Foreign Beauty Brands Are Flying High in China, But That Doesn't Mean It's Easy
It can be a lucrative business helping to keep China beautiful. L’Oréal, overcame supply chain challenges, inflationary pressures, and lockdowns to post record annual sales of $36.6 billion in 2021, largely buoyed by Chinese consumers' appetite for beauty products. Estée Lauder also saw strong growth from China. This will see it increase its coverage in the market and open a new innovation centre in Shanghai in a few months. Although the brand has been in China since 1993, CEO Fabrizio Freda remains "absolutely excited by the potential of China."
With pandemic-induced lockdowns and more homebound consumers, consumers globally have had less occasions for their full beauty regime. But in China, beauty categories were already bouncing back as early as April 2020, with imported cosmetics growing 30% that year. French beauty exports to China topped $2.15 billion last year, having grown 56% since 2019.
Yet behind the gloss of stunning cosmetics export growth to China, there remains an increasingly savvy fraternity of domestic beauty brands who are playing to an ever-more patriotic consumer base. In many cases, these brands are combining their local knowledge with data to jump on trends early. They are often well-funded, commonly spending much more on marketing than foreign brands. Whereas brands like Estée Lauder and L’Oréal spend between a quarter to a third of its sales revenue on marketing, Perfect Diary's Yatsen spends over two-thirds.
Despite being up against domestic competitors' massive marketing spend and national pride, our Tracker data illustrates that foreign brands continue to hold strong for most skincare and beauty segments. Domestic brands are emerging in targeted sub-categories such as face masks and colour cosmetics, where they have surpassed foreign brands for revenue.
The continued success of imported brands in China's beauty category illustrates that premium foreign traits still hold significant appeal for many Chinese consumers. But it is not possible to trade on that alone. A recent Vogue Business survey of the most patriotic generation, Gen-Z, found that just 11% of fashion buyers are "patriotic spenders." However, most of the other 89% will consider domestic brands that meet their needs, forcing foreign brands to work smarter.
Increasing marketing spend by beauty brands is pushing up the cost of acquiring new customers. To ensure that the return on that investment is positive, brands are increasingly utilising insights and data to build 360-degree strategies that are optimised to connect with consumers at a functional and emotional level.
This week, China Skinny has released a China beauty white paper to provide some inspiration for building those connections with the target audience. Utilising our Trackers, we've drawn on ecommerce and consumer data to identify some key needs and trends in the beauty category, and illustrated how brands are incorporating these into the strategies. You can download your copy here.
Few beauty brands have the budgets of L’Oréal and Estée Lauder for insights and data. Fortunately, smaller beauty brands can still access infinitely-valuable market data and trends as they happen through China Skinny's Skincare and Beauty Trackers. We incorporate ecommerce data with consumer research panels to identify the most effective messaging, ingredients, features, sales and research channels, identifying under/untapped opportunities, customer profiling and much more. Whilst it's designed to stay abreast of ongoing monthly changes in the category, we've aimed to keep it accessible for smaller brands, which means you only need to sign up for a month for just $999. Learn more about how the Trackers can assist you to make more informed decisions.
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