How Proya and Yatsen’s investments diverge from L’Oréal and Estée Lauder

In the first half of 2025 alone, 30 out of 53 global cosmetics deals happened in China. These ranged from strategic acquisitions to venture capital rounds for startups such as Hairology, Juyuan Bio, and PMD. Among them, few moves were louder than Jingbo Bio’s 3.4 billion RMB ($474 million) strategic partnership with consumer giant Yangshengtang — a deal hailed by industry observers as the largest investment in China’s domestic beauty sector this year. “The Chinese beauty sector in 2025 is characterized by a blend of traditional values and modern innovations, with investors keenly evaluating brands that can navigate both domestic complexities and international opportunities,” says Jacques Roizen, managing director of Digital Luxury Group, former Pandora SVP and China general manager. Yet, as Chinese conglomerates like Proya and Yatsen build toward global ambitions, and multinationals like Estée Lauder and L’Oréal continue expanding through clinical and scientific-led brands, the question becomes: Are Chinese investors and their global counterparts now playing two very different games? The end of the fast-scale era for beauty Behind this renewed confidence is a discerning checklist. Investors have shifted their gaze from viral marketing potential to a more robust trifecta: prestige, scientific innovation, and global adaptability. Just two years ago, explosive growth on Tmall or Xiaohongshu (also known as RedNote) was enough to land a term sheet. Not anymore. “Now investors are a lot more cautious,” says William Lau, partner of beauty investment and brand group, Ushopal, and CEO of Chinese luxury beauty multibrand retailer Bonnie&Clyde. “What’s getting attention are brands with real staying power. Those with strong heritage, a clear identity, and ideally, something science-based behind the formulas. It’s no longer just about marketing; people want to see credible ingredients and proven efficacy.“ “If the product can't back itself up, it’s not getting funded,” he adds. That renewed scrutiny stems from saturation. In 2024, China’s cosmetics retail market sales dipped 1.1%, the first decline in five years. According to Benjamin Cavender, managing director at China Market Research Group, which helps investors evaluate opportunities in the region, showing strong in-house R&D is critical, versus an ability to copycat. “Chinese consumers are so sophisticated now that they really expect any brand that they purchase to have a couple of hero products that are distinctive,” says Cavender. “Brands also need to have a very strong digital team, a clear and effective marketing strategy that can be run profitably and a good understanding of how to use different digital channels in China effectively.” From mass beauty to prestige The success of Mao Geping Cosmetics, whose shares surged 87% on debut in December 2024, signaled investor appetite for premium homegrown names. Melt Season, another rising local label, secured minority funding from Estée Lauder in 2023, marking a rare bet from a multinational on a still-nascent Chinese brand. Why? Chinese consumers are trading up, not just in terms of price, but expectation. “What investors are looking for now are brands that can grow in the mid to premium space,” says Lau. “Consumers are more educated. They care about ingredients, results, brand experience. That’s where global brands still have a real edge, if they know how to tell their story properly in China.” This shift aligns with moves by domestic powerhouses like Proya and Yatsen, both of which are racing to upgrade their portfolios. Proya, which surpassed 10 billion RMB ($1.5 billion) in revenue last year, is doubling down on premium categories such as perfume, baby care, and men’s skincare. Its chairman, Hou Juncheng, told shareholders the company plans to plug gaps in its portfolio through overseas acquisitions, notably through its Paris office. In April, the brand appointed former L’Oréal and Johnson & Johnson executive Wang Yifeng to oversee product development and brand incubation, reflecting a pivot from aggressive front-end marketing to systemized innovation. C-beauty’s global ambition gap Chinese conglomerates want to go global. But their focus, for now, remains distinctly domestic. “They’re still quite China-focused. You can see it in their footprint, most of their effort and team are still based here. They’re looking at global brands, but mostly with the intention of building them inside China, not necessarily scaling them abroad,” says Lau. “At Ushopal, we are kind of the opposite. Over half our team is outside China now, and we are building a group that’s global from day one. It’s a different approach, and I think it’s what’s needed to really build a global beauty house.” Gregoire Grandchamp, co-founder of Next Beauty, a firm that specializes in beauty investment and partnerships, echoes this sentiment. “We are in contact with big Chinese beauty groups. They are looking for deals,” he says. “But the challenges are building reputation, accessing the best deals, making an effort to understand local cultures, and hiring international talent to successfully operate the brands abroad.” Huijia Huang, founder and strategist at beauty consultancy Republic Pagi says that pre-pandemic, “investable” in China's beauty industry primarily meant broad market penetration and a clear path to revenue and expansion (local and global). Post-pandemic, the investment landscape has shifted significantly towards a more agile approach. “Investors now prioritize brands with, primarily, a strong and growing young consumer base, and the speed-to-market of niche product offerings,” she adds. “Brands that incorporate traditional Chinese remedies and resonate with local cultural values are becoming more appealing, but global expansion potential matters too,” Roizen says. Yatsen Group has pivoted from low-cost color cosmetics to high-end skincare, acquiring brands like Eve Lom, Galénic, and Dr. Wu. “Proya and Yatsen have global ambitions and seek to establish their differentiated offering that allows them to stand as proud Chinese ‘glocal’ brands on international shelves,” says Huang. Meanwhile, Chinese biotech firms like Jingbo Bio, known for its breakthroughs in recombinant human collagen, are beginning to draw comparisons with global science-backed players. “I do think we are seeing more rationalization of investments,” says Cavender. “When speaking with Chinese VCs and private equity there is a sentiment that they have been burned too many times, and that while China’s consumer economy is recovering, that the recovery is tenuous. So, my perception is that this is a very slow market where only the very best companies are finding access to funding.” New beauty frontiers are becoming investor darlings With the general skincare market increasingly saturated, capitals flowing into emerging niches. Personal care brands, such as haircare leader Siyu and Colour Wow are gaining steam. Siyu was recently acquired for 1.65 billion RMB ($230 million) by a consortium led by mother-and-baby retail giant Kidswant. Meanwhile on June 30, L’Oréal acquired haircare brand Colour Wow joining the L’Oréal Professional division. Elsewhere, biotech continues to blur the lines between medical and beauty. Functional skincare, led by brands like Jingbo Bio’s ProtYouth, is expanding rapidly. The company’s skincare revenue rose 86.8% YoY in 2024 to 140 million RMB ($20 million). According to Frost & Sullivan, China’s recombinant collagen-based functional skincare products advanced from 800 million RMB ($112 million) in 2017 to 4.6 billion RMB ($642 million) in 2021, and are projected to grow to 64.5 billion RMB ($9 billion) by 2027. “Both global expansion and lower-tier China growth are valid paths,” says Grandchamp. “As long as sales grow fast.” Cavender concurs. “Lower-tier cities in China still have massive untapped potential,” he says. “So, investors don’t need to be overly worried about global expansion, yet.” Global multinationals still play the long game While Chinese firms prioritize speed and localization, their global counterparts are taking a longer-term, portfolio-integrated approach. “Chinese beauty investors and multinational corporations like L’Oréal or Estée Lauder have fairly different investment priorities,” says Roizen. “Chinese investors tend to focus on brands that align with local consumer preferences, emphasizing cultural relevance, rapid scalability within China, and agility in responding to market trends. Multinational corporations seek brands that can integrate into their global portfolios, emphasizing innovation, brand equity, and potential for international expansion.” “L’Oréal and Estée Lauder are looking for large deals that can immediately contribute to sales, like Medik8,” says Grandchamp. “Sometimes, they’ll take a minority stake if they see a long-term fit, but it’s more strategic.” Estée Lauder’s minority investment in Melt Season shows its interest in capturing China’s next beauty champions early. The challenge for multinationals is integration, without diluting brand essence. Lau points out that Chinese investors are starting to look deeper: “Can the brand actually integrate with their way of working? Can they adapt without losing what makes the brand special?” “That’s where a lot of deals go wrong. You buy a great brand, but the team has difficulties, the culture clashes, and you lose that global edge,” he says. Looking ahead The beauty capital cycle is no longer defined by blitz-scaling or blind optimism. Today’s most investable brands are those with strong scientific backbones, clear identities, and the ability to resonate — both at home and abroad. “Investors are focused on market niches with high growth potential,” says Roizen.

How Proya and Yatsen’s investments diverge from L’Oréal and Estée Lauder

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Published July 03, 2025

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How Proya and Yatsen’s investments diverge from L’Oréal and Estée Lauder