Hong Kong - Country Commercial Guide
Cosmetics and Toiletries

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-03-04

Overview

 

2017

2018

2019

2020 (estimated)

Total Market Size

2,774

3,394

2,471

1,541

Total Local Production

116

128

134

141

Total Exports

2,475

3,320

3,911

3,598

Total Imports

5,132

6,586

6,248

4,998

Imports from the U.S.

543

768

742

667

Exchange Rate: 1 USD

7.8

7.8

7.8

7.8

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Units: USD million

Data Sources:

Total Local Production: Estimated from industry sources

Total Exports: Hong Kong Trade Statistics

Total Imports: Hong Kong Trade Statistics

Imports from the World: Hong Kong Trade Data

Hong Kong Trade Statistics; Cosmetics 2019
U.S. Share of Imports of Cosmetics; 2019

Imports dominate Hong Kong’s market for cosmetics, toiletries, and skincare products. France was Hong Kong’s largest supplier of the US$2.5 billion market in 2019.  Korea, Japan, the United States, and China were the other major suppliers.  Hong Kong imported US$741 million worth of cosmetics, toiletry and skincare products from the U.S. in 2019, a decrease of 3 percent compared to 2018.  The lower demand for U.S. cosmetics is likely due to the decline in sales to Chinese tourists. The number of Chinese tourists dropped significantly in 2019 with the advent of the protests, and was further compounded by the COVID-19 pandemic at the end of the year. Hong Kong’s imports of cosmetics, toiletry and skincare products will likely decline by about 20 percent in 2020 as demand from Chinese tourists continues to fall.

For many years, Hong Kong was a major launching pad for the marketing of cosmetics and skincare products in the mainland Chinese market, and Hong Kong served as a showcase for the millions of Chinese tourists (44 million in 2019) that visit Hong Kong each year, often with shopping for personal, family, or even re-sale use as a primary or sole travel objective.  However, there has been a shift over the last year in which smaller brands have begun to enter the Chinese market directly rather than use Hong Kong as a launch pad. This trend is driven by these brands partnering with Chinese investors who have market knowledge, a clear grasp of import and other government regulations, and who have mastered Chinese social media. Many U.S. companies still do sell their cosmetics and skincare products to China through their Hong Kong distributors.

While China has reduced import duties on cosmetics and skincare products, thereby reducing the retail price differential between Hong Kong and China, mainland visitors to Hong Kong are still attracted to products in Hong Kong over China.  According to industry sources, the perceived assurances of authenticity and reliability of the products in Hong Kong often outweighs price as a buying factor. Apart from import tariffs that the Chinese government imposes on cosmetics, there are also VAT and product registration costs which do not exist in Hong Kong, meaning that equivalent products may actually cost less on the Hong Kong side of the border.

Following the opening of new cross-border transport links such as the Hong Kong-Zhuhai-Macau Bridge and Guangzhou-Shenzhen-Hong Kong Express Rail Link, which have made it easier for Chinese tourists in the southern provinces to travel to Hong Kong for day-trip shopping visits, the number of Chinese tourists to Hong Kong surged in the latter part of 2018 and the first half of 2019.  However, in the latter half of 2019, protests and social unrest in Hong Kong discouraged Chinese visitors from traveling to Hong Kong, resulting in a 14 percent drop in the total number of Chinese tourist arrivals in 2019. The outbreak of the COVID-19 pandemic exacerbated the drop in the number of Chinese tourists to Hong Kong in 2020.  Hence, for local retailers and distributors of cosmetics, toiletries and skincare products, sales in the cosmetics sector for the remainder of 2020 will be dependent on domestic demand from Hong Kong residents.

There are no import duties on cosmetics, toiletry, and skincare products in Hong Kong, and registration is not required for cosmetic products. However, the market is very competitive, with the top ten brands accounting for about 70 percent of the total market.  Appointing a local distributor and working closely with them to promote the brand is essential.  In addition, adapting products to local demands and trends is vital in order to remain competitive. This process may include, for example, modifying the packaging and product sizes of products to suit local tastes.  U.S. cosmetic and toiletry suppliers are, however, known for being innovative in product development, and for producing high quality, safe products at competitive prices.  Many U.S. brands are market leaders through continuous brand-building activities and advertisements, adaptation of products to local market demands and trends, and maintaining competitive pricing.

Leading Sub-Sectors

Products with the best sales prospects in Hong Kong include:

  • Complete line of facial and anti-aging products
  • “Dermo-skincare products” for retail distribution and distribution to doctors
  • Daily-use facial masks, and home spa, home nail, and hair coloring kits
  • Hair coloring products
  • Fake eyelashes, eyelash extension products, and semi-permanent eyebrow make-up
  • Nail colors, nail-care products, soft gel nails gels, and nail-art
  • Body treatments, slimming treatments, massage and bath products for use in spas and

professional skincare salons

  • Sun protection products
  • Skincare, cosmetic and toiletry products made of organically grown and naturally

derived ingredients; also, hypo-allergenic, with low concentrations of fragrance

 and preservatives

  •  Skincare products, hair styling products, and grooming products for men
  •  Products for treating acne
  •  Dry shampoo
  •  Hand creams that have powerful moisturizing ingredients
  •  Private labeling /OEM skincare products and cosmetics for leading chain retail stores

Opportunities

Numerous international cosmetics brands choose Hong Kong as their first overseas market or to launch new products in Asia, citing its open regulatory environment as the attraction.  Hong Kong accepts U.S. product labeling, and there are no local mandatory labeling or registration requirements on cosmetics.

In 2018 and the first half of 2019, for some local retailers, demand from Chinese tourists accounted for 60-70 percent of their total retail sales in Hong Kong of cosmetics, skincare, and toiletry products.  However, according to a local cosmetics retail chain, sales to Chinese tourists in 2019 declined about 30percent following months of protest and social unrest that started in June 2019. Protesters targeted Chinese tourists, causing many to avoid traveling to Hong Kong to purchase cosmetics and skincare products. 

Retail shops’ opening hours were also affected by the protests and hindered local Hong Kong residents from shopping.  Retailers have reported an increase in online sales, especially after the outbreak of COVID-19, with local consumers avoiding shopping trips to retail stores.  Retailers have also restructured their product mix to focus on hand sanitizers and hand washing products.  As more consumers stayed home during the pandemic, self-care skincare and personal care products became the focus of retailers.  Consumers became more interested in actionable information rather than new product launches, as they now have more time to view videos on how to apply make-up or use certain skincare and personal care products.

Many of the luxury casino resorts in Macau that have opened in the past few years feature facilities such as spas and skincare treatment centers for casino customers and MICE visitors.  Macau received 39 million visitors in 2019, of which 72 percent (28 million) were from China.  Chinese visitors to Macau often purchase skincare products and cosmetics in the major casino resorts’ shopping malls.  Macau has reported low numbers of COVID-19 cases, and casinos were closed only for two weeks in February 2020, but with the border between China and Macau remaining closed, the number of visitors to Macau dropped substantially in the first few months of 2020. This has had a significant dampening effect on the sales of cosmetics and skincare products, as well as the spa business.

Resources

Trade Shows: 

Cosmoprof Asia 

This is Asia’s largest, most comprehensive and international beauty industry trade show featuring equipment, products (skin care, cosmetics, personal care products, nail products, perfumes and toiletries, and cosmetic raw materials), packaging products, and training services in the beauty industry, including for hairdressing, spas, and beauty and skincare salons.  U.S. exhibitors at this show can receive free market research and enjoy buyer matching and counseling services from over ten U.S. Commercial Service offices in the Asia Pacific region and beyond.

Associations:

The Cosmetic & Perfumery Association of Hong Kong Ltd.

A listing of the Association’s members comprising contact details of importers, distributors, wholesalers, and retailers is available at this website.

Hong Kong Cosmetic Technical Resources Centre

Provides consultancy support on regulatory requirements and assistance with product registrations in Hong Kong and China, technical support on product development, product testing and quality control services. It also provides customized technical training for cosmetic practitioners and assistance in setting up laboratories.

For more information about this industry sector, please contact:

U.S. Commercial Service, Hong Kong

Swee-keng Cheong, Commercial Specialist

Email: sweekeng.cheong@trade.gov