China continues to be one of the largest cosmetic producers in the world. A positive regulatory environment and an upbeat Chinese economy has fueled the growth of the cosmetics industry. Multinationals are consistently expanding operations in China. However, the counterfeit cosmetics still pose as a major deterrent to foreign investment in the industry.
This report analyzes The Cosmetics Industry in China in Michael Porter’s Five Forces Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.
