Ally Dai, Freelance Writer11.01.23
Austin Li’s Blunder
The Austin Li incident occurred during Li’s September 10 live-stream selling session. One viewer commented that a buy-one-get-two-free deal of Florasis eyebrow pencil (priced ¥79, roughly $10.80) was still expensive. In response, Li cited the difficult market situation for domestic beauty brands, before asking the would-be customer: “Is it really expensive? Sometimes people need to reflect upon themselves: having not received a pay raise for years, have I worked hard enough?”Li’s comments caused a huge uproar among local netizens who saw them as insensitive toward the current economic climate. Despite his apology the following day, Li’s WeChat lost 1.47 million followers within 10 days.
Florasis Suffers
Florasis suffered collateral damage to its reputation despite it announcing to “be reviewing the partnership with Li.” Many enraged netizens directed their anger at the local beauty startup, insisting Florasis overcharges consumers with “a price of eyebrow pencil comparable to gold per gram.”Well recognized for its premium positioning with a traditional and ornate Chinese aesthetic, Florasis sparked a heated public debate and close scrutiny on the perceived value of the domestic brands priced similar to or higher than overseas competitors.
The spillover from this incident comes at a time when beauty consumers are looking for proof of value more than ever under the current economic situation. Of course, some are still willing to pay for high-quality and efficacious products. And aligning with such consumer mindset, the cosmetic industry is now striving to reduce the reliance on third party live-streaming and mega-influencers which recently have been blamed for increasingly unbearable marketing spending, and revamp the efforts on science-backed R&D.
Standout with R&D
With consumers turning away from celebrity toward efficacy, proactive domestic players are making the switch as well. Based on sales revenue over the past two years, the names on its top domestic beauty players list largely remains the same, with all those making constant strides in R&D. They are:- Shanghai Jahwa United Co.;
- Proya Cosmetics Co.;
- Bloomage Biotechnology Co.;
- Yunnan Botanee Bio-Technology;
- SYoung Group Co., Ltd.;
- Yatsen Group;
- Shanghai Chicmax Cosmetic Co.;
- Giant Biotechnology Co., Ltd.;
- Lushang Freda Pharmaceutical Co. Ltd.; and
- Marubi Holdings Group.
Though the rankings of many of these players vary year to year, Jahwa and Proya remain at the top of the sales chart. Based on the 2023 half-year financial reports, the largest Chinese cosmetics companies are:
- Jahwa, ¥3.629 billion;
- Proya, ¥3.627 billion;
- Bloomage, ¥3.076 billion;
- Yatsen, ¥1.624 billion;
- Giant, ¥1.606 billion;
- Chicmax, ¥1.587 billion;
- Freda, ¥1.106 billion; and
- Marubi, ¥1.059 billion.
In 2022, 42 ingredients were registered and just six in 2021. Plant-derived and biotech-created ingredients are on the rise, though chemicals still dominate.
New Ingredients
Some notable plant-based ingredients by domestic players include:- Ludwigia Adscendens extract as skin protectant and moisturizing agent by Botanee;
- Pandanus extract as moisturizing agent by Guangdong Bawei Biotech;
- Paris Fargefsii rhizoma extract as skin protectant by Yunnan Baiyao Group; and
- Fuscoporia Obliqua/Betula Alba Juice Ferment as moisturizing agent and antioxidant by Hangzhou Yangshengtang.
- In the biotech category, the latest include:
- Bifidobacterium/Lactobacillus/ Soybean Extract Ferment Filtrate as skin protectant, oil-controlling agent, moisturizing agent and exfoliating agent by Yatsen;
- Saccharomyces/Pearl Ferment Lysate Filtrate as skin protectant and antioxidant by Zhejiang OSM Beauty-tech Co. Ltd.; and
- N-Acetyl Neuraminic Acid, Hydrolyzed Calcium Hyaluronate and Hydrolyzed Zinc Hyaluronate by Bloomage Biotech.
Testing Requirements
Of course, gaining the regulatory approval of new ingredients is only part of the game. Formulating a cosmetic product with greater safety and effectiveness and manufacturing it at scale is equally important, and all of these require rigorous testing. Despite the fact that the testing sector seemed to cool down since the publication of Qualification Criteria for Cosmetics Testing Agency (Draft) by NMPA last August, leading domestic players are still actively investing in their testing capacity, the latest including Proya and SYoung, as well as major OEM/ODM players like Bawei Biotech and GD Lchear.The very latest example includes Shanghai Fosun Jinmei Cosmetics, which made its name by acquiring two oversea cosmetics brands Ahava and Wei years ago. Last year, it launched Yogan. Most recently, in July, its newly-established testing center gained official approval. Meanwhile, independent testing agencies are furthering their cooperation with suppliers and brands.
Independent R&D
In short, with market conditions constantly evolving, the beauty players have to juggle more challenges, such as regulatory compliance, product research and development and reputation. Geopolitical issues even come into play. Japan’s controversial discharge of treated nuclear wastewater into the Pacific Ocean, prompted some domestic Chinese brands to publicly declare they would no longer source ingredients from Japan. This consequently created a new dilemma in ingredient sourcing.As a way forward, Chinese cosmetics companies and their suppliers are adopting a more independent research and development approach and ensuring flexible supply.
Ally Dai
Freelance Writer
allisondai@126.com
allydai73@gmail.com
Ally Dai is a freelance writer/independent consultant based in Shanghai. She has covered the beauty industry for more than 15 years. Previously a senior editor and industry researcher, she now works on content creation with publishing houses, event organizers and PR companies in the personal care and life science industries.