Monthly Digest: China Cosmetics Industry Review | September 2020

Market updates

1. In September, ByteDance, the parent company of Tik Tok and Douyin, gained its payment license, meaning that it can develop its payment business like Alipay and WeChat Payment. Sources from BiteDance imply that this payment business mainly serves the future e-commerce business in BiteDance, and Douyin has founded an e-commerce department, meaning E-commerce business in China will welcome the entry of another tech giant.

2. On September 1, Tmall Global announced it would upgrade its overseas warehouse business and officially released the cross-border direct delivery service "Overseas Direct Procurement," focusing on importing overseas niche products. Further reading can be found on ChemLinked.

3. On September 3, Taobao Livestream announced to share its technology and resources to over 60 online platforms, including 360 Website (a search engine), What’s worth to buy (a promotion information collection platform), WPS (a set of working software), etc. By sharing resources, Taobao wants to lead more traffic to its e-commerce platform.

4. On September 23, Tmall Global released its “Service Partner” plan as part of Alibaba’s “Five Year $200 Billion” import plan. In the next half-year, Tmall Global will cooperate with 100 services companies to introduce 1000 overseas brands into China. Further reading can be found on ChemLinked.

Service Partner Plan

Company dynamics

1. On September 10, Lanseral, a new male skincare & makeup brand, finished its 15-million-yuan angel round of financing. As a new brand founded in 2019, this male care brand now has 11 SKUs, including lipstick, BB cream, cleansing, etc.

2. On September 10, Clarins, the French cosmetic group, established its first overseas laboratory in Shanghai. This laboratory will focus on consumer research, product evaluation & testing, and new product development.

3. In September, Lily&Beauty and Ruoyuchen, two cosmetics e-commerce operation companies, both successfully established IPOs in China’s stock market.

4. On September 15, SIMPCARE, a natural skincare brand, got its A-round financing. Founded in 2019, SIMPCARE focuses on natural cosmetic ingredients and has two product lines, CBD products, and tea flower products.

5. In September, Perfect Diary, a domestic cosmetic brand, finished a new round of financing, after which its valuation has reached 4 billion dollars. Perfect Diary’s last round of financing was in March 2020. At that time, its valuation was 2 billion dollars, which means its valuation has #doubled in half a year. After this new round financing, Perfect Diary also has started its process to IPO in America. Perfect Diary has opened 200 stores in China with its latest store in Shenzhen.

6. On September 19, MAGEPING, a cosmetic brand founded by a Chinese make-up artist, announced the launch of a new series of products, MAOGEPING·LIGHT. These products have been on the shelf of Sephora.

7. On September 19, Marie Daigar, a domestic makeup brand, cooperated with Louvre to launch a limited edition of makeup.

8. On September 24, Helijia, a beauty service platform, announced cooperating with Tmall Global to develop a business model combining online CBEC products with offline beauty services. Some overseas spa brands, such as Medsap from France, and Repacell from Germany, will sell their products through Tmall Global and train technicians from Helijia to provide both products and beauty services.

9. On September 24, MINISO, a retail brand, submitted an IPO prospectus to the U.S. Securities and Exchange Commission (SEC), and plans to list on the New York Stock Exchange. However, one day before the submitting, a cosmetic product called "One-Step Peelable Nail Polish" from MINISO, was detected with chloroform content as high as 589.449μg/g, which is more than 1,400 of the national standard limit of 0.40μg/g times, sampled by Shanghai Medical Product Administration.

Limited Edition from Marie Daigar

Data browse

1. According to data from Qichacha, China now has 394,000 cosmetics e-commerce companies. The number of new registered cosmetics e-commerce companies was 116,000 in 2019, increasing by 58% YoY. In 2020, a total of 74,000 cosmetics e-commerce companies were established.

2. As of June 2020, the number of valid registrations of China’s cosmetics product trademark was 857,000, accounting for 3% of the total number of valid trademark registrations. And the average time taken to register a trademark in China now is 8-9 months, which is less than 2016 where it took 13-14 months.

3. According to Haikou Customs statistics, since the implementation of the new duty-free policy on Hainan Islands on July 1, as of the end of August, the tax-free sales in Hainan have reached a total of 5.58 billion yuan, a year-on-year increase of 221.9%. Among them, cosmetics ranked first with 2.77 billion yuan, accounting for 49.6% of the purchase amount.

4. Data from the National Bureau of Statistics shows that the total retail sales of consumer goods were 335.71 billion yuan in August, increasing by 0.5% YoY. Among all categories, cosmetics total retail sales reached 2.84 billion yuan in August, with a 19% increase rate.

Duty Free Store in Hainan

Regulatory compliance

1. In September, Shanghai Administration for Market Regulation sampled 50 batches of products from five e-commerce platforms. Among them, 70% of cosmetics have an excessive packaging problem, involving famous brands like CHANEL, LAMER, AERIN, etc.

2. On August 28, 2020, China National Institutes for Food and Drug Control (NIFDC) released the draft Instructions for New Cosmetic Ingredient Registration and Notification Dossiers and Instructions for Cosmetic Registration and Notification Dossiers for public consultation. ChemLinked’s interpretation of the Animal Testing in China’s Cosmetics Sector can be found on ChemLinked here.

3. On September 1, 2020, China National Institutes for Food and Drug Control (NIFDC) released the draft Guidelines for Cosmetic Efficacy Claim Evaluation for public consultation. ChemLinked’s interpretation on Draft Guidelines for Cosmetis Efficacy Claims can be seen on ChemLinked here.

4. On Sep. 21, 2020, China NMPA released the draft Administrative Measures on Cosmetics Labeling, one of the subsidiary regulations of Cosmetic Supervision and Administration Regulation (CSAR), for public consultation. ChemLinked’s interpretation on the CSAR Subsidiary Regulations on Administrative Measures on Cosmetics Labeling can be found on ChemLinked here.

5. On September 28, China NMPA released three CSAR subsidiary regulations on GMP, sampling inspection and adverse reaction monitoring for public consultation. ChemLinked’s interpretation on these three regulations can be found on CL News1, CL News2, and CL News3.