"Lipstick Effect" Comes To China As Economy Slows Down

China's economy grew at its slowest rate in 2012, and marketers and market analysts claimed the "lipstick effect" has come to the country. Lipstick effect happens when the economy slows down and consumers are more willing to spend on smaller and less expensive indulgences, such as lipstick, rather than on expensive luxury products. China's gross domestic product rose 7.8 percent in 2012, its slowest rate since 1999. In the first quarter of 2013, China's economy grew 7.7 percent. China's Purchasing Managers' Index dropped to 49.2 points in August 2012, a nine-month low. Although the industrial and manufacturing industries declined in 2012, fast-moving consumer goods and fashion brands made significant gains. China's beauty and personal care market's retail value grew from 184.1 billion yuan, or $30 billion, in 2011 to 202.1 billion yuan in 2012.