How can Australian cosmetics companies build their brands in Hong Kong and China?



>>Voiceover: Hong Kong is Asia’s cosmetics capital. Australian cosmetic exports exceed A$135 million per annum. Peter Law is Senior Vice President of large scale local retail operator, Sasa, a company with over 260 stores, including operations on mainland China.

>>Peter Law: Hong Kong is a free trade port without any import tax, brands from all over the world can enter the market easily. International brands coming from USA, Europe, and some Australia are the major players.

>>Voiceover: Despite their growing popularity locally, many Australian cosmetic suppliers encounter a steep price barrier to compete in the Hong Kong market. Tiffany Lau explains.

>>Tiffany Lau: For some of the Australian brands, when they do the pricing they will just take half off from the retail price. But in Hong Kong, even in China, it’s very difficult because we have very high costs here. So what we usually do is, I think most of the brands in Hong Kong are doing the same thing, we take the cost and multiply by four to five times.

If you take half of your Australian retail price and multiply it by four or five, it’s very, very expensive here in Hong Kong, which reduces your competiveness in the local market.

If we are selling the product through channels like Watsons or Mannings or even other stores, they require a certain date of freshness for the products. So the expiry date is very important here and also the ingredients. All the products must have the ingredient list on the product itself or the box itself.

>>William Tsui: When it comes to the packaging I always recommend that it’s a combination of Chinese and English.

>>Voiceover: William Tsui heads up Mekim, which is a major distributor based in Hong Kong. He says using traditional Chinese characters on product labels is very important for the Hong Kong market.

>>William Tsui: The traditional Chinese is used in Hong Kong, simplified Chinese is used in China. Now when you add the label onto the product, if you put traditional Chinese onto the product, consumers from China, they have higher confidence because then they will have the impression that this is a kind of imported product. If you put simplified Chinese onto the pack then they might have the impression that this product is from China.

>>Voiceover: So to hit the ground running remember to be flexible with your wholesale pricing and take advice from your distributor regarding labelling. The font and look of your packaging can have a huge impact and remember, requirements for a full list of ingredients and a long shelf life.