Natural and Organic Cosmetics in China: The Problems Behind the Hype

According to a research report by Grand View Research, the global organic personal care market size was estimated at USD 13.33 billion in 2018 and is projected to register a CAGR of 9.4% from 2019 to 2025 ^[1]. At this growth rate, the global organic personal care market will expand to USD 25.1 billion by 2025.Increasing demand for cosmetics and skin and hair care coupled with rising need for environment- and animal-friendly products is expected to drive growth.

North America is no doubt the pioneer and market leader for these product categories, with Europe coming in just behind as the second biggest market for organic products. The Asian market is still just getting to grips with the increasing importance of this segment. In Asia, people’s awareness of personal health and safety and their awareness of using environmentally sustainable products is gradually increasing. The rise of the middle class in China, India, Vietnam, Thailand, Malaysia and the rest of the Asian Pacific region has been nothing short of phenomenal. As expected, increased wealth and living standards have translated to increased demand for higher quality and ultimately safer products.

How about Chinese consumers’ attitude to natural cosmetic products? A report by AlixPartners titled “Naturally Beautiful: Millennials and Preferences in Beauty and Personal Care Products^[2] may tell us the answer. The report asked consumers how much importance they place on beauty products being “healthy,” “clean,” and “natural.” Researchers surveyed a combined 4500 consumers in five countries: China, France, Germany, the United Kingdom, and the United States.

The AlixPartners survey found a common interest in natural and organic beauty products across the five surveyed nations, but Chinese consumers are more committed to green beauty than consumers in the other four nations. While 72 percent of all respondents said purchasing “healthy or clean products” was important to them, 90 percent of the Chinese consumers surveyed fell into this category. In contrast, only 56 percent of British consumers regarded green beauty products as important.

However, defining the scope of these product categories is one of the major problems for brands. Standards for these products tend to vary across borders or there may be no standard definitions or regulations at all. This leads to misunderstanding and confusion amongst consumers and offers opportunities for more unscrupulous brands to mislead consumers. This situation makes it difficult for well-meaning brands to build consumer confidence. Therefore, it is important for brands to understand what kind of products are regarded as natural or organic by consumers.

AlixPartner also asked consumers how important each stage of the product lifecycle was: ingredient sourcing, ingredient quality, manufacturing, logistics, and marketing. Quality of ingredients was the most important factor for 77 percent of millennial and Gen-Z consumers, while the majority of 18-34-year-old respondents cited the source of ingredients and type of manufacturing as important. Logistics and marketing were considered comparatively less important. Older respondents held similar preferences but were less likely to regard each of these factors as “important.”

As mentioned before, China doesn’t set a specific definition for organic/ natural/ clean cosmetics. In fact, there is also no specific regulation about organic/ natural/ clean cosmetics because it is very difficult to set standards for this kind of cosmetics.

In China, there are four regulations for organic products. They are:

However, organic cosmetics are not included in the latest Organic Product Certificate Catalogue. The main content of National Standard for Organic Products is production, procession, labeling and management of plant, animal and microbial products. Cosmetics are also not mentioned in this National Standard. Labeling is also a major stumbling block, on July 1st, 2012, the Certification and Accreditation Administration of the People’s Republic of China announced the cancelation of organic certification of cosmetics, essentially banning the use “organic” or “100% natural” labeling claims on cosmetics in China.

Therefore, if natural or organic cosmetics want to develop in China, they need to overcome these challenges:

Chinese government doesn’t recognize organic cosmetics and also holds a cautious attitude to natural cosmetics, which means that natural brands who want to enter China’s market will encounter certain barriers. However, the development of cross-border e-commerce provides an option for these brands because there are fewer limits for products entering China in this way. As long as products are in List of Import Goods through Cross-border E-commerce (2018 Edition), they can enter Chinese market through cross-border e-commerce platforms, but it is worth noting that the Chinese word “有机” (organic) is still not allowed if a Chinese label is added to the product package. The English word, “organic”, is permitted.

As we know, cosmetics that use ingredients which are not listed in Inventory of Existing Cosmetic Ingredients in China (IECIC2015) require registration in China. This gets in the way of the development of natural and organic cosmetics to some extent. Recently, ChemLinked editors took part in China international beauty expo 2019 in Guangzhou China. We have seen some exciting new ingredients trend including the research and development of some plant extract, herb and ingredients from ocean.

The good news is that in Regulation concerning Supervision and Administration over Cosmetics (Draft for Second Public Consultation) which is highly likely to enter into force at the end of this year, new ingredient registration will be much easier. Under pending regulatory reforms management of new ingredients will be stratified based on the inherent risks of the ingredient. Under this framework new cosmetics ingredients will refer to natural or artificial ingredients used for the first time in China. Antiseptic, sunscreen, coloring, dyeing, whitening new ingredients and other high-risk new ingredients will need to be registered at National Medical Products Administration (NMPA). Other new ingredients will be subject to filing with the National Medical Products Administration 30 working days prior to being used. If NMPA has questions, they shall come up with questions within that 30-day assessment period. Besides this, it is worth noting that if a whole plant is approved as cosmetic ingredient, then it is not necessary to apply for each individual ingredient derived from the different parts of the plant.

At present, the natural and organic cosmetic market in China is quite chaotic. Both well-meaning brands and some unscrupulous brands are competing. According to the report (Naturally Beautiful: Millennials and Preferences in Beauty and Personal Care Products), 38% of consumers in China don’t know where to buy reliable natural cosmetics. The price is another problem as natural products usually have a shorter shelf-life and this often translates to a premium price. The good news is that Chinese respondents were significantly less likely than other nationalities to report cost as a barrier to purchasing (just 36% of respondents mentioned price as a barrier to purchase compared to 56% in other countries). In summary organic, natural, sustainable, clean label etc. are all key trends driving growth in China’s cosmetic sector. Harnessing consumer demand requires careful consideration of retail channels and compliance strategy, which must be key parts of any successful China market entry strategy.