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Monthly Digest: China Cosmetics Industry Review | January 2020

Market updates

1.POLA, the Japanese cosmetics group, plans to open more than ten franchise stores in China within three years. The group opened its first franchise store in September 2019. In the fiscal year 2018, the brand's sales in China were 1.9 billion yen (about 122 million yuan).
2.In 2020, Tmall Global plans to introduce more beauty brands in line with the trend of "vegan beauty," which means products are free of any animal-derived ingredients, and instead, they use natural plant ingredients and organic formula. This move is driven by the increasing number of Chinese consumers, especially post 1995s (Gen Zers), which tend to prioritize natural, sustainably sourced, ethical, cruelty-free, clean, and environmentally friendly ingredients.
3.AmorePacific group's cosmetics brand Espoir has officially entered the Chinese market by opening its Tmall store. Currently, the store has only 11 products on the shelves, mainly covering foundation and beauty tools.
4.Hong Qi, China's famous automobile brand, has released three crossover products, including a kind of blended perfume which has caused sensation among Chinese consumers. More domestic brands have started crossover or co-branding marketing under the tide of “China Chic."
5.GUCCI has opened a beauty concept store in Beijing, marking the official entry of its beauty makeup series into the Beijing market. The store, covering more than 450 square meters and offers a full line of GUCCI beauty products, including perfume, lip balm series, etc.

6.Hermès' first makeup collection "Rouge Hermès" will hit the market through Hermès boutiques, Hermès.com website and third-party retailers in 35 countries in March of 2020. This collection includes 24-color lipsticks for $67 each(about 460 yuan).

Regulatory compliance

1.On January 3, 2020, China State Council finally passed the Cosmetic Supervision and Administration Regulation (draft). The final version of the regulation is expected to be released soon, and China's cosmetic regulatory framework will be overhauled following the release.

2.On January 2, 2020, China National Medical Products Administration (NMPA) released an announcement stating that products certified as medical devices shall not use “facial mask” as their names and facial masks certified as cosmetics shall not claim medical efficacy. After the announcement was issued, searches for the keyword of “facial masks with certificates for medical devices (械字号面膜)” on e-commerce platforms such as Taobao, Suning, Red, etc., and related products have been blocked.
3.The National Medical Products Administration ordered four cosmetics companies to rectify within a time limit after it found that they did not comply with the relevant provisions of the "Key Points of Cosmetics Production License Inspection" during an unannounced inspection. The four companies included Cosmax (Guangzhou) Cosmetics Co., LTD., Zhongshan Sinno Cosmetics Co., LTD., and Guangzhou Ruixin Biotechnology Co., LTD, etc.

Company dynamics

1.Alibaba has officially implemented the Content Creator Management Rules from January 1, 2020, to optimize and improve the experience of content creators and consumers on Taobao live-streaming platform. The new regulation, for the first time, included the “consumer experience index," taking the feedback from consumers of related live-streaming orders as an important reference.

2.On January 2, 2020, L 'Oreal Paris announced post-00s teen star Ouyang Nana as their newest brand spokesperson. On January 8, 2020, Armani Cosmetics, a subsidiary of L 'Oreal group, announced Jackson Yee, also a post-00s celebrity, as its spokesperson. L 'Oreal group aims to attract more Chinese younger consumers through the endorsement of post-00s stars.

3.Shiseido opened its first shared office space--Shiseido Zhimei Innovation Center, in Shanghai on January 8, 2020. The center will focus on Chinese consumers' demands, creating products that they love and really need.
4.The Notice on Adjustment of Cosmetics Product Sharing released by Tik Tok stated that starting from January 15, 2020, the platform would re-screen cosmetics products and only allow the sale of high-quality products on the platform.

5.Watson's China has launched its enterprise WeChat to carry out social e-commerce and establish one-to-one contact with customers. In addition, it plans to launch a cloud store on WeChat in the first quarter of 2020 to make shopping more convenient and efficient.

Data browse

1.Tmall announced on January 8, 2020, that its ”Hey Box," (a kind of incubator and e-commerce platform to launch new products on the market) has helped launch over 100 million new products in 2019 and aimed to help build 300 new products with sales over 100 million and 1000 brands with their new products sold over 100 million in 2020.

2.Sasa International's third-quarter results fell by 27.3%. Following plans to close all of its stores in Singapore, Sasa International has tentative plans to close about 20-25% of its stores in Hong Kong over the next 18 months and focus its resources on increasing its presence in the China mainland market.
3.As of January 16 closing, the total market value of Proya reached 23 billion yuan, hitting a new high and exceeding Shanghai Jahwa, with a total market value of 20.6 billion yuan. Shanghai Jahwa and Proya represent respectively, the old and new power of China’s domestic cosmetics brands.

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