Low Inflation and High Growth in China

China's consumer prices rose at the slowest pace in almost two years last month as clothing and mobile phones became cheaper, according to figures from China Mainland Marketing Research Co. Meanwhile, a Kline study finds double-digit growth in the cosmetics and toiletries market in China.

The China consumer price index rose 1.3% from a year earlier. After climbing 1.8% in July, August's increase was the smallest since September 2003 and lower than any of the nine economists' forecasts in a Bloomberg News survey.

Prices in August rose just 0.2% from July, without adjusting for seasonal factors. Food prices rose 0.9%, consumer-goods prices rose 0.5%, while clothing costs fell by 1.7% and prices of mobile-phone handsets and other telecoms products dropped 16%.

A new survey from Kline & Company shows that China's booming economy and a shift in consumer attitudes have contributed to 13% growth in the country's cosmetics and toiletries (C&T) market in the past year. In the year 2003 to 2004, China's share of the $147.4 billion worldwide C&T market at the manufacturers' level was 5%, or $7.1 billion.

Lenka Contreras, VP and Head of the Consumer Products practice for Kline's research division explains the significance: 'China's share of the global C&T market may seem small compared to huge markets like the US and Japan but, with a population of over a billion people, the growth potential there is staggering'.

Earlier this month, Beijing granted Avon the right to sell directly in China through a pilot program. Legislation enacted in 1998 that banned pyramid selling, which covered direct selling, had prevented Avon from selling products through its traditional route.

Kline's Global Cosmetics & Toiletries 2004 study presents sales data for 16 countries, including China, based on data collected from approximately 1,000 interviews with cosmetic and toiletry marketers, distributors, and retailers, as well as government agencies and trade organizations. The company's proposed market study, Beauty Retailing China 2005, will examine the changing retail environment for 14 categories of cosmetics and toiletries in China.

China Mainland Marketing Research Co. is online at www.cmmr.com.cn .Kline & Company's web site is at www.klinegroup.com.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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