The sales channels of cosmetics products in our country have been expanding continuously, including department stores, supermarkets, pharmacies, professional chains, direct channels, e-commerce online shopping platform and other channels.

With the multi-level evolution of China's consumer market and the increasing acceleration of consumer demand changes, the sales channels of cosmetics products in China have been expanding. At present, they include Department stores, supermarkets, pharmacies, professional chains, direct channels, e-commerce online shopping platforms and other channels.

In recent years, China's cosmetics products in various channels of sales as shown in the following figure:

1 Sales channels:

>>>> Department store

Since the cosmetics products entered the market, department stores have been the top sales channels, and they are one of the core sales channels of cosmetics products, especially high-end cosmetics products. In 2015, the retail sales volume of department stores'special counter cosmetics reached 10.314 billion yuan, accounting for 41.09% of the total.

In the early stage of the popularity of cosmetic products, cosmetic consumers mainly concentrated in the first and second-tier cities. The department stores where high-end brands gathered relatively were the main places for cosmetic sales. Department stores usually use high-end decorative patterns and cutting-edge fashion visual effects to highlight the brand concept of cosmetics products, provide consumer consultation, customized services, feel brand connotation and other multi-dimensional user experience, bearing the functions of pre-sale, sales, after-sale, publicity and so on. Therefore, setting up department stores in high-end department stores is not only an important channel for direct sales of high-end cosmetic products, but also one of the important means for building brand image and brand value of cosmetic products.

In recent years, the retail sales of high-end cosmetics through department stores have maintained a growth trend. Although, under the impact of new sales channels such as electronics, the proportion of cosmetics products sold by department stores in total sales of cosmetics products has declined, the core role of department stores in providing customers with experiential services and customized services, brand promotion and product display will become more prominent. In the future, the position of department stores as the key channel of cosmetics sales will be maintained for a long time.

Benefiting from the development of information and communication technology and the popularity of smart mobile terminals, in recent years, the e-commerce sales channel of mass cosmetics products has developed rapidly, accounting for 21.53% in 2015, and has become the main sales channel of cosmetics products besides Department stores.

Compared with traditional offline purchasing channels, online e-commerce channels have the competitive advantages of saving time, labor and money. Online shopping has become an indispensable part of young consumers'pursuit of fashion, convenience and quality of life. The rise of e-commerce channels has accelerated the popularity and penetration of cosmetics consumption in China, and promoted the people's willingness to consume cosmetics products. On the other hand, online marketing also has the disadvantage of poor user experience. Consumers are more inclined to buy products with familiar brand and performance online. The establishment of brand image of cosmetics products requires more publicity and services from physical stores. Off-line experience and on-line purchase will become an important way to combine on-line and off-line sales of cosmetic products in the future.

>>>> Other channels

　　 Sales in supermarkets, cosmetics stores, pharmacies, direct sales and other sales channels have remained stable in recent years. Compared with department stores, the above channels cover a wider area and face a larger consumer group. Therefore, the products sold by the above channels contain a larger proportion of popular brands, and the price of products is usually more attractive. They have become the main marketing channels of domestic mass cosmetics products.

2 Cosmetics Market Scale and Change

In 2015, China's cosmetics market sales amounted to 31.529 billion yuan, with a compound growth rate of 7.70% from 2012 to 2015. It is expected that the Chinese cosmetics market will maintain a compound annual growth rate of 9.42% from 2015 to 2020 driven by the upgrading of Chinese consumption. By 2020, the scale of the Chinese cosmetics market will reach 495.05 billion yuan, as shown in the table below.

On the one hand, with the growth of per capita disposable income of urban residents in China, the per capita expenditure of consumers in the field of cosmetics has maintained a rapid growth trend, and the importance of consumption in the field of cosmetics has been significantly enhanced; on the other hand, the per capita expenditure of consumers in the field of cosmetics still accounts for a relatively low proportion of their disposable income. According to the data of the National Bureau of Statistics, in 2015, the per capita disposable income of urban residents in China was 31,195.00 yuan, while the per capita expenditure on cosmetics was only 229.6 yuan. The per capita proportion of cosmetics in disposable income was relatively low.

With the deepening of China's national income doubling plan and the implementation of urbanization strategy, the total number of urban residents will further expand, the per capita disposable income will further increase, and it is expected that the per capita expenditure in cosmetics will further increase.

3 Market Scale and Change of Cosmetic Industry

According to Euromonitor International data, the annual composite growth rate of China's cosmetics market is 11.44% from 2012 to 2015, and the scale of China's cosmetics market reaches 25.101 billion yuan in 2015. The annual composite growth rate will continue to be 10.85% in the next five years. The scale of China's cosmetics market will reach 42.016 billion yuan in 2020, as follows:

According to the proportion of retail sales of cosmetics in the cosmetics market, China's current retail sales of cosmetics only account for 7.95% of the cosmetics market, Japan and Korea's retail sales of cosmetics account for 17.83% and 16.21% of the cosmetics market, and the United States for 17.98%. Compared with the mature cosmetics market, China's retail sales of cosmetics account for a larger proportion of the cosmetics market in the future.

From the per capita consumption of makeup, in 2015, China's per capita consumption is only 18.26 yuan. In the same period, Japan and Korea's per capita consumption is 45.22 US dollars and 37.27 US dollars respectively, and the United States is 44.74 US dollars. Compared with the mature market of makeup, China's per capita consumption of makeup will have greater room for improvement in the future. With the increase of disposable income per capita and the popularization of the concept of cosmetics consumption, the cosmetics industry is expected to usher in a mature period of large-scale development, and the cosmetics market in China is expected to maintain a sustained growth trend.

4 Market Scale and Change of Color Makeup Segmentation Industry

Makeup can be divided into facial makeup, eye makeup, lip makeup and nail products. Among them, facial makeup accounts for the largest proportion, accounting for 48.61% of the total retail sales in 2015. At the same time, the retail sales of facial makeup grew fastest, with a compound annual growth rate of 14.08% from 2012 to 2015. Facial makeup includes Foundation / concealer, powdery / loose powder, Blush / gloss, etc. the main function is to modify facial defects and brighten complexion. It is the most basic make-up product. With the acceleration of life rhythm, consumers are more and more inclined to use facial makeup products, such as BB cream and C C cream, which have a significant role in promoting the sales of facial makeup.

5 Industry Competition

Cosmetics industry is a fully competitive industry with a large number of enterprises and fierce market competition. At present, the competition pattern of China's cosmetics industry presents the following characteristics:

>>>> （1）International brands have obvious advantages

For a long time, China's cosmetics industry has been dominated by international brands, especially in the high-end cosmetics market, almost monopolized by international brands. In 2015, among the top 15 cosmetics brands in China, 11 international brands, including Chanel, LV, Estee Lauder, L'Oreal and other well-known global enterprises, mainly from the United States, France and Japan.

With the advantages of global brand advantages, accumulated popularity, stable product quality and mature channel laying, international cosmetics brands have won a large and stable customer base in the Chinese market, which has caused greater competitive pressure on local brands.

>>>> （2）Increasing Market Share of Local Brands

Modern cosmetic products originated in Europe. In the early stage of industry development, cosmetics from Europe and America occupied the main global market and occupied a favorable position for industry competition. However, international cosmetics giants generally have a global architecture system, and the overall strategy level of the brand is generally decided by the global headquarters. To a large extent, the budget setting, target setting and product design of major brands are also globally coordinated and unified. To a certain extent, the complexity of brand decision-making process makes it lack of flexibility when facing regional markets. With the continuous development of the industry, local brands will gradually rise, grow in the process of industry competition, and the market share shows an upward trend year by year. Compared with international brands, local brands based on regional cultural background and aesthetic standards have a more thorough understanding of the needs of local consumers and more targeted product development.

Comparing with the development of Korean and Japanese cosmetics brands, both countries experienced the process that international brand cosmetics occupied the majority of the market share in the initial stage, and then local brands continuously eroded the international brand share and eventually exceeded the international brand share. At present, the development of China's cosmetics market has initially presented the characteristics of Korean and Japanese cosmetics market, and the market share of local cosmetics brands is showing a steady upward trend, constantly seizing the market share occupied by international brands.

>>>> （3）High-end cosmetics market is an opportunity for local brands

The difference between high-end makeup and popular makeup is mainly reflected in the industry and consumer perception, retail channels, product prices, product performance and other aspects: high-end makeup brand and its brand ownership enterprises must be generally recognized as high-end by the industry and consumers; high-end makeup sales channels should be preferred to department stores; high-end makeup quality is more secure, the price is relatively high.

In 2015, the retail sales volume of high-end cosmetics in China reached 6.752 billion yuan, and the compound annual growth rate from 2012 to 2015 was 13.40%. The compound growth rate of high-end cosmetics brand products from 2015 to 2020 is expected to remain at a high level of 1.145%. By 2020, the retail sales volume of high-end cosmetics is expected to reach 11.611 billion yuan, with a huge market prospect.

Despite the obvious advantages of international brands in high-end cosmetics, local brands break the monopoly of international brands in high-end areas and develop national high-end brands is the inevitable trend of the development of China's cosmetics industry. With the upgrading of consumer structure of cosmetics products in China, high-quality products will become the mainstream of market consumption. Local high-end brands are expected to expand the market share of local brands in high-end products through clear brand positioning and targeted product research and development based on the understanding of regional cultural background and aesthetic standards and accurate grasp of consumer psychology.

6 Trends and Causes of Profit Level Change in Industry

Generally speaking, the profit level of cosmetics industry is affected by brand awareness, technology level, sales model and other factors. Enterprises with high brand awareness, leading product technology level and adopting direct operation mode can usually get higher profits.

The change of profit level in cosmetics industry is influenced by many factors: on the one hand, the intensification of competition in the industry, the increasing number of competing manufacturers and the increasing maturity of the market will lead to the decline of the overall profit level in the industry; on the other hand, the continuous updating of product technology and emerging new products will promote the rise of the overall profit level in the industry. Cosmetics directly act on sensitive parts such as consumers'eyes and facial skin. The safety and effectiveness of products are very important for consumers. Product quality and product effect experience are determined by the production process and technology level of the product. The improvement of industry technology level can bring better product experience to customers, so it will drive the increase of industry profit level. At the same time, cosmetics, especially color cosmetics products, usually contain strong fashion elements. Industry manufacturers will regularly or irregularly launch new products with different concepts and styles. While injecting fresh vitality into the business operation, it can promote the overall profit level of the industry.