Top Chinese Beauty Brands Reveal A New Industry Landscape

In recent years, competition in the beauty industry has intensified. Chinese domestic beauty brands have risen, quickly becoming a force that cannot be ignored.

Chinese domestic brands, exemplified by PROYA, have made significant strides in various areas, including product innovation and organizational restructuring. These efforts have allowed them to compete with international beauty giants. Popular brands like Kans and Winona have also demonstrated remarkable market potential with their differentiated products and appealing marketing strategies.

This article provides a brief analysis of the major Chinese beauty brands, offering an overall view of the competitive landscape of Chinese beauty brands. With their continuous innovation and increasing influence, these brands are not only carving out a solid foothold in the market but also potentially reshaping the dynamics of the Chinese beauty industry.

Landscape of Chinese Domestic Beauty

Leading Players in China’s Beauty Market

Based on the revenue of major listed beauty companies in the first three quarters of 2024, the industry can be roughly divided into four tiers:

• First tier: PROYA, which continues to maintain its dominant position with nearly 7 billion yuan in revenue.

• Second tier: Shanghai Jahwa and Botanee, both generated revenues exceeding 4 billion yuan.

• Third tier: Bloomage Biotech, S’YOUNG Group, and FREDA, with revenues ranging between 2 billion and 4 billion yuan.

• Fourth tier: MARUBI Group and Voolga, with revenues of less than 2 billion yuan.

Among them, PROYA’s revenue of the first three quarters of 2024 reached 6.966 billion yuan, ranking first. Suppose this growth rate continues in the fourth quarter, in that case, PROYA is poised to surpass the 10-billion-yuan threshold, becoming the first Chinese beauty company to reach this milestone. Notably, Proya lagged behind Shanghai Jahwa and Freida in 2022. However, with its well-known skin care concept of “Vitamin C for skincare in the morning and Vitamin A for the evening,” Proya made a huge leap, surpassing its competitors and positioning itself as the leader among Chinese beauty brands.

In terms of growth rates, similarly, PROYA experienced the highest revenue growth, with an impressive increase of 32.72% YoY. MARUBI Group followed behind, posting a growth of 27.07%. In contrast, companies like Shanghai Jahwa, S’YOUNG Group, Freda, and Bloomage Biotech showed a downward trend in revenue. Shanghai Jahwa, which has been undergoing significant structural adjustments as part of its transformation process, experienced a decrease of 12.07% YoY. Despite the challenges, Shanghai Jahwa’s position in the second tier reflects its strong brand strength and broad consumer base.

Revenue and Profit Ranking (First Three Quarters, 2024)

(Data source: Meizhuang Toutiao)

Performance of Brands Under Top Beauty Companies

In the first half of 2024, the revenue rankings of brands under major listed beauty companies are outlined in the following table. Among these, the PROYA ranked first with a revenue of 3.981 billion yuan, contributing 79.71% of PROYA’s total revenue. This makes it the first Chinese brand expected to surpass 8 billion yuan in annual revenue. Additionally, Kans, a brand under CHICMAX Group, and Winona under Botanee Group, also posted strong performances with revenues of 2.927 billion yuan and 2.389 billion yuan, marking YoY increases of 184.7% and 5.69%, respectively.

Brand Performance Rankings (H1 2024)

(Data source: Beauty in Sight)

In addition, data of this year’s Double 11 also shows that Chinese brands also performed well. According to Tmall and Douyin, two major e-commerce platforms, PROYA outperformed international giants such as Lancome and Estée Lauder, emerging as the biggest winner of the event with top rankings on both platforms. This achievement highlights PROYA’s competitive edge as well as the growing influence and market share of Chinese beauty brands.

Moreover, other major Chinese brands also delivered good performances. Comfy, for instance, demonstrated strong momentum on Double 11’s opening day. Its collagen bars became the first product that surpassed 100 million yuan in sales, with more than 200,000 units sold on Tmall within just 10 minutes. Kans, a brand under CHICMAX Group, achieved total sales of more than 1.107 billion yuan on Douyin, becoming one of the best-selling beauty brands on the platform.

Despite these successes, international brands continue to dominate the Chinese beauty market. On this year’s Double 11 sales list, only five Chinese brands (PROYA, Comfy, UNISKIN, Winona and OSM) made it into the top 20, with international names like Lancome and Guerlain still popular choices for consumers. The traditional dominance of international brands is still remarkable.

R&D and Marketing: The Pillars of Success

The rise of Chinese domestic beauty brands can be attributed to combined factors, with investments in R&D and strategic marketing as key drivers. As consumers become more discerning and quality-conscious, an increasing number of local beauty brands have leveraged these two factors to build brand awareness and gain consumer trust.

1. R&D Investment

Scientific research has always been a key driver of enterprise development. Leading beauty companies are putting more emphasis on R&D, focusing not only on developing new products but also on sourcing high-quality ingredients, innovating formulations, and optimizing production processes.

The R&D investments of major beauty companies in the first three quarters are listed in the table below. Bloomage Biotech has the highest R&D investment of 313 million yuan, marking a 12.99% YoY increase compared to last year. Notably, Bloomage Biotech’s R&D investment accounts for 8% of its revenue, significantly higher than many of its industry peers. Botanee invested 200 million yuan in R&D during the first three quarters of this year, an increase of 9.78% YoY, ranked second in R&D investment. Besides, it’s worth noting that Botanee has successfully registered 9 new cosmetic ingredients this year, demonstrating its ongoing commitment to innovation (Please see all notified new cosmetic ingredients on the Cosme list). Voolga, previously criticized for its overfocus on marketing, has made significant strides by doubling its R&D expenditure, with an increase of 100.08%. In August 2024, Voolga officially launched its Shanghai R&D center, signaling a stronger commitment to innovation.

R&D Investment Rankings (First Three Quarters, 2024)

(Data source: Meizhuang Toutiao)

In the cosmetics industry, research and innovation are crucial for enhancing brand strength and market share. Therefore, managing R&D investment while balancing profit pressures is a challenge that requires careful consideration by beauty companies.

2. Marketing Expenses

In addition to R&D investment, sales expenses also deserve attention. To attract consumers and build brand awareness, companies continually increase spending on advertising and marketing to capture a larger market share. By comparing sales and R&D expenses, we can gain insights into whether a company is focusing more on market expansion or product innovation.

In the first three quarters of this year, Proya invested 3.232 billion in marketing expenses, with sales expenses growing 42.29% YoY, followed by Voolga and MARUBI, which saw growth rates exceeding 30%.

When ranked by the proportion of marketing expenses to revenue, the top three are MARUBI, Botanee, and S’YOUNG. Most companies fall within the range of 45% to 55%, with Freda and Voolga below the average. For the first three quarters of this year, Freda’s sales expenses accounted for 36.46% of its revenue, while Voolga was 33.56%. Notably, MARUBI’s market expenses accounted for 54.87% of its revenue in the first three quarters, with a year-on-year growth of 34.62%. Marubi explained that these high expenses were largely driven by its online transformation and the rising cost of online traffic.

Marketing Expenses Rankings (First Three Quarters, 2024)

(Data source: Meizhuang Toutiao)

These data reveal that major beauty companies are placing different emphases on their strategic choices between market expansion and product innovation.

Struggles and Challenges of the Transformation Process

Despite growth in many areas, Chinese beauty brands face challenges as they navigate the intense competition in the industry. As a result, major Chinese beauty companies, including S’YOUNG Group, Freda, Bloomage Biotech, and Shanghai Jahwa, are actively seeking change and have entered a new “era of transformation,” where the performance struggles resulted from their strategic upgrades are particularly evident.

Freda’s latest performance reflects that it is still in the adjustment and recovery stage of transformation. In the first three quarters of 2024, Freda reported an operating income of 2.803 billion yuan, a YoY decrease of 17.45%, mainly due to its ongoing strategic shift. Last year, Freda shifted its business focus, completing the divestiture of its real estate business and ramping up efforts in the pharmaceutical and cosmetics sectors. These strategic shifts signal changes in Freda’s business direction and positioning. Fortunately, Freda’s core cosmetics business showed positive results, with 1.708 billion yuan in revenue in the first three quarters, up 3.25% YoY. Specifically, RELLET under Freda generated 658 million yuan (up 7.57%), and Dr. Alva under Freda earned 909 million yuan (up 1.80%).

Meanwhile, Bloomage Biotech, also undergoing a significant reform, experienced pressure on its performance in Q3, with both revenue and net profit declining. According to its financial report, Bloomage Biotech’s operating income for the first three quarters stood at 3.874 billion yuan, a YoY decrease of 8.21%, while its net profit attributable to shareholders of the listed company dropped 29.62%, amounting to 362 million yuan. Bloomage Biotech explained that the decline in revenue, along with increased management and R&D expenses, contributed to the drop in profit.

Overall, industry developments including PROYA’s emerging as the “new leader,” CHICMAX Group’s strong breakthrough, as well as Bloomage Biotech and Freda’s growth challenges, signal a clear shift in consumer preferences and a new industry landscape. Companies must adapt to these changes to uncover new growth opportunities. While the path to transformation is filled with uncertainty and risk, challenges and opportunities coexist.

Chemlinked Comment

Chinese brands are increasingly offering products that meet higher standards, positioning themselves to capture emerging growth opportunities and enhancing their market competitiveness. Despite this positive trend, their journey is far from complete. These brands still face challenges in expanding global influence, refining brand image, and gaining wider recognition in a market dominated by established international players. Looking ahead, improving competitiveness is crucial. Staying ahead in the evolving competitive landscape may become the new battleground for these companies in the next stage of development.