As Strict Regulation, China’s Efficacy Skincare Brands Have Good Opportunity

The beauty consumption structure tends to be younger and refined skincare is on the rise. Consumer demand for efficacy skincare products is increasing. According to Euromonitor data, China’s efficacy skincare market is expected to reach $15.988 billion by 2024, accounting for 22.9% of the overall skincare market.

Since the spread of COVID-19 in 2020, the global cosmetics market suffered its first decline in nearly five years under the impact of the pandemic. However, Asia Pacific was less affected. Especially in the context of the upgrading iteration, diversification and refinement of Chinese consumers’ consumption demands, coupled with the influence of policy guidance and channel changes, the Chinese cosmetics industry still maintained an upward trend.

Euromonitor data shows that China’s cosmetics market size reached $75.671 billion in 2019, leading the world with a compound growth rate of 9.9% from 2014 to 2019. According to Euromonitor’s classification, as of 2019, the Chinese cosmetics market has the largest share of skin care products at 1.16%, followed by hair care, color cosmetics, and oral care at 11.91%, 11.55%, and 9.68%, respectively. According to Euromonitor’s statistics, the volume of China’s skincare market was $38.715 billion in 2019 accounting for 51.16% of the overall cosmetics market.

In China, the cosmetic market is generally divided into luxury, high-end and mass markets. Among them, the luxury, high-end market is for people with high consumption levels in first- and second-tier cities in China. According to Euromonitor, the high-end cosmetics market size was $24.044 billion in 2019 accounting for 31.77% of the market share.

The mass market, on the other hand, mainly targets the middle-class population in China’s lower-tier cities (other than first- and second-tier cities). The unit price of cosmetics products in the mass market is generally low. But the size of China’s mass market was as high as $43.874 billion in 2019 due to the large population of Chinese consumers, accounting for 57.98% of the cosmetics market share. It is the most important cosmetics market in China.

In terms of growth rate, the size of China’s high-end cosmetics market is growing faster. From 2014 to 2019, the compound growth rate of high-end market is 16.98%, while the compound growth rate of the mass market is about 4.90%. The Chinese cosmetics market is still dominated by sales in offline channels but the sales share of online channels is steadily increasing year by year and is expected to account for 40% in 2023.

The beauty consumption structure tends to be younger and refined skincare is on the rise. Consumer’s demand for efficacy and ingredients is increasing. Targeted efficacy skincare products have become a trend and the overall market size in China continues to climb. According to Euromonitor, the market size of China’s efficacy skincare will be $5.256 billion in 2019, accounting for 13.6% of the overall skincare market. It is expected to reach $15.988 billion by 2024, accounting for 22.9% of the overall skincare market. Meanwhile, dermatological-grade, strong efficacy skincare products will account for over 75% which contributes major incremental volume.

In recent years, China’s cosmetic regulatory policies is more strict and China is also increasing the regulation of efficacy skincare products, which will facilitate the rectification of China’s cosmetic industry. Some SMEs or manufacturers which produced unqualified products and raw materials will be cleared out of the Chinese market. Brands that complies with China’s national safety standards, as well as had strong R&D strength will accelerate their development in this situation.



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