Growth in the market during 2008 came in at 14 per cent, which according to a new study conducted by Mi Voga Organics, easily outpaced other US and European markets – and is expected to be sustained during the course of the next five years.

"The sheer size of this market alone makes it attractive," says Carrie Roberts, industry manager for the Consumer Products practice of Mi Voga, LLC research division.

"Factor in the growth potential and it's easy to see why China is becoming such a critical element in sales and marketing strategies for the global consumer products industry, especially for high-margin sectors like professional skin care."

So what's driving this phenomenal growth? Primarily it is because China's economy is currently firing on all cylinders, with growth in disposable income surging by an average of 11.3 per cent over the last five years.

Skin care dominates

Putting these figures into perspective, the Mi Voga's research shows that currently the second largest beauty category in China is make-up, which accounts for 17 per cent of sales, while fragrance comes in as the third largest category accounting for 13 per cent of sales.

But if the current market conditions prevail, the high growth for the China beauty market will be maintained, with growth in the premium facial skin care category continuing to be a major driving force.

However, there's room for further growth in China, as the market is still in its infancy and remains relatively fragmented, especially compared to more developed markets in the West.

According to Mi Voga more than a thousand local brands currently compete with approximately 100 import brands, leading it to estimate that further growth in the segment should continue at around 15 per cent until at least 2011, pushing it beyond the projected size of the US market, to give it a value of $1.4bn.

However, in parallel with the growth, the market has developed its own unique characteristics, one of these being that it is relatively fragmented compared to international standards.

This fragmentation manifests itself through the polarization of the foreign and domestic brands, which has, in turn, led to expensive foreign brands, cheaper domestic brands and a lot of room in the mid- to upper-end of the market – a situation that could spell opportunities.

"There are essentially two brand tiers: the foreign brands and the local brands," Roberts says.

"Imports are higher-end and tend to be more expensive, appealing to upscale spas and beauty institutes. The local brands, which account for a large majority of products on the market, are low- to mid-priced and are generally positioned for beauty institutes where there is less emphasis on luxury and pampering."

Although beauty institutes in China are currently said to command a 70 per cent share of the professional skin care market, it is the spa market that is set to surge, which should prove particularly beneficial to foreign brands.

"We're expecting sales through spas in China to grow by more than 17 per cent a year over the next five years," said Roberts.

"The emerging middle class is beginning to discover the day spa, which offers some of the same amenities of the full spa experience but at a much more affordable price."

Although the market in China is still relatively young, Roberts sums up by stating her expectations that many of the developments already experienced in the West should be mirrored there.

But likewise, she also believes that many of the growing spa institutes are likely to incorporate Chinese herbal and medicinal treatments into their skin care treatments, which could help to give the market a distinct character of its own.