The beauty boom has returned to post-pandemic China. Cosmetic sales bounced back quickly, achieving year-over-year growth of 9.5% to 340 billion RMB (approximately $52 billion) during 2020, and over 10% in the first quarter of 2021, according to National Bureau of Statistics of China. 

Those gains are underscored by results from China’s “618” shopping festival, which occurs in June. The event commemorates the founding of JD.com on June 18. JD.com, Inc., also known as Jingdong and formerly called 360buy, is a Chinese e-commerce company headquartered in Beijing. After Singles’ Day on November 11 (11/11), 618 is the most important day for e-commerce sales in China.

During this year’s 618 festival, the beauty sector ranked No. 4 in sales, growing 17.8% to top $7.8 billion across major B2C e-commerce platforms. According to Syntun, an e-commerce data company in China, Tmall, JD and Pinduoduo are the top e-commerce sites in China. What sectors ranked ahead of beauty during the festival? Number one was electronic home appliances, followed by mobile communication devices and apparel and accessories.

While all three e-commerce sites stepped up their beauty efforts during this year’s festival, Tmall remains by far the largest player in the category, with sales nearly three that of JD according to Syntun. Several beauty trends are driving demand. 

Taking a high-level view, demand for safe, effective, easy-to-use and eco-friendly formulas, align with today’s global beauty trends. Taking a narrower focus, more specific in China’s post-pandemic market, wellness-focused products with evidence-based efficacy and/or multi-sensorial user experience. It is equally important that the messages are conveyed to the consumers in an easily understandable and truly resonant way through digital and physical channels. 

On closer inspection, however, there are quite a few sub-plots at the local level. Demand remains for products associated with mask wearing; i.e., skin care featuring maskne/anti-acne treatments and makeup focusing on long-wearing “mask-proof” formulas. But recently, sales of “rescue” treatments have soared. Largely in the form of concentrates or facial masks claiming immediate effects, these skin care products target dull skin and acne caused by the pandemic related lifestyle, given the penchant for late nights among Chinese youth.

Another example are natural/plant-based products. Younger consumers show growing interest in clean beauty, but with a local flavor. There’s surging demand for Traditional Chinese Medicine-inspired botanicals, like Ganoderma lucidum (Lingzhi in Chinese) and Artemisia argyi (àicǎo in Chinese) and biotech ferments. At the same time, at-home beauty device sales have soared. These trends arise, as consumer tastes, regulations and cultures quickly evolve in China.

Converging & Diverging Consumers
Local consumers are more sophisticated. On the one hand, they are savvier, already evolving into an ever-large group of ingredient-centric (Chen Feng Dang in Chinese), or recently upgraded efficacy-centric (Gong Xiao Dang in Chinese).

On the other hand, they are increasingly diversified, segmented into various subgroups primarily by age/gender, living city/area, as well as lifestyle and subculture. For today’s brands in China, big or small, foreign or local, those that garner the most attention and, ultimately, the most sales, include: 

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• Post-95s and Post-00s. Refers to people born between 1995 to 1999 and after 2000, respectively; broadly equivalent to Gen Z in the West; 
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• Small-Town Youngsters. Consumers in their 20s and 30s living in tier-3, -4 and lower cities and towns;  
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• Two-Dimensional Space. Gamers and those in the ACGN (Animation, Comic, Game, and light Novel) communities; and
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• Hardcore Fans. Consumers drawn to pop idols. The term refers especially to those actively involved in their idols’ careers and commercial sponsorships.

Besides these emerging groups, observers insist that men, babies and new mothers will finally live up to their buying potential. All of these subgroups overlap and have much in common when it comes to beauty care needs like: hydrating/soothing, whitening/brightening and anti-aging. However, the most sought-after features can vary greatly between groups, in terms of product type, form, application scenarios and price. These variants have spurred sales of some subcategories, such as leave-on facial masks, hair thinning treatments and body scrubs. 

For example, Dear Boyfriend’s leave-on facial mask is positioned as “a best friend for all Chinese young men.” The encapsulated, hydrating product targets gamers with two major claims, “taking care of your skin while playing video game,” and “applying it and going straight to sleep without washing off.” Those attributes made Dear Boyfriend a best-seller across various online platforms.

As a result, marketing and distribution channels are quickly evolving and diversifying to target the different subgroups, but all put a focus on digital. It makes perfect sense, as the local population shifted online during the pandemic. Nearly two-thirds of Chinese consumers readily share their views on a product before and after purchase, according to a recent survey by iiMedia Research. No wonder then that social marketing has been built into nearly every brands’ marketing strategy in China. 

Popular platforms include the video-sharing platforms Douyin (Chinese version of TikTok), Kuaishou (similar to TikTok, but targeting the local users in lower-tier cities), Bilibili (mostly featuring long videos), and content-sharing e-commerce platform Little Red Book (Xiao Hong Shu in Chinese), a cross between Pinterest and Amazon), as well as WeChat and Weibo, along with of course, Taobao/Tmall and JD.

Regulations Add Complexity
China’s increasingly strict regulatory environment adds more complexity to the beauty market. With the overarching Cosmetic Supervision and Administration Regulation (CSAR) in place at the beginning of 2021, China’s cosmetic sector ushered in a new era of safety and efficacy. The new regulations more clearly spell out rules for cosmetic classification, ingredient management, efficacy evaluation, safety assessment, online cosmetic supervision, accountability system and punitive measures. 

Combined with a comprehensive series of subsidiary regulations, new administrative measures on cosmetics labeling come into force on May 1, 2022. The rule will surely impact product marketing. It aims to ensure product transparency by cracking down on false, exaggerated or misleading product information, especially across various e-commerce platforms with live-streaming selling. The regulations are expected to reduce use of “cosmeceuticals” in advertising as the new measure prohibits explicitly various product claims related to medical and implying medical effects.

Regulations will also impact formulations that contain insufficient amounts of active ingredients. Specifically, the label rule calls for a full ingredient listing on product labels. It also demands:

• Ingredients at levels higher than 0.1% (w/w) must be listed in descending order;
• Ingredients not exceeding 0.1% (w/w) should be labeled separately under “other trace ingredients,”although not necessarily in descending order.

The regulations also set stricter rules over product trade names containing ingredients.  These labelling measures will be implemented next year. There has been a flurry of sub-regulations introduced this year, including: Cosmetics Efficacy Claim Evaluation Standards, The Technical Guidelines for Cosmetic Safety Assessment, Inventory of Existing Cosmetics Ingredients, Provisions on Management of Registration and Notification Dossiers for Cosmetics and Cosmetic Ingredients and “Provisions on Management of Online Trading,” which is designed to tighten live-streaming e-commerce. All of these new regulations are intended to dampen marketing claims and promote real R&D in the cosmetic sector, according to China’s National Medical Products Administration.

Made in China
Regulations aside, cultural self-confidence has come into play since 2017, when China designated May 10 as “China Brand Day.” The designation created demand for fashion known as “national tide/Chinese style” (GuoChao in Chinese).

The increased focus on local culture, among younger generations in particular, opens up the door for beauty brands. Successful cosmetics companies combine modern technology and art with traditional elements in the products, mainly TCM-inspired ingredients and Chinese-style packages.

Several local beauty brands benefit from GuoChao. Some well-known examples include makeup brands like Perfect Diary, Floris and Colorkey, and skin care brands such as Winona and Biohyalux. Apart from formulation quality, the real strength of these brands is in their marketing. For example, Biohyalux teamed with the Chinese Palace Museum to create a limited lipstick collection inspired by a unique story, artifact or time period from ancient China. Florasis’ Love Locks lipstick includes a love story engraved right on the lipstick bullet. Winona skin care promotes its location in Yunnan, a southwestern province of China, known for its skin-soothing botanicals and herbal medicine resources. Biohyalux is the first local beauty brand to succeed with GuoChao branding. Biohyalux is owned by Bloomage Biotech, the largest supplier of hyaluronic acid.

While grabbing the headlines and starting to chip away at the dominance of international conglomerates,  the local beauty brands still have a long way to go. As shown in the latest report on China’s 618 shopping festival in June, foreign beauty brands again outperform their local counterparts—even when compared to last year’s sales totals.

Furthermore, iiMedia Research’s recent consumer survey points out that, overall, international brands enjoy more favorable consumer perceptions over local ones, in terms of brand packaging, efficacy and product.

Paradoxically, coupled with a traditional culture renaissance, China is driven by idol fandom. Fans are willing to spend their money on products connected to their favorite celebrities. Of course, beauty brands waste no time in leveraging their obsessions. One recent high-profile example is Tom Ford’s Lip Lacquer Luxe Matt 03 Lark. It sold out minutes after its debut and far-exceeded company expectations. Sales were propelled by two new spokespersons, actors Gongjun and Zhang Zhehan. Both star in Word of Honor, the latest smash hit Boys’ Love drama in China. The TV drama is set in a traditional Chinese martial arts world, which appeals to women in their 20s and 30s. These fans are willing to buy any and every product promoted by the World of Honor stars.

Emotional Connection
Rapidly evolving consumer tastes, shaped by a more stringent regulatory environment and growing interest in Chinese culture, have created new opportunities for local beauty brands.

The one-size-fits-all strategy for R&D and marketing no longer appeals to China’s beauty consumers. In particular, highly digitally-engaged youth are open to fresh and innovative ideas, and are willing to trade up to buy more and pay more.

Marketers who can meet their demands for quality and tap into their emotions, too, have plenty of growth opportunities.

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Ally Dai
Freelance Writer
[email protected]
[email protected]
 
Ally Dai is a freelance writer/independent consultant based in Shanghai. She has covered the beauty industry for more than 15 years. Previously a senior editor and industry researcher, she now works on content creation with publishing houses, event organizers and PR companies in the personal care and life science industries.