Contents

• Market Condition

• Company Dynamics

• E-commerce & Social Commerce News

• Regulatory Compliance

Market Condition

1. According to the National Bureau of Statistics, China’s cosmetic retail sales from January to August 2023 totaled CNY 263.9 billion, showing a year-on-year (YoY) increase of 7.5%. The retail sales in August 2023 reached CNY 32.1 billion, increasing 9.7% YoY. 

2. The latest data from the General Administration of Customs of China (GACC) reported that the total import value of cosmetics and toiletries from January to August 2023 amounted to CNY 85.25 billion, declining 11.7% YoY. The import value in August 2023 dropped significantly by 21.9% YoY to CNY 9.99 billion. 

3. According to Qingyanqingbao, a cosmetic information platform, the cosmetics sales on Tmall in September 2023 was CNY 9.29 billion, experiencing a YoY decrease of 19.47%. Specifically, the sales of skincare, makeup and perfume categories were CNY 6.93 billion, 1.71 billion and 261 million, down 22.03%, 10.15% and 6.63%, respectively. Additionally, international brands accounted for 12, 9 and 18 seats among the top 20 skincare, makeup and perfume brands, respectively.

4. During the first half of 2023, more than 2,000 overseas brands set up their initial stores in China through Tmall Global, Ali’s cross-border e-commerce platform for selling import commodities. Among these brands, the top 3 sectors were nutraceutical, make-up and personal care, accounting for 32%, 20% and 10%, respectively. Meanwhile, Nutritional products for seniors, clean beauty products and male care products were popular categories for these brands focused to lay out. Besides, the top 5 countries of origin of these international brands were the United States, Japan, South Korea, France, and Australia.

 Company Dynamics

1. BASF, a renowned chemical producer, signed a 25-year electricity purchase agreement with State Power Investment Corporation (SPIC) in September, in which SPIC will annually supply one billion kilowatt hours of renewable energy power to BASF’s verbund site in Zhanjiang, Guangdong province since 2025. This cooperation marks an essential step for BASF towards achieving Zhanjiang verbund site’s goal of sourcing 100% renewable energy by 2025, and aligns with BASF’s objective of achieving net-zero carbon dioxide emissions worldwide in 2050. It is also worth noting that Zhanjiang verbund site project is BASF’s largest overseas investment hitherto, with a total investment of 10 billion euros. The site will be independently constructed and operated by BASF and serve as the enterprise’s third-largest production base globally upon completion.

BASF’s Zhanjiang verbund site under construction

2. Recently, Perfect Diary underwent a brand logo transformation on social media and e-commerce platforms, including Xiaohongshu, Weibo, Tmall, Douyin, etc., recently. According to Perfect Diary, the new logo is designed to highlight the brand's message of encouraging consumers to record their lives through makeup products. But since the transformation of the brand’s logo is typically associated with adjustments in its business strategies, there is also speculation that Perfect Diary intends to evolve from a makeup brand into a brand with comprehensive coverage.

Transformation of the logo from left to right

3. On September 7, 2023, Estée Lauder’s early-stage strategic investment and incubation arm, New Incubation Ventures, made a minority equity investment to China’s beauty brand CODEMINT. The brand was founded in 2021 by Grace Chow, a renowned Chinese influencer having a substantial presence on social media platforms. Focusing on clean beauty, this brand offers a product line that includes makeup, cleansing products, facial masks, etc. CODEMINT’s positioning in the promising clean beauty sector, combined with its strengths in product capabilities and impact on social media impact, captured the attention of Estée Lauder. More detailed information on ChemLinked.

4. Marubi, a prominent Chinese domestic skincare brand, unveiled two recombinant collagen dressing products this September for consumers who have undergone medical aesthetic surgery. These products feature a new recombinant Type III collagen as the core component, which is jointly developed by Marubi and the National Engineering Research Center of Genetic Medicine, with the characteristics of high activity, purity and zero irritation. In recent years, the recombinant collagen industry has been attached great attention. Not only Chinese domestic brands proactively made strategic layouts in this sector, but international brands also consistently invested in it. For instance, on September 16, 2023, LVMH-backed private equity firm L Cattertonthe participated in the B-round financing of Jiangsu Trautec Medical Technology Co., Ltd., a leading Chinese synthetic biotechnology enterprise specialising in the R&D of recombinant collagen-based biomaterials, with its yuan-denominated fund. (More information about the Recombinant Collagen industry in China on ChemLinked.)

5. Shiseido announced on its official website to begin full-scale operation of the brand’s Inner Beauty Business with the roll-out of the new brand SHISEIDO BEAUTY WELLNESS (SBW). The brand is scheduled to be launched in Japan in February 2024 and the rest of Asia involving China from 2025 onward. As the first step, SBW will jointly develop products with TSUMURA & CO., Japan’s leading enterprise of Kampo extract intermediates production, and Kagome Co., Ltd., a Japanese food giant. In the future, SBW will collaborate with the brand’s partner enterprises, each possessing expertise in their specific domains, to provide innovative beauty solutions that bring harmonisation to consumers’ skin, body, and mind.

E-commerce & Social Commerce News

1. China’s social media Xiaohongshu announced the closure of its two self-operated e-commerce platforms this month: Oasis and Fulishe. Its Oasis platform will be officially closed on October 31, 2023, followed by the closure of its Fulishe platform on November 16, 2023. Instead, it will focus on buyer e-commerce model, under which buyers play a crucial role in selecting and recommending commodities to users. In the future, in order to efficiently accommodate diverse user demands, Xiaohongshu hopes to invite more buyers, principal owners and brands to the platform by supportive policies.

2. On September 20th, Tmall Innovation Centre (TMIC) and Tmall FMCG jointly unveiled an “efficacy map” aiming to help brands achieve improved performance in four dimensions, i.e., “production factors”, “consumer experience” “consumer guidance” and “marketing expression”, so as to incubate new products fitting the market trends. The map can identify the combination of elements that will probably contribute to a higher rate of product popularity and even generate a brand-new product that has never been seen on the market. Meanwhile, it cooperates with industry partners such as BASF and Croda to provide brands with cutting-edge ingredients and formula solutions. La Mer, Estée Lauder’s skincare brand, was the first to attempt the map. Through the help of the map, its new skincare product The Lifting Firming Serum determined its positioning of “firming” and “anti-sagging”, and targeted consumers favouring fitness and medical aesthetics as major groups. After its launch on Tmall in September 2023, the product gained significant consumer attention, securing the top spot on Tmall's ranking of new liquid essence product.

3. Currently, the first-tier group of Douyin’s cosmetic sector is dominated by Chinese domestic brands, which take up 17 seats among the top 20 hot-selling brands of Douyin cosmetics category in September 2023, including skincare brands like Kans, Proya, OSM, etc., makeup brands such as AKF, Florasis, etc., and cosmetic device brand like Amiro and Jmoon. According to Douyin’s statistics, the GMV of Chinese domestic brands accounted for 83.7% of the total GMV of the top 20 brands this September. In particular, the GMV generated by the top-ranked brand Kans and the fourth-ranked brand Proya reached CNY 286 million and 146 million, respectively.

Regulatory Compliance

1. On September 1, 2023, Supervision and Administration Measures on Online Operation of Cosmetics came into effect. The Measures clarifies the regulatory objects and authorities of cosmetics online operation, the management responsibilities of cosmetics e-commerce platforms and the obligations of cosmetic operators on the e-commerce platforms. More detailed information on ChemLinked.

2. China National Institutes for Food and Drug Control (NIFDC) released and implemented the finalized version of the Technical Guidelines for Children Cosmetics. The Guidelines introduces enhanced requirements pertaining to safety assessments and testing of children cosmetics, children cosmetics specifically designed for the Chinese market, children sunscreens, ingredient use in children cosmetics, as well as labeling and claims of such products. More detailed information on ChemLinked.

3. On September 4, 2023, NIFDC approved the Guidelines for Submitting Information through the Cosmetic Ingredient Safety Information Submission Platform, clarifying the application scope of the platform, the submission principles, necessary documents, and the obligations of cosmetics registrants and notifiers. More detailed information on ChemLinked.

4. On September 4, 2023, NIFDC released the final Technical Guidelines for Filling in and Submitting Cosmetic Formula (the Guidelines) with immediate effect. Consisting of 11 parts, the Guidelines specifies cosmetic registrants’ and notifiers’ responsibility for ingredient quality and safety, refines the requirements for filling in and submitting ingredient safety information, as well as gives instructions on handling changes to ingredient safety information. More detailed information on ChemLinked.

5. China notified WTO of a draft national standard titled Safety and Technical Standards for Cleaning Products. This mandatory standard is currently open for comments until October 27, 2023. Upon its approval, the existing standard GB/T 26396—2011 Technical Specification for Safety of Soaps and Detergents will be replaced. Stakeholders will be given a 12-month transitional period to ensure compliance with the new standard. More detailed information on ChemLinked.

6. On September 14, 2023, the general cosmetics notification system issued an announcement regarding system updates. An improvement was made to the efficiency of notification. Notifiers are now allowed to fill in the previously obtained submission code for compound ingredients to associate ingredient safety information. However, the Cosmetic Safety Information Submission Platform still does not support applications for new submission codes for compound ingredients that do not have existing codes. More detailed information on ChemLinked.

7. On September 25, 2023, China National Medical Products Administration (NMPA) issued an announcement regarding the implementation of toothpastes supervision regulations and the simplification of notification document requirements for toothpastes already available in the market. More detailed information on ChemLinked.

 **Disclaimer: All pictures used in the article are from the Internet.