Skin Care Market Shanghai

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Human Capital

After reviewing the Deloitte Human Capital Trends report for China, it was apparent that China scores low in comparison to their counterparts globally in terms of leadership, culture & engagement, and learning and development capabilities. In some instances, its beneficial to hire a Chinese manager in the local market that has knowledge and deeper understanding of day to day Chinese business operations. Salary and insurance costs are lower for the local employees, but Chinese employees very often have existing contacts with suppliers, customers, and local government authorities that can be leveraged. The downside is China has several laws and regulations concerning treatment of employees, including a Labor Law, a Regulation on Labor Management of Sino-foreign Joint Ventures, Regulations on Labor Management of Foreign Funded Enterprises, and Regulations on the Control of Resident Offices of Foreign Enterprises, as well as separate standards for details such as minimum wages, holidays, and working conditions, etc. I will delve deeper into the regulations later in the paper.

Deepender Rana talks about the one child rule, ‘A different Kind of Youth’ – self-absorbed, and how it would impact China’s Human Capital. The Chinese government implemented a one-child policy as a part of family planning policy. This policy was enforced for approximately 30 years. It is estimated that the Chinese society will see a decline in many sectors of business due to this rule. “In addition, adults born under the one child policy are more inclined to spend on themselves and luxuries. This group travels more frequently abroad than the previous generations. The resulting exposure to foreign brands has instilled a cachet and preference for niche products and foreign origins.” (U.S. Department of Commerce, 2016)

International Property Rights (IPR) Strategy

Companies must be aware of the Chinese "first-to-file" patent system, which means that it is possible for local Chinese companies to register another company's patents even though it is not the original inventor of a technology. It is imperative that a company registers their trademark across different categories as well to deter potential infringers. New market entrants should ensure that all trademarks are registered both in English and Chinese. By ensuring that all internet domain names are properly registered, the risk to one’s organization will be reduced. The skin care market on the Chinese mainland continues to grow at a rapid pace in tandem with the upward development of the Chinese economy in the recent years. The luxury skincare products are trending as well.

Government Policies and Regulations

Prior to an employee starting the engagement, the company must ensure the contract with new employee detailing duration, job description, work location and condition; Document a Probation Period; and Foreign Employees must have the proper visa. For example, the employer will need to issue an employment license and certificate to a foreign employee. There are a number of government policies and regulations that impact the hiring and firing of employees. Business owners must act judicious in regards to all of the government policies and regulations. In addition, they change rapidly to accommodate the agenda of the Communist party. First time foreign manufacturers or affiliates must obtain and complete an Application Form for Hygiene License of Imported Cosmetics from the hygiene administration department above the local or city level of the importing place. Upon receipt of the application dossiers, the hygiene administration department under the State Council will set up a cosmetics safety panel to inspect the product in question. Products which have passed the inspection will be issued with an Approval Document for Hygiene License of Imported Cosmetics and the number of the approval document. The approval document will be valid for four years.

Importer must also apply for a Verification Certificate for Chinese Labelling on Imported Cosmetics before reporting to the inspection and quarantine department. Normally, an application for verification of labelling process requires 90 working days before reporting to the verification department. Skin care products are also subject to hygiene licensing. China is looking for ways to simply some of its processes by introducing a new pilot. “On 12 May 2017, a pilot allowing the import of non-special use cosmetics on a “filing instead of approving” basis was launched in the Shanghai Pudong New Area. This new scheme will simplify the process by which foreign cosmetics enter the Chinese market, shorten the cycle for imported cosmetics and lower logistics and warehousing costs.” (HKTDC Research, 2017).

To sum it up, there is a robust skin care market in the Tier 1 and Tier 2 markets in China. The suitability of this location is entrenched by China’s rich history, significant market trends and consumer segmentation. The unpractical government policies on the establishments and the presence of government policies and regulations supporting employee interests are not in the best interest of foregn companies. In addition, international Intellectual Property do pose a signficiant risk to a new business. The Global Study Tour was an amazing trip becaue it enabled me to undersetand the things to consider when setting up a in the Chinese market.

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