How Big is the Market for Chinese Ingredients in Cosmetics?

No doubt, “Chinese ingredients” are currently in vogue.

Over the past two years, the cosmetics industry has witnessed the emergence of one Chinese ingredient after another. Not only are raw materials or products labeled with Chinese ingredients selling well, but many emerging brands that promote Chinese ingredients are also gaining momentum.

So how big is the market for Chinese ingredients?

The entire industry chain supports the localization of Chinese ingredients

The trend of Chinese ingredients in the cosmetics industry began with various platforms launching IP activities related to Chinese ingredients at the end of 2021. With the push from multiple parties, Chinese ingredients became a frequent buzzword in the industry last year, and consumers are getting familiar with Chinese ingredients. Through this trend, they also see the research and development strength of brands, which invisibly deepens their recognition of Chinese local brands.

As we all know, ingredients are the soul of cosmetics, carrying the quality and efficacy of the products. The rise of Chinese ingredients is not just a marketing concept, but a profound reform of the Chinese local industry chain, and it is the inevitable result of the self-improvement and accumulation of technology by Chinese local enterprises.

CHAILEEDO has previously listed more than 20 brands/companies that have “Chinese ingredients,” including the top ten listed cosmetics companies in China and innovative brands that consider Chinese ingredients as a trump card in competition with traditional and international brands.

Along with the improvement of companies’ research and development capabilities, consumers’ understanding of the concept of Chinese ingredients has gradually strengthened. This list is getting longer, and brands have made progress in both the depth of research investment and the breadth of ingredient application. For example, in the declaration of new raw materials for cosmetics, Chinese local cosmetic brands have emerged one after another. Just this year, many brands such as BTN, S’Young, Marubi, YATSEN, and YOSEIDO have completed the filing of new raw materials.

It is worth noting that new raw materials not only represent the innovation of companies but may also be industry or global firsts. They often have irreplaceable characteristics and carry significant meaning as the product of continuous exploration of scientific research boundaries.

At the same time, an increasing number of Chinese ingredients with patent protection and technological barriers have made their way from the laboratory to consumers’ dressing tables. The industry has already seen many representative “Chinese ingredient cosmetics,” and the outline of the market size is emerging.

Based on the unprecedented attention to Chinese ingredients in the market, on October 13th, at the 2023 (8th) China Cosmetics Trend Conference, CHAILEEDO will release the “2023 Chinese Ingredient Market Insight Report” for the first time. According to the report, the sales of Chinese ingredient cosmetics in the first eight months of 2023 increased by 9.3% compared to the previous year.

Currently, the main sales channel for Chinese ingredient cosmetics is online, primarily through e-commerce platforms such as Taobao, with sales exceeding tens of billions yuan in the first eight months. Douyin (Chinese TikTok) and Kwai are experiencing rapid growth, with year-on-year increases of over 20% in the same period.

(Credit: From the “2023 Chinese Ingredient Market Insight Report”)

It is worth mentioning that Chinese ingredients are also gaining favor from international beauty conglomerates. For example, Shiseido and LVMH’s funds have invested in the reorganization of collagen protein companies such as Trautec. The new cosmetic raw material “Swiftlet Acid” from CASOV has been applied to the new series of the YUE SAI under L’Oreal.

All these signs indicate that Chinese ingredients with Chinese characteristics that reflect the Chinese domestic research and development strength of Chinese cosmetics are not just a castle in the air. After repeated internal verification and testing by companies, they have now entered a new stage of commercialization.

New driving forces for brand development

In the preface of the “2023 China Ingredient Market Insight Report,” Liu Wei, a consultant dermatologist of the Chinese Medical Doctor Association, a professor of dermatology, and a doctoral supervisor, put forward: “In just a few years, a batch of cosmetic raw materials and ingredients with Chinese characteristics and patents have emerged, such as hyaluronic acid, recombinant collagen protein, plant extract biotechnology fermentation, bio-synthetic peptides, as well as Chinese local specialty plant materials, etc. These have given birth to a batch of Chinese cosmetic brands that are safe, effective, distinctive, and popular among consumers.”

So, from the perspective of market sales, which Chinese ingredients are more popular and welcomed by the market?

CHAILEEDO has selected Chinese ingredient products from the top 500 skincare products sold on Taobao from January to August. Among them, the sales of recombinant collagen protein products exceeded 880 million yuan, while the sales of purslane/green prickly pear extract, licorice extract with sophora flavescens, and pearl barley extract all exceeded 500 million yuan. The corresponding efficacy of these four ingredients is anti-aging, soothing and repairing, and whitening.

From the table below, it can be seen that Chinese ingredients are currently applied in products such as Kefumei Recombinant Collagen Series, PROYA Advanced Facial Cream, CHANDO Time Frozen Essence, and KANS Luxury Softening Toner and Lotion. CHAILEEDO noticed that these products are mostly hero products of the brands. The total scale of the brands also ranks among the top in the industry, such as Kefumei’s revenue exceeding 1.6 billion yuan and Dr. Alva revenue exceeding 1 billion yuan in 2022.

Combining the “2023 China Ingredient Market Insight Report” with CHAILEEDO’s observations, Chinese ingredients have become a trend for brands, especially for brands with a scale of over 1 billion yuan. Their demands for exclusive ingredients are more explicit, and their technological and market advantages are more significant. In turn, Chinese ingredients will help brands break through boundaries and bring new growth highlights.

In terms of ingredient sources, the application of plant extracts is more extensive, and there are more breakthroughs in biotechnology ingredients. The “2023 China Ingredient Market Insight Report” also points out that currently, more than 60% of the selling points of Chinese ingredient products are based on natural extracts, and consumers’ awareness of Chinese ingredients is mainly focused on plant-based products, such as Tremella polysaccharide, aloe polysaccharide, and other ingredients.

On the other hand, the development of nanotechnology and synthetic biotechnology has provided new ideas and methods for ingredient technological innovation, including the transformation of existing ingredients and the creation of new ingredients, bringing efficient and sustainable production methods.

Brands continuously strive for technological breakthroughs, create unique ingredients to meet consumers’ efficacy demands, and carry out long-term marketing and promotion to gradually cultivate consumer awareness. According to the “2023 China Ingredient Market Insight Report,” over 90% of consumers recognize Chinese ingredient brands, half of the consumers recognize the high cost-effectiveness of Chinese ingredient brands, and half of the consumers believe that Chinese ingredient brands have better research and development technologies tailored to Chinese people.

When the technological innovation awareness of industrial chain enterprises awakens and consumers’ lack of trust in Chinese brands turns into cultural self-confidence, the scale of the Chinese ingredient market will continue to grow.

The era of Chinese ingredients is coming

Why is it said that Chinese ingredients will be an opportunity for the rise of local enterprises?

CHAILEEDO found that each Chinese ingredient usually goes through a long process of raw material screening, design modifications, efficacy verification, etc., ranging from a few years to over 10 years. To a large extent, Chinese ingredients do not appear out of thin air, nor are they just marketing gimmicks. They are the result of local enterprises overcoming deficiencies and gaps in basic research, advanced talents, independent and bargaining power over raw materials, brand influence, and brand value, and opening up a new path.

In the past, many Chinese domestic scientific and technological enterprises in the cosmetics industry were short-lived. One reason was that they failed to overcome the hurdle of technology transfer, either falling in the early stages of research and development or failing to successfully commercialize their research achievements.

The rise of numerous Chinese ingredients allows enterprises to break free from the dependence on imported raw materials. The successful application of a series of Chinese ingredients and the market recognition of related products also represent local enterprises crossing the gap between basic and applied research, overcoming the “death valley” of difficulties in scientific research achievement transformation and promotion. This undoubtedly brings about a comprehensive transformation of the industry and will bring more development opportunities.

It can be said that Chinese ingredients represent a groundbreaking symbol for local enterprises and the cosmetics industry. Just as Yang Cheng, Vice Dean of the School of Chemistry and Materials Science at Jiangnan University and Director of the Jiangnan University Cosmetics Innovation Center, stated in the “2023 China Ingredient Market Insight Report,” “We are now witnessing a new transformation: cosmetics industry entering the era of Chinese ingredients.”



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