6 Beauty Trends in China, Including a Sales Model Wake Up Call

China has weathered the pandemic with much stronger control of Covid infections than many other places, and was the only major world economy with positive economic growth in 2020. Its beauty sector, the world’s second largest cosmetics market right behind the US, is still growing and going through a period of rapid trend transition and disruption. This is resulting in changes in product preferences and consumer behavior. The economic peaks and valleys of the last 2 years have also laid bare some tough realities about certain sales and promotion models. Here we share 6 must-know China beauty trends.

1. National pride continues

Although European, American, Japanese and Korean brands still dominate the premium end of the market while domestic brands are mostly in the mid-range and lower end of the market, there’s a concerted effort and supportive government policies to change this dynamic. We can see that Chinese brands not only want to take over the top end of the market but openly advertise these goals.

Strides made in recent years by domestic beauty brands are part of the Guochao (“national hip”) trend. Makeup brand Perfect Diary is its poster child with its high sales, strong cultural elements and its direct to consumer, social media-centric sales model.

Perfect Diary’s parent company, Yatsen Holding, after its IPO in New York in late 2020, also became the first Chinese beauty company with a market capitalization of over 100 billion RMB.

Chinese brand Florasis has even gone as far as marketing itself overseas and has become a known brand online through influencer campaigns on Instagram, Facebook and TikTok. However, it seems that the brand hasn’t fully worked out its distribution model and is still hard to buy outside of China.

2. Cosmetic procedures are no longer taboo

China’s medical beauty sector is expanding rapidly, growing from 64.8 billion RMB in 2015 to 176.9 billion RMB in 2019 and forecast to reach US $52.4 billion by 2023. Apps like Soyoung, China’s answer to realself.com, where people compare results from various treatments, mean that lots of people are sharing before and after photos and post-surgery diaries.

This is influencing people and affecting their decision-making process. There are around 3.5 million of these diaries on the platform. There are also more than 25,000 professionally qualified plastic surgeons and over 6,000 medical beauty institutions on the platform. It debuted on the Nasdaq in 2019 and is going strong. Post-90s consumers and those in the south of the country are the main force driving in this sector.

3. Men’s grooming continues to grow, just as their hair is failing to

Men’s fashion and grooming is going from strength to strength. Sales of men’s cosmetics were around US$15.6 billion in 2019, up 8% from the previous year, according to Euromonitor, with increasing demands for innovative products designed specifically for men. Men are also more open to aesthetic procedures. Rhinoplasty, cheek fillers and hair augmentation are the top three treatments.

China’s relentless 996 working culture – working from 9 a.m. to 9 p.m. 6 days a week – is taking its toll and men are seeing hair loss at younger ages. On Douban, groups about hair care and people looking for hair loss prevention ideas have grown. People are looking beyond shampoo and conditioner. According to Tmall’s Hair Care Industry Consumer Trend Insights report, they are seeking more advanced solutions such as hair masks, oils, essences and ampoules. Hair transplants and customized wigs and hair pieces are also very popular.

Interestingly, with an average price of 7,025 RMB, men are spending 2.75 times more than women per transaction.

4. Growing needs and desires

The market is growing and segmenting to include more than just basic facial makeup and skincare. People are looking for beauty devices for the eyes, mouth, hair, neck and body. The growth in beauty devices for eyes far exceeding that of other categories.

Late nights and “staying-up culture (修仙文化)” mean that young people are looking for solutions for the dark circles and puffiness under their eyes. According to CBNData, between 2017 and 2019 alone, purchases of eye beauty devices on Tmall by those born after 1995 (Post-95s) and those born after 2000 (Post-00s) has increased 67-fold.

There are also new trends in sunscreens. People are becoming more educated about the effects of both UVA and UVB rays and looking for broad spectrum protection. Older consumers saw sunscreens as moisturizing aids, but younger generations are more focused on their anti-aging benefits. People are also looking for convenient, effective sunscreens that smell nice, go on smoothly, don’t interfere with makeup and don’t look chalky.

Fragrances, especially domestic brands like To Summer, are a big hit on Red and are also looking to expand their reach and offerings with perfumes, balms, incense, scented candles and more.

5. Social media is still front and center

In addition to dedicated apps like Soyoung, content related to beauty brands abounds on platforms like Red (Xiaohongshu), WeChat, Weibo, Douyin, QQ and Bilibili. Domestic brands like Perfect Diary and Florasis have used them skillfully to gain a foothold in the market.

Although beauty products are sold primarily through dedicated e-commerce platforms like Tmall and Taobao, most Post-90s and Post-00s consumers learn about new brands through social media. Red has also successfully connected itself to Taobao as stores can quote posts and comments made on Red when editing a product introduction. Red played a key role for Perfect Diary as its sales improved a lot after it opened a store on Red.

But…

6. The limits of celebrity live streaming and influencer-led sales and promotion models are clear

Beauty brands are heavily reliant on KOLs (key opinion leaders, influencers) for promotions and sales. Nowhere was this more evident than in the May run up to the 618 shopping festival when 27 new endorsements were announced in 7 days. It’s turned into a bit of an overlapping frenzy with multiple titles like image ambassador, brand friend, brand spokesperson and more being used to refer to people in multi-star brand deals with some people representing an entire brand, others repping a line and still others doing promotions for a single product. Things are becoming segmented to the point of craze and confusion.

On top of this, sales often collapse when a celebrity isn’t involved or when a big name live streamer isn’t doing the sales. It’s turned into a celebrity daigou market in many ways and it’s not sustainable. For example, according to data from June to September 2020, reviewed by Zhongtai Securities, a Dr. Yu brand face mask that Li Jiaqi recommended in June sold more than 100,000 units yielding a GMV of 19.9 million yuan. When he stopped recommending it in July, only 6,500 were sold, with sales of 1.22 million yuan. In August, only 8,800 pieces were sold, with sales of 1.56 million yuan.

Some brands think the solution is an in-house live streaming host, but the truth is, none have the pull of big names and experienced live streamers. People know when they hear certain names that they’re in for great discounts, limited editions, a variety of interesting, unique products and an entertaining broadcast. A new, unknown name doesn’t come with these guarantees and it’s a reputation and skillset that is very particular and takes time to build. It also demands a person who has the stamina and energy to pull off an energetic, compelling marathon live stream.

The truth is that brands need these big names and their celebrity endorsers, but brands that build their sales model on them thinking that they’re laying a solid foundation are in for a shock.

The only sustainable model in China is for brands to build their own fan and customer communities organically and slowly, putting in the hard work and taking the time, while also working with celebrity endorsers and uber popular live streamers strategically for big promotions a few times a year for the biggest or most suitable occasions. Brands that have special privileges, experiences or online spaces for long-time fans and customers are also on the right track. An offline presence, highly coordinated with the brand’s online entities, is also required at some stage, even if it’s just pop-up stores to start with.

Though the beauty market has been challenged by the pandemic, the crisis also swiftly brought it to the next level and accelerated trends that were already happening. But the days of leaning nearly entirely on live streaming and celebrities, thinking this online-only push is a sustainable business model, are nearly over.