In September, global beauty giants made two investments in Chinese brands. These investments shed light on the current trends within the Chinese beauty market and illuminate the strategic directions pursued by these global industry leaders.
LVMH-backed Private Equity Firm Invested in a Chinese Recombinant Collagen Enterprise
On September 16th, Jiangsu Trautec Medical Technology Co., Ltd. completed its B-round financing, securing over CNY 200 million in total. The funding round was jointly led by the yuan-denominated fund of L Catterton—the LVMH-backed private equity firm, and the CLSA Capital Partners. Notably, this isn't the first instance of Trautec attracting the interest of international beauty giants. In August 2022, Trautec secured nearly 200 million RMB in its A-round financing, with Shiseido Beauty Innovation Fund as a lead investor. Shiseido noted that Trautec was the first enterprise they invested in after establishing this dedicated fund, with the aim of exploring new biomaterials for cosmetics and tapping into the potential of functional skincare market in China.
Beauty giant investors in Trautec
Founded in 2015, Trautec is a leading Chinese synthetic biotechnology enterprise specializing in the research and development of recombinant collagen-based biomaterials. By far, Trautec has realized large-scale and standardized production of recombinant collagen types I, II, III, and XVII. In January 2023, Trautec's recombinant collagen type XVII received recognition with an INCI (International Nomenclature of Cosmetic Ingredients) designation and was included in the international catalog of cosmetic ingredients.
Production facilities of Trautec
Recombinant collagen, following hyaluronic acid, is a highly promising raw material in the Chinese market. It has the potential to become a new driving force for the growth of the functional skincare market. As the recombinant collagen field continues to gain momentum, more enterprises are venturing into this sector, intensifying the competition even further. More information about China's recombinant collagen.
Estée Lauder Invested in a Chinese Clean Beauty Brand
On September 7th, Chinese beauty brand CODEMINT received a minority equity investment from New Incubation Ventures, the strategic early-stage investment and incubation arm for The Estée Lauder Companies. This marks Estée Lauder's first investment in a Chinese beauty brand.
CODEMINT & Estée Lauder New Incubation Ventures
CODEMINT was founded in 2021 by the renowned Chinese influencer Grace Chow, who has a substantial presence on social media platforms such as Weibo, Douyin, and Xiaohongshu. Focusing on clean beauty, this brand offers a product line that includes makeup, cleansing products, facial masks, etc.
It's noteworthy that CODEMINT's angel investor is Cosmax, providing crucial support in terms of product R&D and production. CODEMINT's positioning in the promising clean beauty sector, combined with its strengths in product capabilities and social media impact, captured the attention of The Estée Lauder Companies.
Clean beauty has indeed become one of the prominent trends in the Chinese beauty market. Against the backdrop of an increasing emphasis on health and wellness, clean beauty with its principles of safety, natural ingredients, animal-friendliness, and environmental sustainability, is continually gaining consumer attention. Therefore, an increasing number of brands are now focusing on the promising Chinese clean beauty market. For example, the globally renowned clean beauty brand Aesop under L'Oréal made its highly anticipated debut in the Chinese mainland market in November 2022. Additionally, the clean skincare brand Grown Alchemist under L'Occitane, entered the Chinese market in July 2023.
From the two recent investments, we can observe the key focus of beauty giants in their investment strategies. Firstly, they prioritize industry trends, enabling them to remain flexible and innovative in a dynamic business landscape. Secondly, these investors value the professional background of the target brands, aligning with their increased emphasis on research and development to meet evolving consumer needs. Moreover, if taking into account L'Oréal's investment in the Chinese high-end niche perfume brand Documents in September 2022, it's also evident that premium and niche brands are among the preferred choices of beauty industry giants.
Unlike financial venture capital institutions that pursue direct financial returns, beauty giants as investors place strong emphasis on whether the target brands contribute to their strategic positioning in trending sectors, enhance their brand portfolios, or expand their market channels. Through this approach, they can better embrace market trends and address a wider range of local consumer needs to achieve new growth opportunities.
**Disclaimer: All pictures used in the article are from the Internet.