Jan 29, 2022
Monthly Digest: China Cosmetics Industry Review | January 2022
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Market updates

1.       On January 6, Douyin e-commerce announced a new policy that creators should file products three working days before launching marketing campaigns on Douyin.

2.       Chinese fashion social media Little Red Book (RED) issued three rounds of punishment for false marketing, prohibiting 81 brands. Brands being prohibited means that when users search for this brand on RED, they will see a warning: “The brand is involved in false marketing, so its relevant content won’t be shown.” Many popular cosmetic brands are on the list, such as Fancl, The History of Whoo, BIOHYALUX, Dove, Nivea, etc.

3.       Chinese video platform Bilibili unveiled its virtual makeup patent. Bilibili has attracted many beauty influencers to upload their makeup vlogs. This technology can help these influencers to better interact with their viewers.

Company dynamics

1.       Chinese cosmetic company CHICMAX has applied for Hong Kong Stock Exchange’s IPO. As an old cosmetic company in China, it has several well-known skincare brands, such as KANS, One leaf, and Baby Elephant. This company also has a strong distribution ability.

2.       Li Huiliang, CTO of Chinese hyaluronic acid giant Bloomage, confirmed to join the Chinese makeup brand Florasis. However, it is still unknown whether this news implies that Florasis will enter the skincare market.

3.       The founder of Chinese skincare brand Frost Cabin (林清轩) posted on Weibo to accuse CHANEL of unfair competition. He stated that Frost Cabin has focused on using red camellia to develop cosmetics for 12 years. However, CHANEL also released red camellia skincare products and poached multiple employees from Frost Cabin. Most opinions online were that Frost Cabin was trying to use CHANEL to gain exposure.

4.       CHANEL worked with the world-lead packaging manufacturer Texen to develop environmentally friendly bottle caps for its two skincare product lines, Le Lift and Hydra Beauty. The bottle cap will be made of recyclable RPET plastics.

5.       Chinese male care fashion brand LANSERAL (蓝系) gained a new round of investment, securing tens of millions of yuan. Founded in March 2020, LANSERAL mainly targets male consumers aged 18 to 25, providing fashionable male care products.

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LANSERAL’s products

6.       Chinese makeup brand Girlcult organized a unique marketing campaign -organizing a funeral for itself, more accurately, for some of its old products. It is a clearance sale in essence. Founded in 2018, Girlcult positions itself as a Chinese fashion makeup brand. It indeed has had its good time, but it is going down now as the whole makeup market cooled down. This marketing campaign did help the brand regain some traffic online.

7.       The Shiseido group sold two skincare brands, Za and Puremild, to URUOI. Shiseido has sold 15 affordable brands within about one year and is determined to focus on its high-end brands.

8.       Chinese skincare brand Daslan completed a Pre-A round of financing. The brand focuses on researching and developing anti-aging cosmetic products, targeting consumers aged 25-35. This brand’s launched anti-aging products use traditional Chinese ingredients, including sturgeon caviar, ginseng, black ganoderma extract and other ingredients, and anti-aging ingredients such as acetyl hexapeptide-8, oligopeptide, and peptide.

9.       Chinese Internet giant ByteDance officially started to sell its perfume products. The perfume brand is named Emotif and now has two SKUs.

10.   Chinese emerging skincare brand C+(C咖) gained its third round of financing within seven months. C+ focuses on providing smear masks for consumers. To solve the problem that smear masks are more likely to be contaminated if packaged in a big jar, C+ creatively develops small Lego-like packaging.

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C+’s products

11.   Four personal care brands from LG group launched zero-waste solid beauty products. They are scalp care brand Dr. Groot and Elastine, body care brand Veilment, and oral care brand Himalayan Pink Salt. Solid products can reduce the use of plastics, water consumption, and shipping costs.

Data browse

1.       In 2021, China’s GDP reached 17.7 trillion US dollars, ranking the second globally, an increase of 8.1% over the previous year. The total retail sales of consumer goods for the year were 44,082.3 billion yuan, an increase of 12.5%. The total import and export of goods in the whole year were 39.1009 trillion yuan, increasing 21.4% yearly.

2.       At the end of 2021, the national population was 14126 million, an increase of 480,000 over the previous year. The net increase in population in 2021 is the lowest in recent 60 years (since 1962).

The population birth rate in 2021 was 7.18‰, falling below 10‰ (1%) for two consecutive years, a new low in the past 72 years (since 1950).

3.       According to data released by the National Bureau of Statistics, the total retail sales of consumer goods in December 2021 reached 4,126.9 billion yuan, a year-on-year increase of 1.7%. Among them, the total retail sales of cosmetics were 34.1 billion yuan, a year-on-year increase of 2.5%, and the growth was 5.7 points lower than the previous month.

In 2021, the total retail sales of cosmetics reached 402.6 billion yuan, a year-on-year increase of 14%, the largest growth rate in the past nine years.

4.       In 2021, the total number of registered imported general cosmetics reached 17,000, a YoY decrease of 20%. South Korea, France, Japan, and the U.S. were the top 4 source countries of imported general cosmetics.

5.       In 2021, the sales of the ten duty-free shops on the outlying islands of Hainan were 60.173 billion yuan, a year-on-year increase of 84%.

Financial results

P&G   2022Q2

  • Net sales reached $21.0 billion, an increase of 6% versus the prior year.

  • Beauty segment organic sales increased two percent versus a year ago. Skin and Personal Care organic sales increased in low single digits primarily driven by volume growth in Personal Care due to innovation, market growth, and pricing, partially offset by negative product mix. Hair Care organic sales increased in low single digits, primarily driven by increased pricing.

Johnson&Johnson  2021Q4

  • 2021 fourth-quarter sales were $24.8 billion, reflecting growth of 10.4%. 2021 full-year sales were $93.8 billion, reflecting growth of 13.6%.

  • Consumer Health worldwide adjusted operational sales increased 3.8%* primarily driven by over-the-counter (OTC) products including TYLENOL, in addition to NEUTROGENA and AVEENO products in Skin Health / Beauty primarily due to COVID-19 market recovery. The growth was partially offset by external supply constraints mainly impacting Skin Health / Beauty.

Jahwa  2021

  • Revenue in 2021 was about 7.66 billion yuan, increasing by 9% YoY. The net profit was about 655 million yuan, a YoY increase of about 52%, the best performance in the past three years.

Regulatory compliance

1.       In September 2020 and 2021, China National Medical Products Administration (NMPA) released the first and the second draft of Good Manufacturing Practices for Cosmetics (hereinafter referred to as “Practices”). After two rounds of public consultation, on January 7, 2022, NMPA released the finalized Practices and will implement it on July 1, 2022. More details on ChemLinked.

2.       On January 6, 2022, China National Institutes for Food and Drug Control (NIFDC) released an announcement to specify the application requirements and acceptance conditions for the renewal of special cosmetic registration certificate. The announcement also introduces specific policy pertaining to potential force majeure. More details on ChemLinked.

Ye Chen
ChemLinked Research Analyst
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