Why do Online Makeup Brands Prevail Skincare Brands in Chinese Cosmetics Industry?

Guangzhou Vaqua International Trade Co.,Ltd.,China

In recent years,multiple online cosmetics brands have emerged in Chinese market,which are popular among young customers especially those of generation Z.For example,HFP,Perfect Diary,Florasis,Judydoll,Zeesea,Meikangfendia,HEDONE and Geoskincare.It is found that except for HFP and Geoskincare,the rest are makeup brands.According to cases of investment in Chinese cosmetics industry,the makeup enterprises and brands are preferred; the funds invested in makeup brands are much higher than those in skincare and other brands.In particular,Perfect Diary has been the flavor of investment banks.Founded three years ago,Perfect Diary has completed four rounds of financing.Doubled in six months,the overall valuation of Perfect Diary has been up to $4 billion,which is close to the listed Chinese cosmetics companies AUPRES and Marubi.Why do the online makeup brands prevail skincare brands in Chinese cosmetics industry? The four reasons are listed as follows.

Firstly,it is decided by the competitive situation of Chinese cosmetics market.Due to historical reasons,the original cosmetics brands used by Chinese customers are foreign ones.For example,the first lipstick used by people born in the 1970s or 1980s is from Maybelline and the first skincare product is from AUPRES,L’Oreal or Olay.In addition,compared with makeup products,the skincare products are highly technical while domestic cosmetics industry started late.Therefore,the foreign skincare brands prevail domestic ones in quality,brand image and values and dominate the middle and high level of Chinese cosmetics market.This is the competitive situation of Chinese cosmetics market.After many years of effort,all foreign brands have had ace products that occupied the minds of Chinese customers and monopolized skincare processes.For example,the makeup remover from Bioderma,the cleanser from Freeplus,the facial soap from Clinique,facial treatment essence from SK-II,Tonique Confort from Lancome,Nutrious Super-Pomegranate toner from Estee Lauder,Advanced Cenifique essence from Lancome,Advanced Night Repair essence from Estee Lauder,Ultimune Power Infusing from Shiseido,White Radiance from Olay,sunscreen from Anessa and sleeping mask from Laneige.The foreign brands build a barrier with their mighty force in both finance and technology.As a result,it is quite difficult for domestic brands to break down the barrier.

Secondly,it is influenced by the competitive situation of Chinese makeup market where the foreign brands dominate middle and high level of market but they are not absolutely dominant in the low level of the market.Even though Maybelline is still the leader of middle level of Chinese makeup market,its leadership has been weakened gradually in recent years due to multiple factors,such as brand aging.In particular,after Maybelline decides to retreat from Chinese department stores,its corresponding market share will be occupied by other makeup brands,especially the inexpensive Chinese makeup brands.In addition,as Chinese makeup market and beauty economy boom,the penetration rate of makeup brands grows higher and the capacity of Chinese makeup market grows larger consequently.When the green hands choose makeup products,most of them tend to use products from inexpensive makeup brands.As a result,they can grow to be a makeup expert with low trial cost.During the past five years,Chinese makeup market has been growing twice as fast as the skincare market and no foreign brands dominate the middle and low level of Chinese makeup market,which makes the rise of new Chinese makeup brands possible.

Thirdly,it is decided by the properties of skincare and makeup products.The skincare product will take effect after it is used for at least one month.The lifecycle of a skincare product is much longer than that of a makeup product.Generally speaking,a skincare product can be used for two months while a makeup product can be used for only one month due to its less capacity and higher usage frequency.Modifying and concealing flaws,the makeup product can beautify the face immediately so that it has been a necessity to bags of the female.Due to features of makeup products,such as expendability,variability and fast fashion,customers are willing to spend on makeup products with the concept of “many,fast,good and economic”.This consumption habit also promotes the development of inexpensive makeup market.

Fourthly,it is influenced by the advantageous foundries in China.In recent years,many domestic cosmetics enterprises are aware that the lack of research and development will have negative influence on their competitiveness in the future.Thus,the domestic cosmetics industry is changing.As a large number of excellent R＆D personnel from foreign enterprises and countries comes into domestic enterprises,the advanced technology is imported as well as the novel thinking and methods.Recently,the cosmetics industry booms leading to the technological communication domestically.Therefore,the research and development in cosmetics industry is bound to be pushed forward along with the uprising of domestic cosmetics industry.Despite the weak research and development in domestic cosmetics industry,domestic enterprises have caught up fast during the past thirty years and been leaders in certain fields with large amount of resources invested,such as funds and talents.This phenomenon is the most evident in domestic makeup industry.Although domestic makeup industry started later than skincare industry,its core competitiveness has formed as innovative and cost-effective products and began to take a place in global makeup market after the foreign technology and devices are imported,innovated and improved.Many big-name and inexpensive makeup products come from Chinese makeup foundry and the advantageous OEM/ODM contributes to the uprising of domestic makeup brands,such as Carslan,Marie Dalgar,Perfect Dairy and Florasis.The representative makeup enterprises are detailed as follows.

Shanghai Zhenchen: In 2017,its revenue ranked first in Chinese makeup industry.Focused on the manufacture of high-level makeup products,Zhenchen cooperates with many international makeup brands and it is even the unique manufacturer of some international makeup brands in China.Due to commercial confidentiality agreements,these brand names are not publicly available but it is certain that some of them rank top 10 of global makeup brands.

Shanghai Chuangyuan＆Chuangxin: Chuangyuan ＆Chuangxin is the largest mascara manufacturer in Asia.In addition to domestic clients,the mascara of many international brands are from this enterprise as well.For example,L’Oreal,Avon,Olay,Nivea are its long-term clients.

Taiwan Thai Ho (Shanghai Lixin＆Shanghai Lufanxi): Foreign media reports that,60% of firstline international brands have cooperated with Taiwan Thai Ho,which has been the second largest makeup manufacturer globally ranking after Intercos,the Italy makeup manufacturer.In Chinese market,many makeup products of foreign brands,such as eyeshadow and eyeliner from Maybelline,blush from Yue-Sai,concealer from Sephora,are made by Thai Ho.

Suzhou Ante: As one of important foundries of Watsons,Ante has unique advantages in the field of lip makeup.In addition to Watsons,Ante has established cooperation with many well-known brands and enterprises at home and abroad,including L’Oreal,H＆M,Proyal,Forever 21,Flamingo,TONYMOLY,etc.

Zhuhai Sheencolor: If you have bought the blush,eyeshadow and lipstick of private brands from Sephora,the fact will be found that most of them are made by Sheencolor,especially the eyeshadow,all of which are from this enterprise.The products of Sheencolor have been exported to many countries including Italy,Canada,British,Germany,Russia and Netherlands and Sheencolor has established cooperation with Sephora,Watsons,MAXYgirl and Oriflame.

Shanghai Yongli: With more than twenty years of research and development and manufacture in the field of eyebrow pencil,Yongli has been the leader of eyebrow pencil manufacturers.The eyebrow pencil of well-known brands,such as Watsons collagen,Missha and Mamonde,are made by Yongli.

The makeup products from these domestic enterprises have been sold in global market along with the first-line international makeup brands and achieved notable merits in spreading Chinese products and brands.They have been the backbone of new domestic makeup brands coming up in recent years including Perfect Diary and Florasis.Due to the long research time,high cost,low R＆D level and limited usage of materials,the domestic skincare industry has no advantages compared with makeup industry.Few skincare products are made by Chinese skincare foundries.

To sum up,the success rate of domestic makeup products is much higher than that of skincare products.As young customers of generation Z who grow with mobile phones become the main force of purchase,the online shopping has been their typical label.With the efficient logistics distribution and upgraded supply chain,the uprising of community purchase,short video and live streaming,it is easier to make an explosive product in the expendable makeup industry.And such an explosive product will contribute a lot to the uprising of entire makeup brand.These factors mentioned above gave rise to the situation where the online makeup brands prevail skincare brands.The author predicts that this situation will continue in next 3 to 5 years.