What Happened Despite ringing in a record 435.7 billion RMB ($60 billion) in retail sales for 2024, China’s beauty sector is nursing a nasty headache. A 1.1% YoY decline, the second contraction in three years, has cast a shadow over the once-ebullient industry. Recent data from the National Bureau of Statistics reveals a market heavily reliant on discounts. Growth spurts were closely tied to shopping festivals like 618 and Double 11, with sales plummeting immediately after — a pattern that highlights a worrying dependence on promotions. For instance, November 2024 saw a staggering 26.4% drop in cosmetics sales, the sharpest decline in a decade, following the Double 11 pre-sales frenzy in October. This market turbulence, marked by six months of negative growth last year, underscores the fickle nature of China’s consumer spending. Many brands, including global ones, are now prioritizing short-term gains over long-term brand building and sustainable growth. The Jing Take The intensifying competition is leaving a trail of casualties. Nearly 15 C-beauty brands, including once-promising names like Hedone and Vnk, shuttered their doors in 2024. Shuiyi, a buzzy brand featured on Xiaohongshu, recently announced its closure, citing a lack of profitability. Meanwhile, Fancl Group’s Boscia, Shiseido’s D program, and Lirene from Poland all pulled out of China last year. With product differentiation becoming increasingly challenging, brands are finding it harder to cut through the noise and resonate with consumers. Many are teetering on the brink of survival. This struggle isn’t limited to emerging beauty brands; even established players like Sephora are also feeling the pinch, with many laying off employees or readjusting their distribution channels. This slowdown marks a stark departure from the heady days of 2014 to 2021, when the market consistently expanded by over 8% annually, exceeding expectations and hitting milestone after milestone. The pandemic and a sluggish economy have undoubtedly taken their toll, with the first decline hitting in 2022 (-4.5%), followed by a weak recovery in 2023 (5.1%). China’s beauty market is maturing, and the days of easy wins are over. Brands can no longer rely on flashy marketing and steep discounts to drive sustainable growth. Innovation, brand building, and cultivating genuine consumer relationships are now critical for survival. Only the most agile and strategic players will thrive in this increasingly challenging landscape. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.