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Top 8 Cosmetic Market Trends for 2022
BY Ye ChenJan 19, 2022
The Chinese cosmetic market welcomes a new year. What will happen in 2022? What categories are worthy of attention? What marketing trends beauty brands should follow? What categories will be the priorities of supervision? Let’s see ChemLinked’s answer to these questions.
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2021 is a special year for the Chinese cosmetic market. Cosmetic Supervision and Administration Regulation (CSAR), the overarching cosmetic regulation, came into force, giving the cosmetic regulatory system a fresh look. In this new regulatory system, the cosmetic market witnessed the explosive growth of some categories and brands as well as the fadeaway and even disappearance of some subcategories. In general, the Chinese cosmetic market has become more orderly, so observant players have more opportunities than before. What can we expect in 2022? By closely observing the whole industry, ChemLinked concludes the top 8 possible trends for 2022.

Trend 1: Functional Cosmetic Keeps an Upward Trajectory

In recent years, functional cosmetic has become a substantial boost for the Chinese cosmetic market. Its market size reached 88.4 billion yuan in 2021 and is expected to exceed 100 billion yuan in 2023. 1

Despite the severe competition, functional skincare brands achieved excellent results in 2021. The Active Cosmetics Division of L’Oreal remained the highest growth rate among its four divisions in 2021. Chinese functional skincare brand Winona, as a dark horse, beat all big Chinese skincare brands and kept itself as the top 1 domestic skincare brand in the 618 shopping festival and the Double 11 shopping festival. BIOHYALUX achieved one billion yuan sales in 2021, only three years after its establishment in 2018. 1

Why is functional skincare so popular? First, consumers’ demand for skincare products has upgraded as their disposable income and educational background have improved. Therefore, simple functions such as moisturizing cannot satisfy their needs, and consumers are hungry for more professional skincare products. In the meantime, the brand new regulatory system also supports high-quality functional cosmetics for further development by eliminating their unregulated competitors. The implementation of Standards for Cosmetic Efficacy Claim Evaluation implies governments’ determination to regulate the efficacy claims of cosmetics, which will undoubtedly give professional players more competitiveness. Therefore, functional cosmetics, especially those backed by big companies and solid scientific technologies, will continue to rise in 2022.

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Trend 2: Niche Sectors Have More Space to Explore

As competition gets more intense in the cosmetic market, niche sectors become new growth points. In recent two years, fragrance and oral care sectors are the two shining stars.

According to Euromonitor, the compound growth rate of China's perfume market is expected to reach 22.5% in the next five years, and retail sales will climb to 30 billion yuan by 2025. 2 Investors have already shown interest to this sector. In the past two years, 9 fragrance brands conducted 14 financing events. The rise of Gen Z contributed most to the rapid growth of the fragrance sector. It is worth noting that the consumption of fragrance products is no longer exclusive to women. The consumption enthusiasm of young men is being awakened at an accelerated pace, and the spending power of post-00s’ male at present.

Oral care is another promising subcategory. In 2020, the market size of the Chinese oral care market was about 7.1 billion US dollars, but the per capita expenditure on oral care products was only 136 yuan, much lower than that in developed countries. 3 As some have noticed this great gold mine, new oral care brands sprung up to catch the opportunity in 2021. Multiple financing events happened in this sector, even supporting some enterprises in gaining 100+ billion yuan investment. For example, NYSCPS successfully gained four rounds of financing in 2021. Among the prosperous oral care market, mouthwash is the most eye-catching product. CBNData shows that the growth rate of mouthwash consumption in the first eight months of 2021 exceeded 100%. 2

Both fragrance and oral care sectors are attracting more players for their high potential but have not witnessed the rise of dominants in the competition. Therefore, there are chances for every participant.

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Trend 3: Sustainability Becomes a Common Concept

Affected by the global epidemic, human beings, including the Chinese, considered more about the importance of a balanced relationship between humans and the environment than before. In the meantime, impacted by the Chinese government’s policies on carbon neutrality, the Chinese sustainability market recorded rapid growth in 2021. Sustainability has become one of the most popular topics on social media. More companies and individuals joined the discussion and took action.

Beauty companies are active practitioners in this campaign. For instance, Lancome launched replaceable packages in more than 300 offline stores in China and recycled more than five million packages in the past two years. The Shiseido Group plans to achieve the goal of 100% recycled packaging before 2025. All L’ Oreal group’s Chinese factories, agencies, and distribution centers have already achieved “zero carbon emission”.

In 2022, as sustainability becomes a common concept among consumers, they will be more likely to welcome sustainable products, and It is undoubtedly that more and more brands will get prepared.

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Trend 4: Chinese Fashion - Key to Attract Young Consumers

In the past, Chinese consumers had a natural preference for overseas products because they were fancier and with high quality. Situations changed in recent years. More consumers, especially young Chinese consumers, start to show a strong passion for local traditional culture, which affects their shopping habits.

In the early days, IP cooperation with famous western IPs such as British Museum and Disney was popular.   Later, some brands adjusted their strategy to cooperate with traditional Chinese IPs and surprisingly gained explosive exposure, such as CATKIN and Florasis. Other brands quickly followed this trend. Traditional Chinese culture suddenly becomes a gold mine for brands to launch original marketing campaigns. For example, inspired by an ancient Chinese beauty from the Tang dynasty, the new perfume brand Scentooze used ancient fragrance formula to develop a new fragrance product. Also, this new fragrance candle’s shape is designed as ancient candlesticks. This innovative product development made this product stand out among competitors in the Qixi festival in 2021 when other brands used cliché designs such as hearts and flowers.

Why is Chinese fashion so popular? The primary reason is that young Chinese consumers, especially GEN Z, have a strong sense of national pride, thus having a natural preference for Chinese culture. Therefore, when brands creatively connect traditional Chinese culture to fashion icons to breed a new fashion - Chinese fashion, young consumers can easily accept it.

There is a high possibility that the wind of Chinese fashion will go on in 2022, but one thing to notice is that brands still require to innovate when using Chinese culture. Big IPs such as Forbidden City and Summer Palace are no longer novel and impressive for most Chinese consumers. They are looking forward to brands that can find out more niche Chinese cultures and use these cultures smartly.

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Trend 5: Beauty Companies Continue to Follow the Latest Tech Trends

As active followers of new tech and fashion, beauty brands are now actively applying the following technologies and hit concepts, virtual reality/ argumented reality (VR/AR), non-fungible token (NFT), virtual idols, etc.

Before the wide spread of the concept of Metaverse, beauty brands had already become passionate players in the VR and AR industry. L’Oreal launched a virtual makeup mirror called Makeup Genius. Estee Lauder released a VR application named iMatch to help users match foundation shade. Shiseido also had a VR project named caico.

In 2021, NFT became the new favorite among beauty brands. Many beauty brands launched their NFT products, which soon went viral online. Givenchy was the first beauty brand to launch a NFT beauty project in July 2021. In December, Paris L’Oreal invited five female artists to create NFT artwork for its lipstick products. Nivea also launched its free limited edition NFT artwork on Polygon.

Also, many beauty brands started their virtual spokesperson projects in 2021, including Watsons, L’Oreal, and Florasis. In 2021, quite a few beauty brands’ reputations were harmed by their spokespersons’ scandals. Virtual spokespersons are a flawless solution to the social needs of beauty brands. Plus, they work 24/7 and are easily controlled. Thus, beauty brands won’t have to overcome PR disasters that could tarnish the curated brand image. Moreover, they don’t age, have radical look changes and get sick.  

Related to the super concept of Metaverse, these new techs will be highly possible to continue their upward trajectory in 2022. More beauty brands are likely to follow these new trends.

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Trend 6: “She Power” - a Fresh Marketing Concept

As Chinese female consumers’ income and education background improved and femininity rose in Chinese society, “she power” became a popular concept in marketing campaigns.

In 2021, quite a few PR disasters were caused by brands’ disrespect for women shown in their marketing campaigns. In some worst cases, a few brands had to publicly apologize to female consumers, such as PurCotton, Sexy Tea, etc. However, these apologies cannot completely offset the negative impact of the lousy marketing campaigns, which gives a good lesson for other brands. In the meantime, some brands’ marketing campaigns gained much traffic and got praised by many female consumers by spreading the concept of supporting women taking ownership of their voices, dignity, and worth. For example, Estee Lauder cooperated with multiple female athletes to show women’s power, sending a message that women should not be simply defined to be gentle, soft, and weak, instead, they can be brave, tenacious, and independent. This marketing campaign went viral online. Proya released a video saying, “It is prejudice, not gender, that draws the boundary” to challenge the gender stereotypes for both women and men, which racked up 150 million views on Weibo.

Female consumers are an essential consumption power, especially in the cosmetic market. With the rise of feminism in China, it is undoubted that they are being more sensitive to marketing campaigns which involve gender issues. It is a wonderful strategy for brands to win female consumers’ recognition by standing with them and sincerely respecting them.

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Trend 7: Children Cosmetic Gets into the Era of Comprehensive Regulation

On January 1, 2021, Cosmetic Supervision and Administration Regulation (CSAR) came into force, implying stricter supervision in the Chinese cosmetic industry. Children cosmetics became the top priority of supervision. The first cosmetic administrative punishment case was a person was banned in the industry for life due to the failure in the inspection of children cosmetics. On July 5, 2021, China National Medical Products Administration (NMPA) announced that children cosmetics were one of the key categories of cosmetic safety risk monitoring. The authority also stated the definition of children makeup and emphasized that there was no so-called “children toy makeup.” From May 1, 2022, children cosmetics applying for registration/notification must use the exclusive logo of children cosmetics.

From January 1, 2022, Supervision and Administration Provisions on Children Cosmetics came into force, putting stricter regulations on children cosmetics than general cosmetics. Children cosmetics have welcomed an era of all-round and multi-level supervision.

A more ordered market environment also supports the development of high-quality products. Many brands have seized the opportunities, especially overseas brands. The children care sector on Tmall Global maintained rapid growth in the past three years. As core categories in this sector, children’s moisturizers, sunscreens, and shower gels have grown by nearly three digits in the past two years. In 2021, more than 40 new overseas children care brands entered the Chinese market through Tmall Global. 4 In 2022, the market is looking forward to more high-quality players.

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Trend 8: Regulatory Authorities Attach Importance to Whitening Products Compliance

At the end of 2021, an administrative ban of general cosmetics with SymWhite 377 sent shockwaves to the cosmetic community and sounded an alarm over the whitening beauty products in the market.

Cosmetics are classified as general and special cosmetics in the latest overarching cosmetic regulation, Cosmetic Supervision and Administration Regulation (CSAR). The former only requires notification, WHILE the latter needs registration, which takes more money and extended time than notification. Whitening products belong to special cosmetics. 

However, in practice, many skincare products that have the whitening function have been notified as general cosmetics because they have other functions besides whitening, so that they argued that other functions are their products' main functions.

The regulatory authorities have determined to regulate these so-called general cosmetics with the whitening function. China NMPA is working on a list of whitening cosmetic ingredients. Products using ingredients on the list shall be registered as special cosmetics. In the meantime, the implementation of Standards for Cosmetic Efficacy Claim Evaluation and Administrative Measures on Cosmetics Labeling also will crackdown on false and exaggerated claims of the whitening function of beauty products.

As regulatory authorities' supervision of whitening ingredients and products is becoming stricter and more standardized, the whitening beauty product market faces both challenges and opportunities.

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Ye Chen
ChemLinked Research Analyst
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