Clearance, store closures, bankruptcies… Over the past three years, the cosmetics industry has endured a long winter, with many new and established makeup brands disappearing without a trace.
However, at the COSMAX Shanghai factory, where efficient production lines run and various major brand cosmetics and mask workshops are now transformed into foundation production lines, the team from the “CHAILEEDO on the Frontline” program personally witnessed the revival of the makeup market, specifically the resurgence of foundations.
For Wuxi Kolmar and Huamei Kangyan (Suzhou) Biotechnology Co., Ltd., founded by former Yves Rocher China CEO Wang Yihua, foundations also play a crucial role. According to Wang Yihua’s plan, Huamei Kangyan aims to maintain its focus on “foundations and skincare,” emphasizing being small and exquisite. She believes that the downturn in color cosmetics may last longer, but foundations still have a window of opportunity with at least 2-3 years of potential growth.
Based on the feedback obtained from visiting nearly 50 beauty industry companies by the “CHAILEEDO on the Frontline” team in January, even though the industry generally perceives the situation in 2024 as unfavorable, many companies remain confident about foundations.
22.4% Growth: The Explosion of Foundations
The confidence of upstream factories in foundations is built upon the increasing market size of the foundation market and the rise of Chinese brands. According to the “2023 China Cosmetics Yearbook” published by CHAILEEDO, the foundation market size in the Chinese cosmetics market reached 89.61 billion yuan in 2023, an increase of 22.4% compared to the previous year. The popularity of foundations is closely related to the promotion of Chinese makeup brands.
It is well known that in October 2016, China abolished the consumption tax on ordinary beauty and decorative cosmetics, and imposed a 15% consumption tax only on “high-end cosmetics.”
The immediate impact of the tax reform was the rapid development of affordable cosmetics. During the period from 2016 to 2018, emerging makeup brands such as Florasis, Perfect Diary, Judydoll, and Colorkey were established successively. They broke through with lip gloss, setting powder, and other categories, focusing on fashion, cost-effectiveness, or Eastern aesthetics. Through innovative marketing and distribution models, they sparked the “New Chinese Makeup Trend.” According to data from the Forward Industry Research Institute, color cosmetics had the highest compound growth rate in 2019, reaching 19.43%.
By the time 2020 arrived, the “lipstick economy” faltered under the impact of the pandemic and continued until 2023. During this period, foundations became one of the most stable and fastest-growing categories in the makeup market.
According to the “2023 China Cosmetics Yearbook,” among the 15 categories within the scope of statistics, including facial cleansers, masks, essences, foundations, lip makeup, eye makeup, and beauty devices, foundations had the highest growth rate among all cosmetic categories, far surpassing lip makeup, eye makeup, and others.
Similarly, between 2020 and 2023, professional makeup artist brands like Timage and MAOGEPING, PASSIONAL LOVER, which transformed and focused on foundations in June 2021, and new-generation brands like FUNNY ELVES and Dewy Lab, all caught the fast development train and made a breakthrough in the foundation market dominated by international brands. For example, Timage, MAOGEPING, and Carslan grew by over 20% on both Tmall and Taobao last year, and the top 10 foundation brands on Douyin were mostly domestic brands. Florasis, PASSIONAL LOVER, FUNNY ELVES, and others also experienced rapid growth.
If Chinese makeup brands drove the “lip gloss era” and the “eyeshadow era” around 2018, undoubtedly, the current trend is the “foundation era,” and the concept of foundation in China is becoming more tangible.
In 2021, Wang Yihua anticipated that foundations were on the eve of a new round of explosion. Her company, Huamei Kangyan, which she founded, naturally focused on the research and production of high-performance skincare and foundations. According to her, “based on the current project status, we may add another 4-head powder filling machine this year because our cushion formula has received good feedback from customers.”
When discussing the company’s achievements in the past year, besides the outstanding performance of sunscreens, what makes Xu Longzhe, the chairman of Wuxi Kolmar, most proud is foundations. He said, “In the past year, our company has delved deep into powder technology and developed exclusive and distinctive powders for Kolmar, making our cushion products highly long-lasting and with excellent coverage. These technologies have created star cushion products for our customers and gradually gained more recognition.”
“Before 2016, our skincare products accounted for up to 60-70% of our total offerings, but now makeup has surpassed 50%, and in terms of performance contribution, makeup is growing much faster than skincare,” said Shen Yingjie, Assistant General Manager of COSMAX China, to CHAILEEDO. He explained that the driving force behind this change was the consumption tax reform in 2016, which allowed COSMAX to catch up with the rapid development of emerging Chinese makeup brands.
“At the height of the cushion trend, almost all well-known brand foundations were produced by COSMAX. Foundations used to be our proudest category,” he added. Although the cushion category waned slightly in the past few years, COSMAX still has confidence in the foundation market.
It can be said that the growth of Chinese makeup brands is not only due to changes in makeup consumption, brand positioning, single-product strategies, improving research and development capabilities, and the assistance of new channels but also relies on mature supply chain companies to support Chinese brands.
(COSMAX factory in Shanghai)
“At least 2-3 years of a window period for foundations”
It is widely believed in the industry that foundations, due to the need to balance adherence, lightweight texture, and long-lasting wear, have the highest complexity in terms of formula structure among all cosmetic categories. They are also a category where consumers make quick decisions. Conversely, once accepted by the market, foundations are more likely to generate stickiness and have a higher repurchase rate.
Therefore, after accumulating positive market reputation in the early stages, many industry experts believe that the dividend period for Chinese foundation brands will continue for some time, and there will be more popular single products in 2024.
Li Jide, the founder of Beauty Link Biotech Research Institute (Guangdong) Co., Ltd., which focuses on research and development of institute-type cosmetics, told CHAILEEDO that in the past, Chinese people didn’t wear much makeup, but now there are more and more people who do. There has been a shift in consumer attitudes and makeup awareness, and the volume of foundation and other base makeup products will continue to increase.
“I have a positive outlook on anti-aging, sun protection, and foundations,” said Dai Chengfang, CEO of Guangdong Tengyu Group Co., Ltd., a technology-driven beauty ODM company, to CHAILEEDO. Regarding foundations, he believes, “Foundations are used in large quantities, and even many men now use BB creams without makeup. The BB creams produced by our company sell well.”
Dai Chengfang further stated, “There is almost no foundation that can cater to everyone’s needs. For example, the needs of dry and oily skin are different. Once consumers find a foundation that suits them, repurchasing becomes easy, and that’s why brands value foundations.”
“When cosmetics were not yet popular in China, most skincare brands in the cosmetics stores had foundations, and they were considered an extension of skincare. Therefore, it was relatively easy to promote,” analyzed Shen Yingjie. He pointed out, “Foundations have a market foundation, and with the resurgence of cushion products in recent years, foundations are still a category worth looking forward to.”
Wang Yihua even stated that the market competition is extremely fierce and has become a battleground. Chinese foundations may still have a window period of two to three years.
Furthermore, due to the prolonged contact of foundations with the face, consumers are paying more and more attention to ingredient safety and whether they cause allergies. The trend of “makeup-skincare hybrids” and the increasing focus on clean beauty are rising. According to CHAILEEDO’s “Trend Insights Report on Functional Foundations,” 96% of consumers prefer to buy foundations with nourishing effects.
“After experiencing the pandemic, consumers are more concerned about the health of their skin, and the trend of skincare foundations is indeed evident,” Wang Yihua told CHAILEEDO. She mentioned that a brand her company collaborates with, which focuses on skincare foundations, has experienced rapid growth and is now their third-largest customer.
However, she also believes, “Ultimately, foundation products must first ensure their makeup effect and then consider their skincare benefits. If a foundation has added many skincare active ingredients but has poor makeup performance, consumers will not use it again after trying it once.”
Yang Boya, the founder of the foundation brand Blank me, has also pointed out, “If a foundation cannot be good in terms of usability, skincare benefits are useless.”
In fact, studying foundations that are suitable for Chinese and Asian skin types and aesthetic preferences is one of the key factors for local brands to create differentiation.
During research visits to the United States, CHAILEEDO also discovered significant differences in foundation shades between the Chinese and Western markets. Typically, a Western brand would release a dozen or more shades of foundation, but most Chinese people prefer natural, lighter shades. This also explains why local brands advocate for building a database of Chinese skin types and color systems.
“European and American foundations, in terms of color shades and texture, are not as suitable for Chinese people,” Wang Yihua also believes. “Chinese foundations will definitely rise, and I think only Chinese people can truly understand Chinese people.”
“From followers to trendsetters: Chinese brands shaping the beauty industry”
During CHAILEEDO’s visits, it was found that several Chinese brands are adopting a dual-product model of “cushion + foundation” and breaking through the base makeup market by targeting specific skin types such as dry and oily skin.
It is well known that the popularity of cushion products in China is closely related to the Korean wave and Korean cosmetics. According to reports, in 2008, IOPE, a brand under Amorepacific, launched the world’s first cushion BB cream, known as the “originator of cushion.” In 2014, this cushion product gained popularity in China due to its association with the lead actress in the Korean drama “My Love from the Star.”
At that time, Korean beauty brands and Korean-style makeup were highly sought after by the younger generation of Chinese consumers. International brands also followed suit and introduced cushion foundations. However, now both Korean cosmetics and international brands are losing their charm among Chinese consumers, and Chinese brands have become the trendsetters. For example, on Douyin (the Chinese version of TikTok), the hashtag #ChineseMakeup has garnered over 860 million views, and there are more than 70,000 notes on Xiaohongshu (Little Red Book) related to “Chinese makeup looks.”
According to reports, the top-selling cushion BB cream during the Chinese New Year on Tmall was Florasis Cushion, and Chinese brands occupied six out of the top ten spots on the list. The repurchase ranking also featured Chinese brands such as PASSIONAL LOVER, Joocyee, and MarieDalgar (data as of February 21, 22:00). This reflects that Chinese brands have gained a competitive advantage in the cushion category, at least.
Looking deeper, the evolution of the cushion brand landscape is just a microcosm of the rise of Chinese beauty and cultural confidence. Shen Yingjie told CHAILEEDO, “The era when China followed whatever was popular in Korea is already in the past.” He mentioned that there is a significant exchange and interaction between COSMAX and China, stating, “We recommend popular formulas from the Chinese market to the Korean market and have also tried to introduce successful Korean products, but they didn’t resonate well.”
In his view, China has progressed from following trends to defining them, and factories need to keep pace with the market and innovate domestically. He revealed that the R&D team at COSMAX Shanghai alone exceeds 400 people.
Xu Longzhe, Chairman of Wuxi Kolmar, also stated, “China is vast and diverse, with a long history. With cultural confidence and the rise of Chinese trends, if factories can incorporate Chinese culture into their research and development, it may produce better and more unexpected results.”
(Wuxi Kolmar)
He further anticipated, “In 2024, our focus will be on serving existing customers, expanding new customers, and continuing to emphasize key points of product competitiveness, such as sun protection and base makeup.” He believes that as the first step in makeup, consumers have higher demands for product usability and user experience, which requires factories to focus on research and development and establish a comprehensive core value system encompassing market, technology, quality, and product value.
From another perspective, as brands compete in the realms of culture and aesthetics, they must create a unified symbolic system that encompasses visual elements, products, communication, and brand values. Chinese brands are drawing inspiration from their unique local culture to shape brand images with distinctive Eastern aesthetic characteristics. In terms of marketing and communication, they are increasingly focusing on brand concepts that resonate with Chinese people’s aesthetics and emotional values. In terms of performance, the ranks of billion to fifteen billion yuan-level makeup brands are welcoming more and more Chinese newcomers, such as Timage, FUNNY ELVES, and PASSIONAL LOVER.
It can be seen that although the high growth of the beauty market is becoming increasingly challenging, as long as Chinese brands persist in meeting consumer demands, focus on niche segments, they can become trendsetters in the makeup market.
