Contents
Market Condition
Company Dynamics
Financial Results
Regulatory Compliance
Market Condition
1. In September, the cosmetic retail sales reached 32.6 billion yuan, with a YoY increase of 1.6%. From January to September, the total cosmetic retail sales increased by 6.8% YoY, reaching 296.6 billion yuan, marking the highest retail sales recorded for the first three quarters in nearly six years. This signifies a continuous recovery in China’s cosmetic industry. However, it's worth noting that after reaching its peak in April this year, the YoY growth has generally been downward in subsequent months, indicating a slowdown in market growth.
2. In September, the import value of cosmetics and toiletries declined by 24.4% YoY to 11.11 billion yuan. From January to September, the cumulative import value of cosmetics and toiletries totaled 963.5 billion yuan, with a YoY decrease of 12.7%.
3. During the first three quarters of 2023, sales in Hainan duty-free shops totaled 34.94 billion yuan, a robust growth of 28.6% YoY. The number of shoppers during this period surged to 5.25 million, a substantial increase of 56.3%. The top three best-selling categories in Hainan's duty-free shops were cosmetics, jewelry, and watches, generating respective of 14.09 billion yuan, 5.01 billion yuan, and 3.66 billion yuan, with growth of 4.8%, 71.4%, and 50% respectively.
4. In the first three quarters, sales of live-streaming e-commerce surged to an impressive 1.98 trillion yuan, marking a substantial YoY growth of 60.6%. This constitutes 18.3% of the total online retail sales. Notably, the proportion of businesses opting for self-live-streaming has increased to nearly half, with innovative scenarios like store live-streaming, factory live-streaming, and on-the-go live-streaming continuously expanding. Traditional brands are actively leveraging live-streaming to connect with consumers and broaden their marketing channels.
Company Dynamics
1. SENSAI, the high-end skincare brand under Kao, has opened its first global flagship store in Shanghai. In addition to the sales area, the SENSAI flagship store also features an exclusive immersive spa section designed to engage consumers through a multi-sensory experience. Kao envisions leveraging the SENSAI brand to make further inroads into the high-end beauty market in China.
2. Shiseido has unveiled its breakthrough anti-aging patented ingredient--CoreXymide which will be applied to the development of products across various brands. Additionally, Shiseido China has formalized a research collaboration with the Shanghai Ninth People's Hospital affiliated to Shanghai Jiao Tong University School of Medicine, signifying a significant venture into collaborative clinical research in medical aesthetics.
3. Estée Lauder has unveiled its "Nutritious Skincare LAB" in Shanghai with the launch of its new Nutritious Skincare Collection. According product profile, beyond incorporating naturally-derived ingredients and adopting a clean formulation, Estée Lauder thoroughly embodies the sustainable skincare philosophy in product assessment and packaging. It is noted that nutritious products are EWG certified skincare.
4. Su:m37°, a beauty brand under LG, announced strategic adjustments to its offline department store counters. Starting from November 1, 2023, Su:m37° will cease point accumulation for offline in-store purchases, and remaining points for members can be transferred to another beauty brand within the LG portfolio. Industry analysts speculate that this adjustment signals Su:m37°'s retreat from offline channels in China.
5. Joy Group, the parent company of Judydoll, has officially announced a long-term strategic partnership with the PIERRE FABRE Group for the Chinese operations of the brand Rene Furterer. With exclusive licensing granted, Joy Group will take full responsibility for all aspects of Rene Furterer's operations in China, including marketing, sales, and channel management.
6. Proya has launched its advanced wrinkless and firming cream product which is formulated with the exclusive patented cyclic peptide cosmetic ingredient--Cyclopeptide-161. As China’s first independently developed cyclic peptide ingredient, Cyclopeptide-161 holds a national S-level structural patent, delivering exceptional stability, permeability, and high bioavailability.
7. Runben Biotechnology Co., Ltd. was listed on the main board of the Shanghai Stock Exchange, becoming the first listed Chinese enterprise with infant and children skincare products as core business. As outlined in Runben's prospectus, the company operates in three primary product categories: mosquito repellent products, infant and children skincare products, and essence products. Notably, the infant and children skincare sector emerged as the leading contributor to the company's total revenue, constituting 45.59% in 2022.
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China’s Infant and Children Skincare Market Thrives with Increasingly Segmented Product Categories
8. Jland Biotech, a leading Chinese recombinant collagen enterprise with an integrated platform covering research and development, production, and sales of recombinant collagen materials and products, has successfully completed its B round financing, which was led by Cenova Capital with additional investment form Evonik. As China's recombinant collagen market is undergoing expansion and standardization, Evonik's investment in Jland Biotech at this pivotal moment is poised to fortify its position within the recombinant collagen industry.
Financial Results
| Enterprise | Revenue | YoY growth | Notes |
| L'Oréal (Q1-Q3 2023) | EUR 30.57 billion | 12.60% | 1. The revenue for the first three quarters is the highest in the past five years for the same period. 2. All four business sectors achieved growth in the first three quarters, with the L'Oréal Dermatological Beauty department leading with a growth of 28.7%. 3. By region, the North Asia region, where Chinese market is included, experienced the slowest growth, with a mere 1.3% increase in the first three quarters, resulting in sales of EUR 7.70 billion. L'Oréal attributed this to the impact of adjustments in the daigou (cross-border shopping) policy on travel retail. |
| Estée Lauder (Q1 2024) | USD 3.52 billion | -10% | 1. Estée Lauder attributed the decline to the pressures in the Asian tourism retail business and the slower-than-expected recovery of the overall premium beauty business in mainland China. 2.The largest decline was observed in skincare, which was partially offset by the growth of the fragrance business 3.The growth of the fragrance business was led by Le Labo which achieved strong double-digit growth in this quarter. |
| Shiseido (Q1-Q3 2023) | JPY 722.4 billion | -5.30% | 1.The Q3 net sales was JPY 228.2 billion, a YoY decrease of 15.3%, marking the lowest in nearly 11 quarters. 2. The net sales in the Chinese market grew by 3.6% to JPY 178.1 billion in the first three quarters of 2023. Brands Shiseido and CPB drove overall growth in China in the first half of the year, but experienced declines in Q3. |
| Unilever (Q1-Q3 2023) | EUR 45.8 billion | 0.40% | 1.The turnover of the Beauty & Wellbeing and Personal Care business in the first three quarters was EUR 9.4 billion and EUR 10.5 billion respectively, both with a growth of 3.7% YoY. 2.In the Chinese market, a slower-than-anticipated market recovery and low consumer sentiment resulted in a mid-single-digit sales decline in the third quarter. |
| P&G (Q1 2024) | USD 21.87 billion | 6% | 1. The beauty sector achieved a net sales of USD 4.10 billion, with a 3% YoY increase. 2. The decrease in SK-II sales partially offset the gains from elevated pricing and innovation-driven growth. |
| Beiersdorf (Q1-Q3 2023) | EUR 7.26 billion | 11.20% | 1. La Prairie witnessed a 15.8% sales decline in the first three quarters. This was mainly due to the negative impact of the "daigou" policy on the Chinese travelretail market, along with retailers' proactive destocking decisions. According to Beiersdorf , in the long term, this is a favorable change for brand enhancement. 2. Mass consumer brands, including Nivea, showed strong growth momentum. |
| Kao (Q1-Q3 2023) | JPY 1125.9 billion | -0.20% | 1. Net sales of cosmetics business recorded JPY 171.5 billion, down by 1.7% YoY, with a substantial decline in the Chinese market. 2. Net sales of the health and beauty care business reached JPY 288.5 billion, with a 3.1% YoY increase. |
| LVMH (Q1-Q3 2023) | EUR 62.2 billion | 14% | 1.The Perfumes & Cosmetics business witnessed a 12% organic growth, reaching EUR 6.02 billion. 2.Organic revenue for Selective Retailing, encompassing DFS and Sephora, surged by 26% to EUR 12.43 billion. |
Regulatory Compliance
1. On October 19, 2023, China National Medical Products Administration (NMPA) solicited opinions on Administrative Measures on Cosmetics Inspection. The Measures systematically clarifies the requirements for inspection categories, inspection procedures, link between inspection and audit, and result handling. It aims to address the main problems currently faced in cosmetics inspection work. More information on ChemLinked
2. On October 27, NMPA's cosmetics registration and notification system issued a reminder. As per the reminder, it will publicize the label images of special cosmetics for sale that have been uploaded by registrants on the NMPA website. This new measure addresses the previous challenge faced by consumers and regulators in screening and supervising products due to the lack of label picture’s publicity. The publicity requirement aims to combat the non-compliant behavior by companies that use different labels during the sales process.
3. In October, China NMPA Approves Eight New Cosmetic Ingredients:
Urolithin A, notified on October 12, 2023
Cestrum Latifolium Leaf Extract, notified on October 12, 2023
Bakuchiol, notified on October 13, 2023
ASINI CORII COLLA POWDER, notified on October 17, 2023
Acetyl Octapeptide-1, notified on October 18, 2023
Vitamin K2(35), notified on October 25, 2023
BLACK GINSENG EXTRACT, notified on October 25, 2023
Hydroxy-α-sanshool, notified on October 30, 2023
Disclaimer: All images used in the article are from the Internet.
