said that finished products manufacturers are now using their low-cost positions with the local Chinese suppliers to put pricing pressure on multinational raw materials suppliers.
"In order to defend their market share, the MNCs have to focus on innovation and a strong IP position. They'll need to compete on ingenuity and their ability to serve as a consistent and secure global source of supply rather than on price," he said.
