In 2022, anti-aging, wellness snacks, and traditional Chinese medicine were all the rage. Chinese consumers took their health seriously — particularly as the country continued to battle against the pandemic — and this extended from looking good to feeling good. They had their fun too, imitating the makeup looks of their favorite TV characters and sharing their creations on social media.
While it’s difficult to forecast the micro trends of 2023, there are certainly broader consumer behaviors that are taking hold and serving as pockets of growth for savvy brands. Looking at recent consumer reports, product launches at expos, and the growth projections of different sectors, Jing Daily has identified major macro trends shaping China’s beauty industry below.
Consumers are willing to spend on premium brands and ingredients, even during difficult times.
Euromonitor predicts that the premium beauty could make up 53 percent of market share by 2025 in China. McKinsey’s latest China consumer report supports this growth, noting that even during these uncertain times, “consumers still trade up to more premium brands when they’re looking to reward themselves.”
While some beauty groups with luxe divisions are already reaping the benefits, others are readying themselves to ride the wave. For example, Coty’s ultra-premium brand Orveda is set to drop in China in 2023, and Lancaster’s Ligne Princiére will be available in the mainland starting in March. Meanwhile, Estée Lauder agreed to buy the Tom Ford brand (which includes the label’s beauty, apparel and accessories lines) at the end of 2022 to “propel our momentum in the promising category of luxury beauty for the long-term,” said CEO Fabrizio Feda.
As demand for premium products swells, Allison Malmsten, marketing director at Daxue Consulting, reminds brands that local consumers are looking at more than the price tag. “Brands communicating their premium status should focus on highlighting their ingredients. Know that Chinese skintellectuals are reading your products label very carefully.”
Sun protection, whitening, skin rejuvenation and anti-aging: Brands will ramp up R&D on these four consumer ‘must-haves’
As Malmsten points out, Chinese consumers are paying more attention to ingredients. According to a 2022 white paper by Sephora and China Business News, “sun protection and whitening,” “skin rejuvenation and anti-aging,” “moisturizing and soothing,” and “cleaning and oil control” have become the four must-haves for local consumers, signaling their focus on efficacy.
While global conglomerates typically dominate beauty sales thanks to their reputation for quality (only two of the 10 top selling skincare brands on Tmall during Double 11 were Chinese), local brands may creep up on them in 2023. Chinese cosmetic giant Florasis, known for its traditional Chinese aesthetics and social media marketing, announced that it would invest 1 billion RMB in product innovation and build five major R&D centers. Other players like PMPM and Proya have hired chief scientific officers to upgrade their offerings.
Driven by proof of efficacy, “consumers will continue to move toward clinical brands founded by doctors and chemists,” explains Carol Zhou, SVP China Business Innovation and Investments at Shiseido. Malmsten adds that premium Chinese skincare brands’ could have an advantage here, as they cater to the problems that Chinese people experience: “One example is the Chinese brand Winona, where the entire brand is dedicated to sensitive skin.”
YSL’s Scent-Sation, Shiseido’s holistic beauty tech signal more personalization through A.I.
But customers don’t only want the best products — they want the best products for them. And one way brands have started catering to this demand is by leveraging artificial intelligence to provide personalized analysis and products.
At the 2022 China International Import Expo, L’Oréal introduced the YSL Scent-Sation to China, which uses an EEG-based headset and machine learning algorithms to give personalized fragrance advice. Amorepacific similarly showcased its Mind-Linked Bathbot, which creates personalized bath bombs by analyzing a person’s brain waves. Prior to this, Japanese beauty giant Shiseido started a program to support startups working with “medical beauty technology” and “holistic beauty technology,” reiterating the trend of tech-driven beauty solutions.
This trend is unsurprising. Chinese consumers are “one of the most tech-savvy consumers in the world” and expect their beauty purchases to be just as convenient and interesting, Shiseido’s Zhou tells Jing Daily. “By leveraging technology such as a customized skin diagnostic tool, individualized skin tracking, and a personalized regimen/customized products, we build a much stronger relationship with our consumers.”
From Florasis’ first offline boutique to Armani Beauty’s global flagship in China: Physical retail isn’t dead
While rolling announcements of closing physical stores may paint a bleak picture for brick and mortar, the format will remain critical in 2023, especially as the country comes out of zero-COVID. The aforementioned study by Sephora also describes that “in the offline scene, consumers satisfy their desires for professionalism, safety, prestige, comfort and sense of luxury through beauty classes, casual makeup trials, the music environment, and exquisite displays.”
In December 2022, C-beauty giant Florasis opened its first-ever physical store, Armani Beauty debuted a high-touch global flagship in China, and niche perfume house L’Artisan Parfumeur unveiled its first boutique in Hangzhou. Perfect Diary, Takami, Aesop, and Documents also opened new offline branches or pop-up shops in China in the past quarter.
“C-beauty is fully ready to go into the retail business,” notes Gabby Chen, head of beauty at Lane Crawford China. “The international brand might be more hesitant about the investments considering the past three years’ COVID policy, however, I believe 2024-25 will have a big wave of new growth for international brands to enter China.”
Makeup metaverse: Expect more Web3 beauty experiences
At the 5th World Artificial Intelligence Conference in 2022, Liu Minghua, the deputy chief executive officer of Deloitte China, stated that China’s metaverse market is forecasted to hit $5.79 trillion (40 trillion RMB) by 2030, equivalent to 20 percent of the country’s GDP. Its future is bright too, considering it has the backing of the Chinese government: Beijing wants a whopping sixfold growth in the virtual reality industry by 2026.
As the infrastructure develops, more beauty brands will dip their toes into the Web3 pool. 2022 already saw a host of activations: L’Oréal Group alone unveiled a “Lancôme Rose Garden” in Tmall and WeChat, launched a Web3 online community for Urban Decay, debuted a metaverse space for Maybelline New York during Double 11, and even created its own virtual KOL for its Yue Sai label called Yuxixi.
“In 2023, we will continue to open the door to new beauty frontiers — including the Web 3.0/Metaverse — to reinvent beauty experiences…catering to the next generation of consumers, their ‘digital cravings’ and aspirations,” writes a L’Oréal China spokesperson. Looking at the potential of virtual KOLs in particular, the company states that brand-owned KOLs like Yuxixi allow for high customization and control in diversified business scenarios, while digitally-native idols like Ayayi could strengthen brand resonance as they represent Chinese pride and Gen-Z aesthetics.