2024: 10 New Trends in the Chinese Beauty Market

Recently, when we met Leng Juncheng in Huadu District, Guangzhou, he had just finished meeting the first batch of clients for the start of 2024. As the head of Guangzhou Opseve Cosmetics Co., Ltd., he has been working in this industry for nearly 30 years.

“Over the past year, I’ve heard two different opinions. Some say the performance reached new heights, while others say it was a tough year in 2023,” Leng Juncheng said with some confusion. “I haven’t noticed any significant positive or negative factors in the industry, so I’m not sure why some people say it’s good while others say it’s not. Hasn’t the pandemic already ended?”

A year’s plan starts with spring. “CHAILEEDO in the Frontline” Team visited nearly 50 cosmetics companies’ bosses or relevant executives in East China, South China, and Shaanxi in a face-to-face manner. We conducted research on the changes in the upstream and downstream of the cosmetics industry in the past year and the fresh perspectives of the industry leaders. From this, we have identified 10 new trends that will impact the beauty industry in 2024.

Small and High-quality Factories Will Become Popular

“Over the past year, we have achieved steady growth,” Leng Juncheng told “CHAILEEDO in the Frontline.” Similarly, located in Huadu District, Zhao Kun, the chairman of Guangzhou Q-MAS Biotechnology Co., Ltd. (Q-MAS), said, “The market was challenging in 2023, and we faced difficulties as well, but the company overall maintained a certain level of growth.” In East China, Li Fen, the general manager of Zhejiang Yalu Biotechnology Co., Ltd., which has been specializing in cosmetics OEM for 14 years, also revealed, “The overall performance of the company increased slightly compared to the previous year.”

Perhaps this perception differs greatly from the experience of a wider range of practitioners. After all, over 50 well-known cosmetics companies have gone bankrupt in the past year. Among them, there are even long-standing cosmetics companies with a history of more than 20 years, such as Shanghai Huayimei Cosmetics Co., Ltd. and Shanghai Xima Plastic Packaging Co., Ltd.

“This indicates that the industry’s polarization has always existed,” said Shen Yingjie, Assistant General Manager of COSMAX (China), the leading cosmetics OEM company. Xu Longzhe, Chairman of Kolmar Cosmetics (Wuxi) Co., Ltd., also stated that as cosmetics regulations become more stringent, some small and medium-sized enterprises without their own research and development capabilities will inevitably face elimination.

Under the accelerated industry reshuffling, “small and beautiful” is the keyword for most companies to cope with the market challenges in 2024. “There is clearly an excess of production capacity now. When you think about expanding your factory, you need to consider if there are corresponding orders to take on the capacity,” Leng Juncheng believes that factories must develop towards being small and beautiful in the future, and they need to find their own differentiated innovative capabilities.

Lai Hanchun, Chairman of Guangzhou Tingcai Cosmetics Co., Ltd., frankly admitted, “In the past, due to the long industrial chain, our company experienced both glory and decline. Currently, we focus on internal improvement and concentrate on the cosmetics business that we are good at.” Shen Yingjie also stated, “As a factory, we must have areas of focus and expertise. For example, some may focus on baby products, others on personal care. As long as it is within their professional field, they can go further.”

“There are no shortcuts in the supply chain.” Wang Yihua, General Manager of Huamei Kangyan (Suzhou) Biotechnology Co., Ltd., said, “As a newly established company, we need to maintain the characteristics of ‘foundation and skincare,’ and strive to be small and beautiful, but highly refined.”

“Tech Innovation” Intensifies

According to the latest data from the National Bureau of Statistics, although the total retail sales of cosmetics reached 414.2 billion yuan in 2023, the year-on-year growth of 5.1% is not only lower than the 7.2% growth rate of overall social consumer goods retail, but also falls short of the national GDP growth rate of 5.2%. As the market enters a phase of stock competition, many business leaders consider research and development (R&D) as the core competitiveness of enterprises in 2024 and beyond.

“This year, the main judgment for the entire industry is still focused on stability,” said Li Fen. For factories, they will focus on strengthening their R&D capabilities and further improving service details to connect with more new brand customers. Xu Longzhe stated, “Instead of being constrained by the external environment, it is better to further hone our core strengths internally. Kolmar in Wuxi allocates 5% of its annual sales revenue for R&D investment.”

As a company that has successfully expanded from a traditional factory to live-streaming e-commerce, Dai Chengfang, CEO of Guangdong Tengyu Group, also believes that “only by intensifying R&D efforts can factories gain more bargaining power and have more profits to invest in research and development. This is a positive cycle.” According to Dai, “A brand-new R&D center will also be put into use, which will further enhance the company’s R&D capabilities.”

From its establishment in 2015 to gaining a foothold in the market with Ositree Black Tea Makeup Remover Oil in 2020, Deng Jianming, the founder of Ositree, attributes the brand’s recent success to comprehensive strength. Deng stated, “The higher the brand climbs, the more it relies on comprehensive capabilities. In the future, apart from supply chain capabilities, it’s all about technical strength.”

Bian Qianjin, the founder of Spring Letter, also told CHAILEEDO, “Currently, the brand has established an independent laboratory and ranks among the top in terms of R&D investment among brands of the same size. In 2024, we will release multiple innovative products. This will be an opportunity for the brand’s success.” Therefore, it is evident that in 2024, the trend of “tech innovation” in the industry will further intensify.

Focusing on “Micro-Innovation”

While the entire industry is enthusiastically embracing “tech innovation,” there are also industry experts who have different perspectives. Zhang Guoliang, the founder of FAIRYHERB, a brand specializing in lip anti-aging products, believes that technology attributes will become a standard for brands but not their core competitiveness. In his view, there are no weak opponents in the future, and the emergence of super brands will become increasingly challenging. Brands still need to find their own positioning and explore unsatisfied consumer needs in specific market segments.

Xu Longzhe also mentioned, “Currently, the beauty industry has entered a period of slow growth, and the mainstream track is already overcrowded and difficult to break through. In this context, leveraging the newly emerging consumer trends and focusing on niche categories will be a good way for both new and old players to stand out in 2024.” Li Jide, the founder of Beauty Link Biotechnology Research Institute (Guangdong) Co., Ltd., stated, “Although the competition in the skincare-focused track is fierce, any brand can differentiate itself through micro-innovation.”

Li Jide stated, “Based on this year’s observations, the trend of satisfying consumers’ pursuit of high efficiency and high concentration is likely to continue growing.” The head of a well-known brand specializing in makeup removers revealed to CHAILEEDO, “Derived from insights into market and consumer demands, we will launch capsule-form makeup removers and serums this year.”

According to research data released by CHAILEEDO, in the top 10 best-selling essence products on Douyin and Kuaishou in January 2024, both platforms had five products each in the form of micro-encapsulation or capsules. Among them, not only did several products have sales exceeding 100,000 units, but many also achieved high GMV in the tens of millions.

Leng Juncheng also mentioned that the brands they currently collaborate with have a positive outlook on the company’s soft capsule series of products. “On one hand, this product category is convenient to use. On the other hand, the soft capsule form enhances the perception of efficacy, particularly in amplifying the advantages of essences and oil-based products,” he stated.

Anti-Aging Continues to Thrive

Based on CHAILEEDO’s interviews, it seems that efficacy skincare will continue to be one of the most popular tracks. Among them, the fire of anti-aging has spread from last year to this year and has gained favor among the majority of respondents. In January, the General Office of the State Council issued the “Opinions on Developing the Silver Economy to Promote the Well-being of the Elderly,” which explicitly stated the development of the anti-aging industry and included “promoting the research and development of cosmetic ingredients, formulas, and production process design” in the document.

According to CHAILEEDO’s intelligence data, the anti-aging market has maintained an average annual growth rate of over 10% from 2017 to 2022. Based on this calculation, the scale of China’s anti-aging skincare market is expected to reach 154 billion yuan in 2024. “Compared to the challenge of achieving skin whitening, anti-aging is more popular due to its large user base and precise targeting of consumers across different age groups,” said Deng Jianming. Zhao Kun believes that the rise in demand for anti-aging is closely related to changes in China’s population structure. With the increasing aging population, the consumer demand for anti-aging is very clear.

Zhou Jinfeng, Chief Brand Officer of Jimi, also pointed out that from the perspective of user demand, young consumers in their twenties are now starting to pay attention to anti-aging, indicating that this track aligns with the current skincare trend. Moreover, from a brand perspective, the product line for anti-aging can be rich and diverse, which means there is more room for exploration. Most importantly, no single company dominates this track, which means everyone has an opportunity.

“Another reason is that products focusing on skin whitening require specific certifications, which not every company and brand can achieve. In addition, skin whitening involves a longer time span, and the tolerance of consumers’ skin varies from person to person, which also demands higher requirements on a company’s capabilities. Perhaps because of this, anti-aging allows for easier breakthroughs,” she further explained.

Entering the Dividend Period for Foundation

According to CHAILEEDO’s intelligence data, the scale of the foundation market in the Chinese cosmetics market was 89.61 billion yuan in 2023, a year-on-year increase of 22.4%. Just like the optimistic outlook for the anti-aging track, many companies also believe that foundation will experience a big breakthrough.

Li Jide believes that in the past, Chinese people did not wear much makeup, but as more and more people are now wearing makeup, and with changing consumer attitudes and a growing awareness of makeup, “the volume of foundation, primer, and other foundation products will continue to increase.” Dai Chengfang also stated, “foundation products are widely used, and even many men now use tinted moisturizers. The tinted moisturizer produced by our company sells well.”

“foundation used to be one of our proudest categories.” Shen Yingjie said, “foundation has a solid market foundation, and with the resurgence of cushion products in recent years, foundation is still a category worth looking forward to.” Wang Yihua went even further, stating that the competition in the entire market is extremely fierce and has become a battleground where all players must contend. foundation products in China may have a window of opportunity for another two to three years. According to him, “A brand that his company collaborates with, focusing on skincare-based foundation, has experienced rapid growth and is now the company’s third-largest customer.”

Xu Longzhe stated that as the first step in makeup application, consumers have higher demands for the practicality and user experience of foundation products. This requires factories to focus on research and development and establish a comprehensive core value system encompassing market, technology, quality, and product value.

“Almost no foundation product can suit everyone. For example, the needs of dry skin and oily skin are different. When consumers find a foundation product that suits them, it is easier to generate repeat purchases, which is also why brands value foundation,” analyzed Dai Chengfang.

Brand Store Livestreaming Becomes a Trend

The past decade has been the golden age of development for Chinese e-commerce platforms, with many cosmetics companies and brands achieving rapid growth through their presence in the e-commerce space. However, now the disappearance of the e-commerce dividend has become the answer given by most industry practitioners. In CHAILEEDO’s interviews, several brand managers candidly admitted, “Currently, on online platforms, a 40-50% traffic conversion rate is considered an ideal state. Many are approaching 80%, and the more we do, the less profitable it becomes.”

“The cost of platform traffic has tripled or quadrupled compared to before, which poses a significant challenge for brands that rely on traffic acquisition through information flow.” Zhou Jinfeng stated that this year, Jimi will focus on the public domain and increase investment in research and development, emphasizing brand-oriented operations. According to her, “Currently, the brand is experimenting with WeChat Video Accounts, and multiple accounts are consistently ranked in the top 10 Tencent beauty accounts, with decent return on investment.”

The high cost of traffic not only affects the profitability of mainstream e-commerce platforms but also makes many companies realize the need for changes in livestreaming e-commerce. Looking ahead to 2024, several company leaders expressed their intention to focus on brand store livestreaming. In fact, the rise of brand store livestreaming was already evident during last year’s Tmall Double 11 promotion. According to official data disclosed by Taotian, on the first day of Tmall Double 11, in the first hour of the beauty industry’s sales, transactions from brand store livestreaming saw an almost 100% year-on-year increase.

“In the future, brand store livestreaming will become a trend.” Dai Chengfang stated, “Platforms need more brands to provide advertising fees, while brands are facing severe price pressure from top livestreaming hosts, resulting in meager profits. Livestreaming from brand stores is a reluctant move.” Xiao Xiran, Brand Director of Skinfuture, also believes that “livestreaming is an important part of enhancing brand influence and sales performance, but at the same time, we also hope that livestreaming can bring fans and traffic, allowing us to have more control over the brand’s self-broadcasting channels.”

Ingredient Innovation: Wide Track, Large Scale, Sustainability

During this round of visits and research, CHAILEEDO found that ingredient innovation is a topic of concern among industry professionals. It is understood that since May 1, 2021, 130 new cosmetic ingredients have been registered, and the number of registrations has been increasing year by year. In less than two months this year, 13 new ingredients have already been registered or updated.

“The biggest advantage of registering new ingredients is the ‘power of discourse,’ which increases product competitiveness and avoids product homogeneity,” said Xu Longzhe. “We have found that Chinese consumers are increasingly interested in natural ingredients. Such natural ingredients will continue to receive attention, and this also requires genuine scientific data as support.”

Chen Jiayue, co-founder of Veminsyn, stated that ingredients with both highlights and shortcomings are easier to promote. “Materials science is about being outstanding; moderate materials are not easy to be remembered.” For popular and best-selling ingredients like retinol and niacinamide, although they have many additional conditions for application, once breakthroughs are made, their advantages are irreplaceable. In his view, “biotechnology is an opportunity for domestic ingredients to surpass others, similar to electric vehicles surpassing traditional fuel vehicles. However, ‘synthetic biology creating everything’ requires time for development and verification, so product selection is crucial.”

He Lizhong, founder and chief scientist of Biocreatech, believes that ingredient innovation should focus on three key factors: a wide track, large scale, and sustainability. This is also one of the reasons why Baikui Rui focuses on amino acid surfactants, which are widely used.

“From the brand side to the consumer side, everyone is a bit tired of popular functional ingredients and is looking forward to new ingredients that have distinct characteristics and can create differentiation,” said Guo Zonghan, Marketing Director of EVEPHON ENTERPRISE CO., LTD. Currently, domestic ingredient suppliers in China are mainly focusing on synthetic biology and fermentation technology. Overall, foreign cosmetic ingredients have accumulated superior technology and demonstrate outstanding effectiveness. However, in terms of domestic cosmetic ingredients, domestically produced active ingredients have reached a level comparable to foreign ones.

Going Global is a Must

It is worth mentioning that more than half of the surveyed companies believe that going global will be the direction of development and the mainstream trend. Companies such as Opseve, Q-MAS, and Guangdong Tengyu Group have explicitly stated their plans to expand internationally. Furthermore, all the interviewed companies have expressed that Southeast Asia will be their preferred destination for international expansion.

Leng Juncheng stated, “The domestic market in China is saturated, so we are looking for growth opportunities in overseas markets, with a primary focus on Southeast Asia.” Zhao Kun also mentioned, “Our international business has already shown results, and we recently received orders for two containers. Comparatively, Southeast Asia is a better match for us, although there is intense price competition in that market.”

So, which Southeast Asian country has a strong beauty market? According to intelligence research conducted by CHAILEEDO, based on sales data from the Shopee platform in the period of October to December 2023, the total sales of the beauty category in six countries, including Indonesia, the Philippines, Singapore, Thailand, Vietnam, and Malaysia, amounted to 34.951 billion yuan. Among them, Vietnam had the highest sales of 25.553 billion yuan, surpassing the second-place country, Indonesia, by a large margin.

As one of the outstanding companies in international expansion, Zhang Shenjun, Chairman of Guangzhou Shi Fei Bio-Tech Co., Ltd., introduced that Shi Fei has been in the industry for 18 years, primarily focusing on the development of cosmetics exports. Currently, the overseas market still accounts for a significant proportion of the company’s business, especially in Europe and the United States.

“From a global perspective, products with excellent value for money and those that are natural and sustainable will be the mainstream in the future,” Zhang Shenjun believes. He advises against blindly following the trend of going global but rather suggests that companies should consider their own capabilities and customer demands when planning their international expansion. They should determine whether they are more suitable for the European and American markets or the Southeast Asian market. Rushing into international expansion without adequate preparation may hinder market development rather than benefit it.

AI+Beauty Becoming More Popular

Recently, OpenAI, an American artificial intelligence research company, released its first text-to-video model called Sora. This model can generate high-definition videos up to one minute in length based on textual instructions, sparking industry attention to the application of AI technology. Several executives from ingredient companies have expressed to CHAILEEDO their views on AI, stating, “In the past, developing ingredients involved a significant amount of time and effort in conducting tests to identify useful substances, which often relied on chance. By utilizing AI technology, the efficiency and accuracy of substance screening can be greatly improved, thereby accelerating ingredient development progress.”

In addition to ingredient development, an increasing number of brands are exploring the combination of AI and beauty. The most common application is the introduction of AI skin diagnosis tools. For example, Watsons and L’Oréal have collaborated to develop an AI skin analysis tool specifically for Asian skin. Built on 15 years of dermatological research and analyzing over 10,000+ selfies, this tool provides skin advice to consumers. Similarly, beauty device brands like Miguang and OGP have launched AI skin testing mini-programs or apps that integrate AI skin analysis with their own beauty devices, providing personalized recommendations to consumers based on facial skin analysis.

Furthermore, AI technology is also being used in precision skincare. Beforteen, an acne treatment brand launched by BTN, utilizes AI technology for precise acne treatment. BTN Group has developed an acne problem identification app using AI, which identifies different types of acne based on massive data. It determines the causes and influencing factors of acne, enabling precise matching between products and consumer needs.

Just as a person knows their own needs, the use of AI technology in the beauty industry reflects the understanding of market trends and the ability to embrace new challenges with confidence. Despite the rapidly changing market, new growth and opportunities can always be nurtured in adversity by grasping trends.