Market updates

1.       United Nations released World Economic Situation and Prospects as of mid-2022. The document shows that the world economy is projected to grow by 3.1 percent in 2022, marking a downward revision of 0.9 percentage points from the previous estimation. The broad-based slowdown of the global economy will undermine a full, inclusive, and sustainable recovery from the pandemic. This slowdown and the war in Ukraine triggered sharp increases in food and fertilizer prices.

2.       Multiple e-commerce platforms, including Tmall, Pinduoduo, JD, etc, started marketing campaigns for 618 shopping festival. The shopping festival is one of the most significant shopping festivals in China, which usually begins in mid-May and lasts for one month.

Company dynamics

1.       Chinese scalp care brand KOSLIV gained a new round of financing. Founded in 2019, KOSLIV mainly focuses on the anti-hair-loss function but has not launched any products yet. The latest data from the National Health Commission shows that 250 million people in China are suffering from hair loss. The huge demand has attracted many players to dive into this market. However, cosmetics that claim anti-hair loss should be registered as special cosmetics, implying that they need to follow more strict regulations.

2.       L’ Oreal group founded its first investment company in China, aiming to boost innovation here. This investment is supported by its venture capital fund, BOLD Business Opportunities for L’Oréal Development.

The L’Oréal group also announces the launch of the L’Oréal BOLD FEMALE FOUNDERS initiative designed to support female-led startups. It will also be developed by BOLD, through a dedicated initial allocation of 25 million euros.

3.       Chinese beauty group CHICMAX’s children functional skincare brand newpage officially released its products, covering face cream, cleanser, shower gel, etc. All products are specially designed for children and priced from 59 to 119 yuan.

newpage's products

4.       According to the Brand Finance Cosmetics 50 2022 released recently, the ranking of Chinese beauty brand PECHOIN has increased further compared with last year, successfully surpassing international brands such as Maybelline, Clarins and SK-II, jumping to the 14th place and becoming the only Chinese brand among the top 15.

5.       Chinese pharmaceutical group Tianjin Pharma acquired 88.867% of the market share of Yu Mei Jing, a traditional children skincare brand in China. More pharmaceutical companies have crossed the field to enter the beauty industry in recent years.

Yumeijing's product

6.       On May 16, Yatsen Global, the parent company of Perfect Diary, released the "2021 Environmental, Social and Governance Report" (ESG Report), becoming the first Chinese beauty company to release an ESG report.

7.       Chinese male makeup brand Yanzhi gained its Angel round of financing, whose main products mainly cover makeup products, personal care products, and cleansing tools. Yanzhi mainly targets male college students, so its products are  mostly priced at below 100 yuan.

Yanzhi's products

8.       American female care brand Rael completed B round of financing, securing 35 million dollars. Founded by three Korean women in the U.S. in 2017, Rael focused on the sanitary pad category at first and now has expanded to other categories such as skincare and body care, covering moisturizers, facial masks, cleansers, and acne patches, etc. Currently, the brand is performing well in South Korea. Rael hopes to enter the Chinese and Japanese markets in the near future while seeking to expand to other Asian markets, the European Union, Canada, etc.

Rael's products

9.       On May 30, Swiss fragrance and fragrance supplier Firmenich announced that it had signed a strategic partnership with ScentRealm in China, a pioneer in digital scent technology. ScentRealm mainly focuses on the technology research, development, and application of digital graphics and digital olfactory products. ScentRealm has established a huge odor database to realize the digital networked transmission and the playback of odors. This collaboration will help Firmenich to bring a higher level of fragrance experience to its clients and consumers.

10.   Unilever officially launched a male skincare brand EB39, positioning it as Unilever’s first entry-lux male care brand in China. EB39’s main selling points are anti-aging and acne treatment.

EB39's products

Data browse

1.       According to the National Bureau of Statistics, in April, China’s total retail sales of consumer goods reached 2.9483 trillion yuan, a YoY decrease of 11.1%. The total retail sales of cosmetics were 2.14 billion yuan, down 22.3% year on year. Except for food and beverage, most categories recorded severe declines in April, mainly attributed to the massive lockdowns in big cities, such as Shanghai.

2.       According to data from the General Administration of Customs, the accumulated imports of cosmetics and toiletries in the first four months were 132,662.8 tons, a year-on-year decrease of 9.1%; the import value was 47.9 billion yuan, a year-on-year decrease of 7.1%. The accumulated imports of cosmetics and toiletries in April was 35,200.2 tons, down 22.9% year-on-year; the import value was 13.19 billion yuan, down 9.28% year-on-year.

3.       In 2022 Q1, the Chinese beauty industry witnessed over 20 financing events, but the investment in the beauty industry has cooled down since April. Only one brand gained investment in April, and only two brands gained investment in May.

Financial results

Estee Lauder    Fiscal Year 2022Q3

1.       Estee Lauder reported net sales of $4.25 billion for its third quarter ended March 31, 2022, an increase of 10% from $3.86 billion in the prior-year period.

2.       The Company reported net earnings of $0.56 billion, compared with $0.46 billion in the prior-year period.

3.       The resurgence of COVID-19 cases in many Chinese provinces led to restrictions in the fiscal 2022 third quarter to prevent the further spread of the virus. Consequently, retail traffic, travel, and distribution capabilities were temporarily curtailed. The Company’s distribution facilities in Shanghai operated with limited capacity to fulfill brick-and-mortar and online orders beginning in mid-March 2022.

4.       Every category grew organically, led by Fragrance’s outstanding performance globally and the makeup renaissance in western markets.

Shiseido   2022Q1

1.       Net sales were 234 billion yen, dropping by 1.3% year on year.

2.       In China, the total sales dropped by 14% compared to 2021Q1. The offline sales slowed down due to COVID-19 variants, but the e-commerce business continued growth, especially during the promotion period of Chinese New Year and Women’s Day.

Yatsen Global   2022Q1

1.       Total net revenues of the first quarter of 2022 decreased by 38.3% to RMB891.0 million (US$140.5 million) from RMB1.44 billion in the prior-year period.

2.       Total net revenues from Skincare Brands for the first quarter of 2022 increased by 68.5% to RMB182.7 million from RMB108.4 million in the prior-year period. The percentage of total net revenues from Skincare Brands of the first quarter of 2022 increased to 20.5% from 7.5% in the prior-year period.

Regulatory compliance

1.       On April 29, 2022, China’s leading e-commerce platform JD.com issued two new platform rules: the Quality Standards for Quality Certification of Lotion and Cream Cosmetics and the Quality Standards for Quality Certification of Essence Cosmetics . The two standards specify the terms and definitions, determination criterion, and quality certification rules for the quality certification of essence products as well as lotion and cream products, respectively. Both standards came into force on May 6, 2022. More details on ChemLinked.

2.       Tmall Global requires merchants to check and rectify non-compliant efficacy claims of cosmetics on the platform. The promotion and claims on the cosmetic product page shall comply with the Chinese Advertising Law and related regulations, shall not contain prohibited claims, and shall be consistent with the information on the product packaging and leaflet. More details on ChemLinked.

3.       On May 1, 2022, China implemented the finalized Administrative Measures on Cosmetics Labeling, which unifies the contents of the previously released labeling regulations and further standardizes the requirements for cosmetics labeling. On May 17, 2022, Hunan Provincial Medical Products Administration issued an announcement, sorting out the main changes and key points for labeling the ten required items. More details on ChemLinked.

4.       China National Medical Products Administration (NMPA) relaxes the threshold for the person in charge of Cosmetic quality and safety. Personnel with experience in drug, medical device, special food production or quality and safety management are recognized to meet the industry experience requirements of the person. More details on ChemLinked.

5.       On May 20, China NMPA released the revised draft of the Announcement on the Administrative Classifications of Sodium Hyaluronate Products for Medical Use for public comments. The draft renews the classification system of medical sodium hyaluronate products  according to their intended uses and mechanisms of action. More details on ChemLinked.