The COVID-19 pandemic and related restrictions sent shockwaves through China’s beauty and personal care industry in 2022 and crippled consumers’ beauty spending. But with the lifting of zero-COVID measures in December 2022, the market heads into 2023 with strong signs of recovery.
China’s beauty and personal care market registered a retail sales decline of 6.4% on the previous year, reaching CNY532 billion in 2022
Source: Euromonitor International
Colour cosmetics and fragrances are among the categories most materially impacted, with year-on-year decline of 15.4% and 6.2%, respectively, in 2022, given the limited use scenario. Hair care and bath and shower pulled through the pandemic with mild decline as daily necessities. The relative resilience of skin care also underpinned the overall market and is expected to help bring back the buzz for China’s beauty and personal care market in a post-COVID-19 era. We have identified three trends that are shaping demand in Chinese beauty and personal care.
Holistic skin health continues to be in the spotlight in the post-pandemic era
In 2022, along with the prolonged COVID-19 restrictions, people's concern for skin health continued and developed, and showed a trend, “from facial to whole body”. In 2022, dermocosmetics beauty and personal care recorded 6.4% growth against the overall market decline and is projected to maintain its growth momentum in 2023, with repairing and soothing becoming among the most important product benefits for Chinese consumers after whitening and anti-ageing. In addition, skinification of hair care, the preference for healthy and natural glow in colour cosmetics products etc also reflect consumers' concern for holistic skin health and beauty from within. Meanwhile, the concept of skin microecology is receiving unprecedented attention thanks to the barrier repairing claim. In addition to international beauty companies such as L’Oréal and Procter & Gamble, domestic brands such as Dr. Alva and Home Facial Pro are also expanding in this area and showing great potential.
Chinese beauty perception is under constant evolution and, in recent years, has been shifting towards embracing oneself and inner confidence under the influence of self-love awareness and individualism. Focusing on oneself and showing one's natural and unique beauty has become a new demand among beauty and personal care consumers, with mental and emotional satisfaction playing an increasingly important role in consumer decisions.
Inner confidence, looking your best, and looking healthy are now the top three definitions of beauty among female Chinese consumers
Source: Euromonitor Voice of the Consumer: Beauty Survey, fielded June-July 2022 (n=20,320)
In the colour cosmetics sector, for example, foundation/concealer and blusher/bronzer/highlighter products are gaining attention – as key products for creating a lighter make-up, these categories were also more resilient in 2022 than eye make-up products, which are key in heavy make-up.
Fragrances, although experiencing its first decline due to the limited consumption scenario in 2022 due to home seclusion, already shows sign of recovery at the beginning of 2023 and still has huge potential with the mainstay of consumption being products with emotional value, with niche brands such as Maison Margiela and Le Labo gaining traction in the Chinese market and achieving a good sales performance over recent years.
Intensified market competition with opportunities bred in segmented markets
The rise of local brands has coincided with the shuffling of the Chinese beauty and personal care market. Compared to international brands, local brands have more flexible marketing strategies and can respond to consumer demands faster. For example, local brands can shorten their research and development (R&D) process to 3-6 months, while international brands usually take more than twice as long to update their products. Domestic brands provide highly cost-effective, more affordable prices with the same level of efficacy thanks to improved R&D capabilities, making international brands easier for increasingly savvy consumers to replace.
However, there will also be some limitations to the growth of local brands, with them facing the long-term problems of weak brand power and difficulty in maintaining a low price strategy. With the end of the zero-COVID policy, international brands may re-emerge, holding the price barrier as well as the high-end market with their own brand power and more advanced R&D capabilities, and competition in the beauty and personal care market will become even more severe.
The end of the zero-COVID policy is set to bring back the buzz for China’s market
According to Euromonitor International, China’s beauty and personal care market will keep stretching with a CAGR of 6.5% forecast for 2022-2027. The lifting of the zero-COVID policy and the reopening will benefit critical drivers of Chinese beauty and personal care. Consumer confidence is expected to shore up with the recovery of China’s economy. Channel diversification is also set to contribute to the recovery of China’s beauty and personal care market when interest-based e-commerce like Douyin and other established online retailers like JD.com gain traction in terms of beauty and personal care products. Continued market education will also keep playing an essential role in the future growth. With the gradual maturity of the market in top-tier cities, lower-tier markets pose growth potential with relatively untapped opportunities.
For further insight, see the full report on Beauty and Personal Care in China. Analysis and key data findings for all Euromonitor International’s 100 research countries can be found here. These reports provide an in-depth understanding of national market dynamics and offer essential local insight unavailable elsewhere.