2024 Cosmetics and Toiletries (COS) Overview

As a premier hub for the Asia-Pacific market, the cosmetics and toiletries industry is one of the most vital sectors in Hong Kong’s retail landscape, anchoring the city’s status as an international shopping destination for brand discovery and consumer innovation.

Table: Cosmetics and Toiletries Market Size. 

Data Sources: Hong Kong Census & Statistics Department  
Units: US$ million
 

Despite the resilience shown in certain segments, the cosmetics and toiletries industry continued to navigate significant headwinds in 2024, as structural changes in consumer behavior and a shifting demographic landscape weighed on the market. In 2024, Hong Kong’s tourism sector experienced a robust rebound, welcoming 44.5 million visitors, marking a substantial 31% increase compared to the 33.97 million visitors in 2023 when COVID-19 restrictions were lifted. Mainland China remained the dominant source of tourists, accounting for approximately 76.4% of arrivals. Other key source markets included the Philippines, Taiwan, the United States, and South Korea. This resurgence in tourism, while positive, needs to be viewed within the context of broader market changes.

However, despite the recovery in tourism Hong Kong’s imports of personal care products totaled US$ 6.763 billion in 2024, reflecting a 21% decrease from the US$8.609 billion recorded in 2023. The United States remains a top-tier supplier to the Hong Kong market, currently ranking as the fifth-largest import origin for cosmetics and toiletries, following Mainland China, France, Japan, and South Korea

This decline underscores the complex challenges the market faces as it navigates the aftermath of the 2019 social unrest and 3 years of COVID-19 related disruptions. The anticipated return to its former status as Asia’s premier shopping paradise has proven more intricate than initially projected, influenced by altered retail consumption patterns stemming from a seismic emigration trend among residents, a slowdown in the Chinese economy, a strong US dollar, and most prominently, the northbound travel trend.

The “northward bound” trend has become a significant feature of Hong Kong residents’ leisure activities, involving frequent travel to Mainland China, particularly Shenzhen and other cities within the Greater Bay Area, especially for dining and shopping.

This trend has gained considerable momentum since the market’s reopening, facilitated by the enhanced ease of transportation which were completed at the start of the pandemic such as the High-Speed Rail Link, the Hong Kong-Zhuhai-Macao Bridge, and the introduction of Northbound Travel for Hong Kong Vehicles scheme which allow private vehicles to travel between Hong Kong and Guangzhou.

To jumpstart tourism, China started granting 30 days visa waivers to 38 countries in late 2023 which expanded to include the introduction of a 240–hour visa-free transit. This new policy helped to bring 20.1 million tourists into mainland China, an increase of 112% from 2023.

Historically, cross-border travel to China was primarily driven by business. Before the pandemic, Hong Kong served as the preferred shopping destination for Mainland Chinese consumers, renowned for its perceived high-quality goods and international brands. However, this norm came to an abrupt halt after the borders reopened in 2023. Hong Kong residents began exiting the city through multiple checkpoints as frequently as weekly. 

This movement was initially categorized as “revenge travel”, a phenomenon where consumers, after being restricted by long-term lockdowns, engage in a sudden and intense surge of travel to make up for lost time and experiences. At that point, many observers considered this a temporary fad that would eventually pass once the initial excitement faded but by mid-2024, market data revealed a much deeper structural shift. Hong Kong residents made a staggering 104.7 million trips to Shenzhen and other Greater Bay Area cities, particularly during festive seasons and long weekends, causing a palpable and ongoing impact on the local retail and food and beverage (F&B) sectors as domestic spending is increasingly exported across the border.

Consequently, the overall volume of total retail sales in Hong Kong decreased by 9% in 2024 compared to the previous year. This trend is expected to persist as local consumers become increasingly more adventurous in finding new ways to expand their spending to include health, beauty and experiential services.

Analyzing the top exporting countries of personal care products to Hong Kong reveals a significant shift in consumer preference. For the first time, China has emerged as the largest exporter, with a total value of US$1.26 billion, surpassing South Korea, which had previously held the top position in the last 5 years.  Other leading exporters include France, Japan, and the United States.

This rise of Chinese brands is linked to several factors, including the emergence of the “new Hong Konger” demographic which describes an estimated 400,000 to 500,000 Mainland Chinese who have settled in Hong Kong under various talent schemes introduced by the government to mitigate the emigration of residents following the social unrest and prolonged COVID-19 lockdowns. These newcomers have contributed to the increased visibility and acceptance of homegrown Chinese brands within the local market.

Furthermore, the quality and brand image of Chinese personal care products have improved in recent years. Leveraging a robust supply chain and advanced manufacturing capabilities honed through years of providing contract manufacturing services for global brands, China is now developing its own competitive brands. This significant production capacity enables efficient cost management, a crucial factor which appeals to consumers who are seeking affordable, quality products amidst a challenging economic climate.

Despite these fundamental market shifts, Hong Kong remains an appealing entry point for U.S. exporters due to its relatively low barriers to entry.  Unlike many other export markets, Hong Kong does not mandate pre-market registration for personal care products, nor are companies required to alter their product labels for market access. Coupled with an estimated annual international 30 to 40 million tourists, Hong Kong presents an ideal platform for U.S. companies to build brand equity and awareness within the broader Asia Pacific (APAC) region.

Historically, the allure of Hong Kong for U.S. exporters was significantly tied to accessing the Chinese market. While this still holds some relevance, U.S. exporters must recognize that the personal care market in Hong Kong is now saturated and highly competitive. Therefore, it is crucial to adjust expectations regarding initial sales volumes and the time required for gradual brand building.

Furthermore, current market conditions in Hong Kong reflect a cautious approach from distributors and retailers who are adapting their strategies to the evolving demographic and fundamental market dynamics.

Hong Kong partners will carefully consider several key factors when evaluating new products, which include:

1.    Competing brands names within the specific product category
2.    Packaging design and its appeal to the target consumer
3.    Product price point and its unique selling point
4.    The level of marketing support, particularly materials for a strong social media presence and content
5.    The number SKUs being offered under the brand
6.    The flexibility of order volume 
7.    Relevant certifications and accolades that enhance credibility
8.    Consumer reviews and online sentiment
 

In the past, the Hong Kong market was more predictable, with the top 10 brands often dominating a significant 70% of the total market share. However, the current landscape, characterized by a wider array of product options and a shifting consumer demographic, makes it increasingly challenging to effectively influence and target specific consumer groups.  Positive product reviews, engagement with brand influencers, and a substantial archive of compelling social media content have become noticeably more important for consumers in their purchasing decisions.

Generally, cosmetics and toiletries from U.S. brands continue to be well-regarded, particularly those holding recognized certifications such as USDA Organic, COSMOS, Ecocert, B Corp, and Leaping Bunny. These certifications provide consumers with assurance regarding product quality, trustworthy manufacturing processes, and insights into the brand’s values.

In conclusion, while the Hong Kong market offers a relatively easy entry point for personal care brands, achieving long-term survival and success requires a nuanced understanding of the evolving market dynamics and consumer preferences. Brands entering this competitive landscape must offer high product efficacy, cultivate strong user engagement, implement a well-defined pricing strategy, and leverage the power of positive word-of-mouth marketing.

U.S. companies seeking guidance on developing a successful market entry strategy into Hong Kong are welcome to inquire about our fee-based services. For additional insights on selling cosmetics to Mainland China, please refer to the China Country Commercial Guide.

Opportunities

Open Regulatory Environment: As a premier free port, Hong Kong maintains an open regulatory framework with no pre-market registration or authorization required for cosmetics and toiletries. Brands can maintain their original U.S. packaging and labeling standards, and since animal testing is not mandatory, the market remains highly compatible with modern ‘clean beauty’ and ethical brand values.

Ecommerce: Personal care is one of the leading e-commerce categories in Hong Kong. Along with its high urbanization rate and a smartphone penetration rate of 96.4% this trend became even more ingrained during the COVID lockdowns. Top ecommerce sites in Hong Kong include Taobao, Tmall, HKTVmall, RedNote, Wechat, Instagram and Amazon.

Resources

Cosmetics and Toiletries Industry Hong Kong 
HKTDC Research

Hong Kong Trade Shows 

Cosmoprof Asia
HKTDC
HKTDC Beauty & Wellness Expo
Hong Kong -Asia Exhibition
Hong Kong Wedding Show

U.S. Trade Show
Cosmoprof Las Vegas

Associations 
Hong Kong Cosmetics

For more information about this industry sector, please contact:

U.S. Commercial Service, Hong Kong 
Natalie Tong, Commercial Specialist  
Email: natalie.tong@trade.gov