Monthly Digest: China Cosmetic Sector Review | Jan 2024
BY Jekyl HeFeb 08, 2024


  • Market Condition

  • Company Dynamics

  • Financial Results

  • E-commerce & Social Commerce News

  • Regulatory Compliance


Market Condition

1. According to the National Bureau of Statistics, the retail sales of cosmetic products in 2023 reached a record high of CNY 414.2 billion, representing a year-on-year (YoY) growth of 5.1%. In December 2023, the retail sales were CNY 32.3 billion, with a significant increase of 9.7% YoY.


2. According to the General Administration of Customs of China, the import value of cosmetics and toiletries in 2023 totaled CNY 126 billion, declining 15.2% YoY. In December 2023, the import value decreased by 20.6% YoY to CNY 8.5 billion. This sector has experienced a continuous double-digit decrease for nine consecutive months, with the largest drop occurring in November 2023.


3. According to the National Medical Products Administration, 12 new cosmetic ingredients were notified in January 2024. Among them, Oplopanax Elatus Adventitious Root Extract completed its notification on January 11, 2024, becoming the first notified Chinese characteristic plant ingredient in 2024. In recent years, due to consumers’ increasing interest to plant extracts, the notified number of new cosmetic ingredients from botanical sources has seen a significant growth.

4. The General Office of the State Council released a guideline to develop China’s “silver” economy, in which measures like developing the anti-aging industry, and encouraging the R&D of cosmetic ingredients, formulas and manufacturing technology were proposed. According to the Ministry of Civil Affairs of China, the number of elderly people aged 60 and above was 280 million in 2022, accounting for 19.8% of the total population. Given China’s large aging population and policy support, the cosmetic industry is more likely to attach increasing importance to the demands of elderly people and create more skincare and makeup products tailored for them.

Company Dynamics

1. Chinese high-end perfume brand DOCUMENTS acquired a new round of financing from USHOPAL, a brand acceleration group partnering with and investing in the next generation of luxury brands in the beauty and wellness area. This financing event marked USHOPAL’s first equity investment in a Chinese domestic brand. Founded in 2021, DOCUMENTS focuses on developing high concentration perfumes containing 15-25% essence. It also offers products including shampoo, conditioner and hand cream, with prices ranging from CNY 120 to 2,950. 


2. Trautec, a leading Chinese synthetic biotechnology enterprise, signed a tutoring agreement with CITIC Securities to officially initiate its A-share IPO process. Established in 2015, Trautec specialises in the research and development of recombinant collagen-based biomaterials. By far, the company has realized large-scale standardized production of recombinant collagen types I, II, III, and XVII. 


3. Benefit, LV’s makeup brand, closed its Tmall, JD and Douyin flagship stores on January 28, 2024, indicating its fully closure of online self-operated channels in the Chinese market. But consumers can continue purchasing the brand’s products in Sephora’s offline stores and online flagship stores. This movement was explained by Benefit’s customer service department as an adjustment to the brand's business scale and development priorities in China. Benefit had previously gained a certain market share in the Chinese market through its hero products such as Dandelion Baby-Pink Brightening Blush and POREfessional Face Primer. However, in recent years, these iconic products were challenged by the domestic makeup alternatives with higher cost-effectiveness. 


4. Kiehl’s launched a new product named Ultra Facial Barrier Balm this month, which followed the formula of the brand’s hero product Ultra Facial Cream, containing ingredients such as ceramide, trehalose and squalane. Owning a compact appearance as lip balm, the new product offers convenience and versatility. It can be applied as a finishing touch after makeup to create a dewy skin effect, and can also serve as a makeup primer to moisturize the skin and prevent cakey before putting on makeups and touch-ups. 


5. Adhering to the skincare concept of “nurtured from both internal and external, combining beauty and nutrition”, Chinese traditional juice enterprise Huiyuan rolled out a hippophae rhamnoides moisturising mask. This innovative product is added with hippophae rhamnoides seed oil, sodium hyaluronate and ceramide, aiming to alleviate skin discomfort and provide deep hydration. In recent years, cosmetics derived from natural materials that can serve as food have gained growing notice and recognition among Chinese consumers. Consequently, more brands ventured into launching this type of products. For instance, in December 2023, Chinese baijiu brand Luzhoulaojiao unveiled a range of cosmetics containing vinasse, including masks, shampoos, and shower gels. 


6. On January 16, 2024, Jala Group, a Chinese cosmetics company, officially announced that its name had been changed to Chando Group. According to the announcement, the renaming was driven by the company’s strategic planning and brand development requirements, as well as the goal of better serving consumers. According to Kantar’s report, Chando has consistently held the top position among Chinese domestic brands in the facial skincare category for three consecutive years. From consumer’s perspective, CHANDO Group enjoys higher awareness compared to Jala Group, as the brand CHANDO is already well-known on the market. 


Financial Results

1. The net sales of P&G from October to December 2023 were USD 2.1 billion, with an organic growth of 4% compared with the same period in 2022. Whereas, the company’s profit decreased by 12% to USD 3.5 billion. Meanwhile, the sales of SK-II in the Greater China zone dropped by 34%, mainly attributed to Chinese consumers' concerns about the Japanese discharge of nuclear-contaminated wastewater.

2. In 2023, LVMH achieved a recorded revenue of USD 93.2 billion in 2023, representing an organic increase of 13% compared to 2022. The group’s business in Asia, excluding Japan, experienced double-digit organic growth as well, becoming the largest revenue contributor with 31% of the total revenue.

E-commerce & Social Commerce News

1. The statistics of Moojing Market Intelligence indicated that the cosmetic sales of four major e-commerce platforms, namely, Taobao, Tmall, JD and Douyin reached CNY 494.5 billion in 2023, with a YoY increase of 3.8%. Ali platforms remain the best-selling online channel, with an average monthly sales accounting for over 50%. Besides, Douyin develops rapidly benefited from its more intriguing short video and livestreaming recommendation algorithm. In terms of per capita consumption, although consumers are increasingly rational in consumption, they are still willing to spend CNY 200-1,000 monthly on cosmetics.

2. In 2023, the GMV of Douyin’s cosmetic sector exceeded CNY 150 billion, increasing 63.11% YoY. Notably, the makeup and perfume category experienced the highest growth rate, reaching 97.46%. Chinese domestic brand and international brands evenly distributed the top 20 best-selling cosmetic brands on Douyin. Benefited from the short drama marketing and brand-owned livestreaming, Chinese brands Kans became the top cosmetic brand on the platform with CNY 3.34 billion GMV.  


Regulatory Compliance

1. On January 12, 2024, China Oral Care Products Industry Association released the initial version of the Inventory of Existing Toothpaste Ingredient in China, comprising 1,026 ingredients. The Inventory includes information such as the Chinese name, INCI/English name, the highest historical use concentration, and notes. For ingredients with specific usage requirements stated in GB 22115 General Requirements on Raw Materials of Toothpastes, the notes in the Inventory indicates that these ingredients should be used in accordance with the requirements in GB 22115. More details on ChemLinked. 

2. On January 25, 2024, China's Ministry of Industry and Information Technology, Ministry of Commerce, and the General Administration of Customs jointly announced the removal of the import license requirement for products containing low-concentration Triethanolamine (CAS No. 102-71-6), including cosmetics. This adjustment became effective on February 1, 2024. More details on ChemLinked. 

Disclaimer: All images used in the article are from the Internet. 

Jekyl He
ChemLinked Market Research Analyst
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