France Become the Largest Importing Country of Cosmetics for China for Two Consecutive Years

According to data from the General Administration of Customs of the People’s Republic of China, in 2023, France exported cosmetics to China amounting to $3.898 billion, maintaining its position as the largest importer for two consecutive years. Japan ranked second, with cosmetics exports to China totaling $3.441 billion, while South Korea came in third with $2.021 billion.

As early as 2022, France had surpassed Japan to become the largest importer of cosmetics to China. In 2022, France’s cosmetics exports to China reached $4.551 billion, surpassing Japan’s $4.506 billion, accounting for 25.37% of China’s total cosmetics imports.

Analyzing data from the General Administration of Customs of the People’s Republic of China for the years 2016 to 2023, the major countries exporting cosmetics to mainland China include France, South Korea, Japan, the United States, and the United Kingdom. The top three positions have been dominated by South Korea, Japan, and France, alternating over the past eight years.

Looking specifically at the years, in 2016, France ranked first, with cosmetics exports to mainland China just exceeding $1 billion, while Japan stood at the third position with $673 million. However, in the subsequent years of 2017 and 2018, South Korea became the largest importer of cosmetics to China, with France coming in second and Japan ranking third.

Starting from 2019 to 2021, Japan reclaimed its position as the top importer of cosmetics to mainland China. In 2019, Japan’s cosmetics exports to China exceeded $3 billion for the first time, reaching $3.134 billion. In 2020, this figure surpassed $4 billion, reaching $4.292 billion. Concurrently, from 2020 onwards, France consistently secured the second position, with cosmetics exports to mainland China totaling $3.887 billion. In 2021, China imported cosmetics from Japan amounting to $4.997 billion, approaching $5 billion, marking the highest historical import value from a single country.

Between 2019 and 2021, the Chinese cosmetics import market experienced rapid growth. Japan’s cosmetics exports to mainland China increased from $3.134 billion to $4.987 billion, with a remarkable growth rate of 59.13%. Similarly, France saw an increase from $2.858 billion to $4.577 billion, with a growth rate of 60.15%. In contrast, South Korea lagged, with cosmetics exports to mainland China increasing from $3.041 billion to $3.896 billion, representing a growth rate of 8.55%, which was less than 10%. This further widened the gap between South Korea France and Japan.

In 2022, France’s cosmetics exports to China reached $4.551 billion, surpassing Japan’s $4.506 billion, making it the largest exporter to mainland China for cosmetics after a gap of five years. Meanwhile, South Korea continued its downward trend, further widening the gap with Japan and France. In 2022, China imported cosmetics worth $2.571 billion from South Korea, falling below $3 billion for the first time since 2017. The United States, on the other hand, reached $2.03 billion, showing a clear trend of potentially surpassing South Korea.

In 2023, France further extended its lead over Japan and South Korea. While the gap between France and Japan was $45 million in 2022, it widened in 2023, with Japan’s cosmetics exports to China totaling $3.441 billion, creating a gap of $457 million compared to France. This year, due to the controversy surrounding Japan’s nuclear wastewater discharge, the Chinese market’s aversion to Japanese cosmetics reached its peak, leading to a further decline in cosmetics imports from Japan into China.

European and American cosmetic brands continue to bet on the Chinese market

For the global beauty industry, China, as the second-largest cosmetics market worldwide, has always been a focal point for major players. Despite the challenges posed by the pandemic leading to a decline in global cosmetic giants’ performance in China, European and American cosmetic companies continue to place significant bets on the Chinese market.

Firstly, in terms of investments, an increasing number of European and American brands are investing in Chinese beauty enterprises. This extends beyond brand ownership, with investments also directed towards the upstream raw material segment of the Chinese beauty industry.

As a global leader in the beauty industry, L’Oréal made several strategic investments in the Chinese market. On September 9, 2022, L’Oréal announced a minority equity investment in DOCUMENTS, a local high-end fragrance brand in China, through its subsidiary Shanghai Meicifang Investment Co., Ltd. In 2023, L’Oréal acquired a minority stake in SHINEHIGH INNOVATION, a Chinese biotechnology company that specializes in cutting-edge supramolecular chemistry. In January 2024, L’Oréal declared a minority equity investment in Zuvi, a hardware startup company established by drone engineers and leading scientists, through its corporate venture fund BOLD (Business Opportunities for L’Oréal Development).

Apart from L’Oréal, Estée Lauder invested in two Chinese beauty brands in 2023. In September 2023, Estée Lauder made its first investment in the Chinese beauty brand CODEMINT through its investment incubation platform, New Incubation Ventures. CODEMINT, founded by Chinese internet celebrity Zhou Yangqing in 2021, focuses on the concept of clean beauty. In late December 2023, Estée Lauder further invested in the Chinese high-end fragrance brand Melt Season through New Incubation Ventures.

Additionally, LVMH’s private equity fund invested in three beauty enterprises in the Chinese market in 2023. In September, the fund made its first investment in Trautec, a Chinese collagen restructuring company. In December, it invested in the foundation brand Blank Me and the emerging children’s skincare brand Hi!papa.

Moreover, European and American beauty brands are increasingly making investments in the supply chain in China.

In recent years, Estée Lauder, grappling with supply chain issues and the challenges of tourism retail, unveiled its new research centers at its China Innovation Labs in the Minhang District of Shanghai in March 2023. The two new centers are named the Global Advanced Technology Center (GATC) and Men’s Beauty Center of Excellence (MBCoE). Estée Lauder stated that scientists at the GATC will focus on anti-aging and skin science, researching plant extracts and herbal ingredients originating from Asia. Scientists at the MBCoE will be dedicated to advancing men’s skincare science, product and packaging development, and clinical testing.

Additionally, in April 2023, LVMH unveiled its first high-end Perfumes and Cosmetics Asia R&D Center in Shanghai. This is the largest research and development center set up by LVMH in Asia, housing product innovation development laboratories, including skincare and makeup color development labs, product testing rooms, and more. Spanning over 22,000 square meters, this stands as the largest R&D center in Asia for the group. Situated on the outskirts of Shanghai, the facility will house laboratories dedicated to skincare, makeup, and color development, along with designated areas for product testing and workshop activities.

On November 29, 2023, Nu Skin announced the opening of a new manufacturing facility in Shanghai, China. Nu Skin stated that it had invested approximately $55 million in the new factory over the past few years. This investment aims to enhance the company’s production capacity and supply chain responsiveness in China and other Asian markets.

In December 2023, Thibaut Mongon, the CEO of Kenvue, visited China for the first time. He engaged in intensive discussions and communication with relevant departments, conducting in-depth visits to the research and development center, production facilities, and end-market locations. During this period, Meng Tingbo announced an investment of ¥110 million to continue expanding Kenvue’s production capacity in the Chinese market and upgrading production facilities. Kenvue initiated actions to establish a sustainable supply chain in China.

In summary, in the Chinese cosmetics market, major European and American beauty giants are actively investing and emphasizing initiatives such as supply chain management and product innovation. Companies like L’Oréal, Estée Lauder, and LVMH are making strategic investments in Chinese beauty enterprises, establishing research and development centers, and introducing new products. These actions demonstrate their commitment to and determination to expand their presence in the Chinese market.

The J-Beauty and K-Beauty is shifting its focus towards North America, India, and other markets

Faced with challenges in the Chinese market, J-Beauty and K-Beauty brands are shifting their focus towards markets such as Europe and America.

Shiseido, representing the Japanese beauty industry, has initiated plans to pivot its development focus towards the North American market. In October 2019, Shiseido acquired the U.S. brand Drunk Elephant for $845 million. Ron Gee, CEO of Shiseido Americas and Global M&A Leader for Shiseido, stated, “The U.S. and North America are the largest prestige beauty markets in the world. We offer the Shiseido Group geographic diversification. The region is critical for the group to grow. Going on offense means what is the investment needed to accelerate growth in the Americas for the group overall.”

Additionally, Shiseido has ventured into the Indian market. In mid-October of the previous year, Shiseido launched its first cosmetics brand in India, introducing the popular NARS cosmetics series to local beauty stores. On October 18, the Shiseido launched its first standalone india boutique store in Mumbai and appointed Bollywood actress Tamannaah Bhatia as its first Indian ambassador.

Furthermore, another J-Beauty brand, Kose, introduced the bestselling Japanese makeup brand ADDICTION TOKYO in the United States, emphasizing the importance of the North American market for Japanese beauty brands.

Simultaneously, in March of this year, Kose appointed Japanese baseball star Shohei Ohtani of the Los Angeles Angels in Major League Baseball as its ambassador. The two-time MLB MVP appeared in advertising campaigns for Kose’s flagship brands Decorté and Sekkisei in the United States, promoting their lotions and sunscreen products.

Reports indicate that the United States is a core focus of Kose’s growth strategy, with sales expected to double by 2026. In the first three quarters of 2023, Kose’s sales in North America grew by 30.2% year-on-year, surpassing both Japan and the Asian region.

Moreover, Kao acquired the Australian sun care brand Bondi Sands last year to enter the Australian market. Kao stated its commitment to continue investing actively to drive global growth.

In addition to J-Beauty brands, K-Beauty enterprises are reducing the number of stores in China due to sales challenges. LG Household & Health Care openly stated that the company is diversifying its business portfolio and shifting its business focus from China to other markets, including the United States.

As part of this strategy, LG Household & Health Care acquired a controlling stake in the Los Angeles beauty brand The Crème Shop Inc. for $120 million in 2022. Back in May 2020, LG Household & Health Care finalized a deal with GlaxoSmithKline to acquire the business rights for Physiogel in Asian and North American markets for £125 million. Physiogel is a dermatological cosmetics and personal care brand originating from Germany, with popularity extending to Asia, Europe, and South America, particularly in South Korea. Additionally, LG Household & Health Care also acquired the U.S. vegan hair care brand Arctic Fox.

Another K-Beauty giant, Amorepacific, earlier announced that the United States is one of its primary growth markets and recently formulated an extensive international expansion plan. In the United States, Amorepacific’s three major brands—Sulwhasoo, Laneige, and Etude House—have aggressively expanded their e-commerce and retail business through well-known retailers such as Sephora and Bloomingdale’s this year.

Shifting their focus to the North American and Indian markets is an inevitable choice for J-Beauty and K-Beauty brands, given the waning popularity of Japanese and Korean cultures in China, the impact of various political events, and the rise of Chinese domestic brands.

In the three years from 2019 to 2021, Japan was the top importer of cosmetics to mainland China. However, by 2022, France had surpassed Japan, becoming the largest importer of cosmetics to mainland China. France’s cosmetics export reached $4.551 billion, exceeding Japan’s $4.506 billion, constituting 25.37% of China’s total cosmetics imports. South Korea experienced a significant decline in cosmetics exports to China, plummeting by 48.13% in three years. In 2023, South Korea’s cosmetics export to China amounted to $2.021 billion, with a gap of only $500 million compared to the fourth-ranked United States.

The Chinese market has been advantageous for J-Beauty and K-Beauty brands not only due to geographical proximity, which reduces supply chain costs but also because of cultural similarities. Therefore, the development of J-Beauty and K-Beauty brands in the Chinese market has had a natural advantage. Now, with J-Beauty and K-Beauty brands redirecting their focus to the geographically distant and culturally different North American market, it appears to be a reluctant move.

In conclusion, the shift of J-Beauty and K-Beauty brands towards North American and other markets can indeed be seen as a reluctant move. Although J-Beauty and K-Beauty brands are making efforts to restore their image in China, repairing brand image remains a challenging task.