Monthly Digest: China Cosmetic Industry Review | December 2019

Market updates

1. Haier, one of the "three giants of home appliances in China"(the other two are Midea and Gree), has entered the beauty and personal care field. Its subsidiary Beijing Lingli Technology Co. Ltd has already rolled out a hairdryer, a radiofrequency beauty instrument, and an osmotic ion beauty instrument in quick succession. The company will also launch an electric toothbrush, an electric razor, and other products, with a view to tapping into China's booming beauty apparatus market.

2. Luxury brand Christian Louboutin opened its flagship store at Tmall, the only official flagship store in mainland China, selling a full range of lipsticks. It also pledged that supplying its Tmall flagship store will be a top priority.

3. MINISO announced that it would establish a new brand Wow Color, which is a cosmetics collection store. The first store will be opened in Guangzhou on January 1, 2020, with a total of 300 stores expected to be opened in 2020.

4. EVY TECHNOLOGY, a Scandinavian sunscreen brand, officially entered the Chinese market this month and opened a flagship store in Tmall. Its product portfolio covers anti-aging, nourishing, and baby exclusive products.

5. SNOWBERRY, a New Zealand natural skincare brand owned by Procter & Gamble, will officially enter the Chinese market. At present, the channel strategy of SNOWBERRY in China mainly focuses on the Tmall flagship store, Xiaohongshu(RED), and other e-commerce channels.

6. MOINA, an Australian brand focusing on natural skincare, has announced its entry into the Chinese market, with offline bricks and mortar stores as their primary sales channel.

Regulatory compliance

1. The Pilot Implementation Plan for the Reform of "Separation of Business license and Certificates" issued by the National Medical Products Administration (NMPA) speeds up the approval of cosmetics production licenses. From December 1, 2019, submission of a business license is no longer required during application for a cosmetics production license, and time taken to approve a cosmetics production license application is shortened from 60 working days to 40 working days.

2. National Medical Products Administration (NMPA) has officially approved hump oil as an existing cosmetic ingredient in China. Cosmetics containing hump oil are allowed to be registered or filed in China.

3. China General Administration of Customs (GAC) canceled five cosmetic certification documents pertaining to customs inspection and quarantine. The administration license, filing certificate, and safety evaluation report of imported cosmetics will not be verified during customs declaration and inspection.

4. Guangdong Chamber of Daily-use Chemicals (GDCDC) approved two new group standards, detailing the test requirements of microorganisms in cosmetics as well as the management specifications in the cosmetic manufacturing process. These standards are voluntary and shall take effect on January 1, 2020.

5. The official website of the National Medical Products Administration revised the article "Identifying Cosmetic Illegal Claims and False Propaganda," published just a day before. The cosmetic claims of "regeneration, anti-fatigue, breast enhancement, high permeability, activation, antioxidant, and permeability" were removed from the ban list. However, claims like "omnidirectional, wrinkle removal, anti-sensitivity, pure natural, anti-bacterial, scar removal", etc. are still in the prohibited list.

Company dynamics

1. Helena Rubinstein, a high-end beauty brand owned by L' Oreal group, has signed Faye Wong as their brand's global spokesperson. Faye Wong is a major celebrity in China and is also influential across Asia.

2. Alibaba Group's Tmall New Product Innovation Center announced a partnership with Amore Pacific to build a joint innovation factory. Amore Pacific's brands Laneige, Mamonde, and Ryo will also work with Tmall's New Product Innovation Center to incubate new products and plan to hit the market in the first half of 2020 officially.

3. Sephora opened its concept store in Chendu's downtown area, featuring more diversified brands and engaging experience. Sephora's expansion has accelerated significantly this year, with the simultaneous opening of 11 stores in December.

4. Perfect Diary opened its 35th and 36th offline store, respectively, in Hangzhou and Shanghai. The brand, which has achieved resounding success through its digital-first strategy and is planning to vigorously develop the offline market, by opening 600 stores in 100 cities over the next three years.

Data browse

1. Retail sales of cosmetics surged in November. According to the National Bureau of Statistics, the retail sales of cosmetics reached 33.1 billion yuan in November, up 16.8% year on year, far higher than the rate of growth seen in consumer goods.

2. Unilever said it expected sales growth in 2019 to be slightly lower than previously expected, and predicted that the first half of 2020 would continue to be weak, with growth less than 3%. These reduced expectations were due to the challenges it faces in several markets around the world.

3. According to the information released by RED, its "Brand Account" service, which was officially launched in March this year, has attracted nearly 30,000 brands already. Besides leading beauty brands such as L' Oreal, Unilever, Estee Lauder, Procter & Gamble, and Shiseido, it has also attracted luxury brands such as Dior beauty makeup and Givenchy of LVMH. RED's monthly active users now exceed 100 million.

4. The Ministry of Finance opened the draft version of the Consumption Tax Law of the People's Republic of China (Draft for Comments) for public comment. Under the proposed law, high-end cosmetics would be subject to a consumption tax of 15% at the production (import) stage, and the overall tax rate would remain unchanged.

Disclaimer: All images used are from the internet.

Related Link

[1] November Recap: Monthly Digest: China Cosmetic Industry Review | November 2019
[2] October Recap: Monthly Digest: China Cosmetic Industry Review | October 2019
[3] September Recap: Monthly Digest: China Cosmetic Industry Review | September 2019