The retail trade revenue of cosmetics in China grew from 74 billion yuan in 2009 to nearly 300 billion yuan in 2019 and was forecasted to surpass 400 billion yuan by 2023. More than 70 percent of cosmetics sales revenue came from e-commerce channels. Alibaba’s Tmall and JD.com accounted for majority of cosmetic products sold online. Besides rapidly growing online distribution, channels such as specialty cosmetics stores, supermarkets, and hypermarkets dominated offline sales. Multi-level direct selling of beauty products has decreased dramatically since 2008 due to new direct sales regulations.
China’s appetite for cosmetic products has a distinct global flavor. More than a third of the beauty market in China are imported goods. Among those, half come from Japan and South Korea, while brands from France, the U.S., and the UK account for another 35 percent of cosmetics imports. Not surprisingly, seven out of ten leading cosmetics market players in China are foreign brands such as L'Oréal Paris, Head & Shoulders, and Lancôme. Among domestic labels, mid-segment skincare and makeup brand Chando and long-established skincare brand Pechoin were the most popular as of 2019.
In terms of product segments, skincare products dominate cosmetics market in China. The size of the skincare market amounted to almost 190 billion yuan in 2018. In comparison, haircare was valued at around 55 billion yuan, with the bath and shower product market amounting to nearly 23 billion yuan. While colored cosmetics account for the largest proportion of cosmetics sales globally, makeup is still a relatively new beauty category in China. Colored or decorative cosmetics, which largely include face makeup, is just starting to emerge and gain popularity among the younger consumers.
Another major trend in the sector is the ‘for men’ segment. The retail sales of male grooming products exceeded 14 billion yuan in 2018, with male fragrance and bath and shower product subsegments growing the fastest.
From the perspective of the cosmetics consumers in China, post-80s and 90s generation are the leading force of beauty and personal care consumption. While the first tier cities still account for the majority of cosmetics purchases in China, the market growth is largely driven by the surging sales in the second and third tier cities. Consumer demographics are also shifting towards the more affluent segment with an increased sense for luxury goods, including high-end cosmetics products.