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Monthly Digest: China Cosmetics Industry Review | April 2021

Market Updates

1.       Multiple sources confirm that ByteDance is developing a new independent e-commerce App. This App will share traffic with other Apps in ByteDance group, including Douyin and TouTiao. After achieving 500 billion yuan GMV in 2020, ByteDance is expanding its e-commerce business step by step.

2.       April 19, Tmall lowered the threshold for opening stores and applied the "Tmall Trial Operation Period" for the first time. For merchants who apply to open a store on Tmall, the qualification review is simplified. After passing a 7-month trial operation period, these trail stores can become official Tmall stores. The new rule starts from four industries: beauty, personal care, home cleaning, and mother & baby.

3.       Kuaishou has set a target for the total turnover of e-commerce at 750-800 billion yuan in 2021, which is about twice that of last year (381.6 billion yuan). Kuaishou hopes to rely more on its own supply chain and its Kuaishou stores, with the proportion reaching 60%.

4.       The 53rd Cosmoprof Worldwide exhibition was rescheduled again, postponed to March 10-14 next year. Also, this trade show will further expand its international version, including Cosmoprof Asia, Cosmoprof North America, Cosmoprof India, and Cosmoprof CBE Asean, as well as its digital version WeCosmoprof, to encourage business.

Cosmoprof is not the only beauty expo that has revised its schedule and diversified its version this year. TFWA Asia Pacific has also decided to launch a special online exhibition in Hainan from June 21 to 24 this year. Luxe Pack also will hold a special exhibition focusing on high-quality sustainable packaging from August 31st to September 1st.

Company Dynamics

1.       Halfist (半懒), a new domestic home cleaning brand founded in March 2020, completed its angle-round of financing. This brand targets Gen-Z by providing them high-efficient and stylish home cleaning products such as rainbow toilet mousse, roller ball scouring pen, and underwear cleaning mousse.

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Product from Halfist

2.       ROCKINGZOO (摇滚动物园), a domestic personal care brand, completed its A+ round of financing, securing tens of thousands of dollars. It focuses on young people’s showering time by providing stylish and colorful toiletries.

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Products from ROCKINGZOO

3.       UCO (悠可), a beauty brand e-commerce operation company, submit a prospectus to the Hong Kong Stock Exchange. UCO’s clients include famous beauty brands such as CPB, Clarins, and SISLEY. Its GMV in 2020 exceeded 16 billion yuan.

4.       ZEBRA TOO ANGRY (生气斑马), a domestic hair makeup brand founded in September 2020, has completed its Pre-A round of financing recently, securing tens of million yuan. The brand has launched wig pieces and hair care products. Its GMV exceeded one million yuan in the first month. Its next step is to launch new products such as hair dye, hair wax, and hair gel.

5.       HAYDON, positioning itself as a global high-end beauty retail brand, is founded at the end of 2020. It opened its third store recently and plans to open 20 stores in 2021. Using space elements to decorate the store, HAYDON committed to creating a cyberpunk & sci-fi atmosphere in its stores.

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HAYDON’s store

6.       Luxury hotel brand Aman launched two new fragrances, "HARU" and "SEI", becoming new members of its perfume series. They were inspired by Aman's urban hotel Aman Tokyo and Amangiri in the Utah desert.

7.       Tabula Rasa (abbreviated as TR), a new male care brand, completed its angle-round of financing, securing millions of dollars. This brand, founded in the middle of 2020, aims to provide high-quality and cool beauty products for modern young people. TR’s first product line includes a tone-up cream and lipstick, launched on Tmall in 2020. These products’ monthly sales increased by 100% month-on-month. It later released personal care products such as cleansing and shower gel.

8.       Benefit, a makeup brand from LVMH group, closed most of its stores in China, only leaving seven stores. Its main distributions have shifted to Tmall, Sephora, and VIP.com.

9.       Estee Lauder group stopped the operation of Rodin Olio Lusso, a skincare brand founded in 2007 with facial oil as its featured product.

10.   HAYMAY, a domestic cosmetic retail brand, announced to open another retail store in Beijing. The new store’s decoration style combines industrial style and future-space style.

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HAYMAY’s store

Data Browsing

1.       According to the National Bureau of Statistics, in March, China’s total retail sales of consumer goods reached 3.5484 trillion yuan, a YoY increase of 34.2%. Among them, the total retail sales of cosmetics were 36.8 billion yuan, a YoY increase of 42.5%, outperforming the overall growth of that of consumer goods.

2.       On April 22, a research report published by Nielsen IQ showed that China's fast-moving consumer market continued to grow under the epidemic in 2020 with a growth rate of 2.9%. Also, the sales of FMCG in live-streaming e-commerce exceeded 58 billion yuan in the last year.

3.       During Tmall Health Festival (from April 8 to April 10), lycium barbarum products, nicotinamide, ginseng products, bone collagen, and skin beauty equipment all recorded explosive growth, with a month-on-month increase of 550%, 507%, 364%, 356%, and 333% respectively.

Financial Reports

1.       International companies

P&G  2021Q3 

-          Net sales of $18.1 billion, an increase of 5%. Net earnings of $3.27 billion, an increase of 12%.

-          U.S. organic sales were up 7%, Greater China up 22%.

-          Net sales of Beauty increased by 9%. The figure for Fabric& Home Care was 8%.

-          Continued growth in e-commerce reached about 50%.

Johnson & Johnson  2021Q1

-          Sales of $22.3 billion, an increase of 7.9%. Net earnings of $6.2 billion, an increase of 6.9%.

-          Asia-Pacific, Africa region reported a 19.4% growth rate.

-          The Skin Health/ Beauty sector achieved growth of 4.1%, while the Baby Care sector’s growth rate recorded 7.7%.

L'Oréal   2021Q1

-          Sales of 7.61 billion euros, an increase of 10.2%.

-          Remarkable growth in Asia Pacific at 23.8 %, driven by mainland China at 37.9%.

-          E-commerce growth at +47.2%.

-          Among four divisions (Professional Products, Consumer Products, L’Oréal Luxe, and Active Cosmetics), Active Cosmetics recorded the highest growth rate, +28.7%, followed by Professional Products, with a growth rate of 21.0%.

LG Household & Health Care  2021Q1

-          Sales of 2,037 billion won, an increase of 7.4%. Operating profit of 371 million won, an increase of 11.0%.

-          The Beauty sector’s sales increased by 8.6% YoY to 1,200 billion won. Particularly in China, the growth of luxury brands and digital channel sales led to steady sales growth.

2.       Domestic companies

Jahwa   2021Q1

-          Sales of 2.1 billion yuan, increasing by 27%. Net profits reached 169 million yuan, increasing by 41.9%.

-          Specifically, the group has opened five flagship stores on Douyin and started to build private traffic groups.

-          Brands performance

HERBORIST佰草集 (+100%)     gf高夫(+80%)     Shanghai Vive双妹 (+120%)

-          Channel performance

Department stores (+170%)     CS (+90%)

Proya   2021Q1

-          Sales of 905 million yuan, increasing by 48.88%. Net profits of 110 million yuan, increasing by 41.4%.

-          At present, Proya's online channels include Tmall, JD, Taobao, Vip.com, and Pinduoduo. The report specifically pointed out that the group has opened Douyin stores.On March 28, Proya held the Ocean Skin Care Festival in Douyin. The live streaming lasted from 6 am on March 28 to the early morning of March 29. The number of viewers reached 284.1w and achieved sales of 6.136 million yuan.

Yatsen Global   2020 Annual

-          Total net revenues for the full year of 2020 increased by 72.6% to 5.23 billion yuan (US$802.0 million). Gross profit increased by 74.5% to 3.36 billion yuan (US$516 million).

-          Net loss for the full year of 2020 was 2.69 billion yuan (US$412.0 million).

-          Total number of DTC consumers reached 32.3 million, increasing by 38.0%.

-          Opened 241 offline stores in more than 110 cities in China.

BOTANEE Group  2020 Annual

-          Sales of 2.636 billion yuan, increasing by 35.64%; Net profits of 544 million yuan, increasing by 31.64%.

-          Winona’s sales accounted by over 99% of the company’s total sales. This brand’s total sales in the past three years have exceeded 5.78 billion yuan.

Regulatory Compliance

1.       On April 9, 2021, the final versions of three regulations were officially released, and will come into force on May 1, 2021, including

Cosmetic Classification Rules and Catalogs (More details on ChemLinked)

Standards for Cosmetic Efficacy Claim Evaluation (More details on ChemLinked)

Technical Guidelines for Cosmetic Safety Assessment (More details on ChemLined)

2.       China National Institute for Food and Drug promulgated the draft Guidelines for Defining the Classification of Radio Frequency Products for public consultation. The Guidelines was released to standardize the management of all products that use radio frequency to achieve the purpose of medical beauty. More details on ChemLined.

3.       On April 20, 2021, China National Medical Products Administration released the 2020 annual report on drug supervisory statistics, including statistics on 1) cosmetic registration and notification, 2) investigation and handling of non-compliant cosmetics, as well as 3) licensing for and routine inspection on cosmetic manufacturers. More details on ChemLinked.

4.       On April 23 and April 25, 2021, China introduced transitional processing measures on the existing registration applications of NCI and released Technical Guidance for Submission of Cosmetics Registration and Notification Dossiers (Trial). More details on ChemLinked.

5.       On April 23, 2021, seven government departments co-launched Internet Live-Streaming Marketing Regulations (Trail) to regulate the live-streaming market.

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