Contents

• Market Condition

• Company Dynamics

• E-commerce & Social Commerce

• Regulatory Compliance

Market Condition

1. According to the latest data from the National Bureau of Statistics, in April 2023, China's cosmetic retail sales reached 27.6 billion yuan, the highest in the past five years, with a year-on-year (YoY) growth of 24.3%. From January to April, the total retail sales of cosmetics amounted to 129.9 billion yuan, marking a YoY growth of 9.3%.

2. During the Labor Day holiday in 2023, the sales revenue of duty-free stores in Hainan reached 883 million yuan, representing a 120% YoY growth. The top three best-selling categories were cosmetics, jewelry, and watches.

3. China Hyaluronic Acid Industry Conference announced that Jinan has become the world's largest production base of hyaluronic acid (HA) raw materials. With annual sales volume of over 300 tons, Jinan now holds more than 40% of the global market share of HA raw materials and over 70% market share in China. Jinan has formed robust advantages in the HA industry with a strong emphasis on HA research and production, led by prominent companies such as Bloomage Biotech and FREDA.

4. According to the 2023 China Baby Skincare White Paper released by Tmall Innovation Center, the baby skincare market is experiencing steady growth despite the decline of infants. The sales revenue of baby skincare products is expected to reach 39.9 billion yuan in 2023. Among the product categories, moisturizing lotion stands out as the top, followed by creams and body powders. Notably, creams demonstrate a rapid growth rate, indicating a high potential for this category.

5. According to the 2023 China Consumer Insight White Paper published by iResearch, over 65% consumers believe in that spending money wisely and purchasing products on-demand can maximize their life quality. Prior to making a purchase, consumers tend to be more impressed with marketing content that conveys professional knowledge. During the purchasing process, consumers will evaluate the discounts, and then purchase on demand to prevent impulse buying that usually results in unused items. In the beauty category, the core competitive factors of products are efficacy and safety. To be more specific, the top three factors that drive consumers' purchasing decisions are suitability for their skin type, product quality and safety, and cost-effectiveness.

6. China's male care market is growing steadily with significant development potential. According to Beauty Data, sales of male care products is expected to reach 15 billion in 2023. In terms of competitive landscape, international giants hold six out of the top ten positions, while domestic brands are rapidly gaining traction. Generation Z emerges as the dominant force of the industry, but consumers aged 25 and above wield higher purchasing power. Notably, 33% of consumers of the male care category are females with gifting purposes.

Company Dynamics

1. L'Oréal China has revealed a breakthrough achievement in the field of hair care: the Bond Repair technology which enables inner hair repair. Concurrently, they have introduced the Bond Repair product series, specifically tailored to the needs of Chinese consumers with effective solutions for repairing damaged hair.

Bond Repair Series of L'Oréal Paris

2. Coty China is set to expedite its skincare business in the Chinese market by leveraging a localized team to capture the evolving consumer trends. Its high-end skincare brand Lancaster has successfully established a comprehensive presence across online and offline channels, including Tmall, Hangzhou Wulin Intime shopping mall, and Hainan duty-free stores. Additionally, Coty China aims to enhance its brand portfolio by introducing more perfume and makeup brands, thus to seek new growth opportunities in China's high-end fragrance and makeup sectors.

3. Shiseido's high-end skincare line, Future Solution LX, has collaborated with Chinese fragrance brand To Summer to create a crystal stone fragrance called "Convallaria". This fragrance features the exquisite blend of lily of the valley and sandalwood. In recent years, international brands have recognized the importance of localizing their marketing strategies, such as co-branding, to enhance their presence in the Chinese market. Moreover, for international brands aiming to further penetrate the Chinese market, another possible strategic approach is investing in or acquiring local brands that excel in specific market segments.

Convallaria by Shiseido Future Solution LX and To Summer

4. Silgan Dispensing, a leading global supplier of packaging solutions, has announced the expansion of the production line of the Melodie series' perfume pump heads at its facility in Wuxi, China. This strategic move reflects Silgan's commitment to meeting the increasing demand for perfume pump heads in the Chinese market, while also ensuring more flexible supply chain and more agile customer service for its clients.

Melodie Series' Perfume Pump Head

5. Prima-Derm Group's laboratory brand, SINGULADERM, has launched an anti-wrinkle product specifically formulated for Asian skin. In the face of intense market competition, an increasing number of foreign brands in the Chinese market are conducting research on the unique characteristics of Asian skin, developing "China-focused" beauty products to better cater to market demands and win over discerning Chinese consumers.

SINGULADERM Anti-wrinkle Product Specifically Formulated for Asian Skin

6. According to Estée Lauder's Q3 2023 financial report (Jan-Mar 2023), its net sales in the Asia-Pacific region declined by 1% YoY to USD 1.19 billion, while net profit tripled to USD 232 million. The Chinese mainland market experienced double-digit net sales growth in February and March 2023. Fabrizio Freda, CEO of the Estée Lauder Group, stated that the company had regained lost market share in Chinese mainland market and anticipated double-digit growth in the fourth quarter.

7. Nox Bellcow (NBC) has partnered with the biomaterials team of China-Singapore International Joint Research Institute to facilitate the application of electroactive biotechnology in cosmetic industry. This cutting-edge technology utilizes the bioelectricity generated from facial movements like smiling and blinking to enhance the efficacy of skincare products. NBC explains that bioelectricity are subtle electrical signals that are imperceptible to the skin but can effectively promote penetration. Additionally, electroactive materials have the potential to repair skin elasticity and provide sustained effectiveness. 

Electroactive Gel Series

8. Proya's Mother's Day marketing campaign garnered widespread attention, with its short film urging a shift in societal perceptions of mothers and reshaping family dynamics. Over the past two years, Proya has consistently taken a supportive stand on women's and societal issues such as gender equality and the mental well-being of young people. By actively engaging with and discussing these topics, Proya effectively communicates its brand values, shaping a brand image that goes beyond product and service offerings.

Proya's Mother's Day Marketing Poster

E-commerce and Social commerce

Xiaohongshu (Little Red Book) has launched the "Note-based Sales" feature, allowing brands to collaborate with influencers on a commission-based model, which moves beyond the traditional advertising partnerships. This new approach addresses the limitations of advertising, ensuring better conversion rates for brands. It also offers influencers a fresh monetization channel. Data reveals that 90% of Xiaohongshu users search on the platform before making purchases, which presents great opportunities for content-savvy influencers and brands to boost the conversions of the notes. 

Note-based Sales on Xiaohongshu

 Regulatory Compliance

1. ChemLinked has compiled the information on the major countries that have regulations on fragrance allergen labeling and their specific labeling requirements. More information on ChemLinked

2. Shanghai Municipal Medical Products Administration (MPA) issued granted a cosmetic production license for on-site personalized service to the SkinCeuticals store located in Shanghai Pudong New Area. This license allows the enterprise to provide consumers with personalized services that involve direct contact with cosmetic contents at the store, akin to bringing the factory to the store and producing custom-made products. More information on ChemLinked