I. Derma cosmetics market size
Sales revenue of skincare products (sum of toner, essence, and lotion category) sold on Tmall and Taobao for the last year (June 2018-May 2019) was 22.1 billion yuan (USD 3.1 billion).
The market size of skincare products for “sensitive skin” is 270 million yuan (1.2% of the total skincare market). Considering that derma cosmetics is a concept which incorporates skincare products for sensitive skin, the derma cosmetics market in China's Alibaba platform is at least 270 million yuan.
Monthly sales trends show fluctuations depending on the season, showing relatively strong sales in all seasons except winter. The number of registered products is steadily increasing.
Table1. Top 5 products in skincare for sensitive skin
II. High growth potential
Derma cosmetics is one of the fastest-growing skincare categories in China. If we compare the growth rate of derma cosmetics (skincare for sensitive skin) with that of skincare for dry skin types and oily skin types, the results are as follows:
- As of May 2019, the market size of skincare for dry skin grew 60% year-on-year, that of skincare for oily skin grew 120% year-on-year and that of skincare for sensitive skin grew 123% year-on-year.
- Annual growth rate of derma cosmetics market in China is projected hit double-digits.
The penetration rate of derma cosmetics in China is relatively low compared to other countries and is somewhere around 20%. However, judging from the fact that the market is expanding at a speed of 20% every year, we expect the penetration rate to reach 50% in five years.
In recent years, there is a growing awareness of cosmetics ingredients in China. Li Jiaqi, one of the top KOLs (short for “Key Opinion Leader”) in China and is also known as 'Lipstick King', introduced cream products from Makeprem and Atopalm in December last year and May this year, respectively, on his Taobao live broadcast. He emphasized the non-irritating and non-toxic ingredients used in products, and the initial volume was sold out during the airing. Both Makeprem and Atopalm are Korean skincare brands that are famous for making products without harmful chemicals.
What’s meaningful here is the fact that 1) one of China’s most prominent cosmetic product KOLs is recommending these skincare products and that 2) the products’ safety has been approved by an accredited Korean institute for use on sensitive skin.
Considering Li Jiaqi’s enormous influence in the sector, we expect to see rising awareness amongst Chinese consumers soon.
(Li Jiaqi, one of the famous KOLs in China)
III. Key features and target points of Chinese derma cosmetics market
1) The average price is relatively low
The average price of the top 10 brands in sensitive skincare does not exceed 200 yuan. Compared to the second table, which shows brand rankings in skincare for all skin types, the price range of derma cosmetics sold in China is relatively low.
2) Most products are mist, toner, or cream; spot treatment products are hard to find
It is easy to find spot treatment products in derma cosmetics in Korea, but not quite so in China. This implies that China’s derma cosmetics market is not mature and segmented enough (yet).
3) The main purpose of using derma cosmetics is moisturization and promoting skin metabolism
'Brightening' and 'whitening' features, which were always on top in skincare features, are not shown on the ranking of the features for sensitive skincare category. For sensitive skin, 'brightening' ranked 11th and 'whitening' ranked 17th.
Table2. Brand ranking of skincare for sensitive skin
IV. Compliance obligations of derma cosmetics in China
Under the current regulatory regime in China, all cosmetics imported and retailed through general trade channels (excludes cross border e-commerce) are mandated to obtain import approval from the competent authority before being marketed or imported in China. Regulatory compliance obligations differ based on the properties of the product i.e. the ingredients used, the labeling claims used etc. (please refer to Cosmepedia for specific examples and detailed procedures). Currently, imported cosmetics in China are divided into 2 broad categories which are subject to 2 drastically different compliance pathways.
- Registration of imported special use cosmetics;
- Filing of imported non-special use cosmetics.
Both of them require stakeholders to invest significant time and financial resources to complete all procedures related, such as the authorization of a Chinese third-party agent, the production of Chinese labels and toxicology test reports, etc.
Additionally, for international cosmetic enterprises who intend to circumvent mandatory animal testing, expedite general trade market access, as well as tap into this vast market, use of newer retail channels like cross-border e-commerce can help to avoid these concerns but does not offer access to more mature retail channels.
Regarding derma cosmetics, they follow the same classification rule and are also divided into special use and non-special use categories. Notably, except for labeling requirements, the import procedures of derma cosmetics is essentially the same as what mentioned above.
Hence, stakeholders who target the Chinese market are recommended to avoid using “敏感” (corresponding translation of “sensitive” in Chinese) when designing a Chinese label even if their products claim “sensitive” on the original label. In terms of labeling, the imported derma cosmetics are not permitted to bear a claim purporting suitability for use by “sensitive” (“敏感” “敏感肌” in Chinese) populations when designing a Chinese label given that the claim confers higher risk for stakeholders both in terms of being flagged by customs officials during inspection and the possibility of having registration/filing applications rejected. Use of the terminology like “sensitive” is only acceptable if it is on the original package (not in Chinese).
- The content is contributed by Measure China, a data service company aiming to help global brands accurately identify emerging consumer and product trends faster.
- The above data in this article was collected from Chinese e-commerce and social media platforms.