“The emergence of a new wave of outbound beauty brands signifies a burgeoning trend, with brands increasingly eyeing international markets for expansion. According to Guo Xiruo, Founder and CEO of Mold Breaking, a brand management firm specializing in beauty, skincare, and fragrances, this trend indicates a shift from the dominance of makeup brands to a rising interest in skincare, personal care, and fragrances. Mould Breaking primarily assists Chinese beauty brands like Huaxizi, Huazhixiao, and Kelaqi in their expansion efforts into Japan, where the demand for quality beauty products continues to soar.
The spotlight on Chinese beauty brands venturing into foreign markets gained momentum in December 2023, with ‘Chinese beauty products selling well in South Korea’ trending online. This surge of interest coincided with a notable increase in China’s export of cosmetics and personal care products, which totalled 34.861 billion yuan from January to September 2023, marking a 26.6% year-on-year growth.
However, despite the promising export data, feedback from individuals residing in South Korea or frequently visiting the country paints a different picture. Many express a lack of exposure to or familiarity with Chinese beauty brands in the local market. “South Korea has long been renowned as a beauty powerhouse, with a strong preference for homegrown brands. Breaking into this market with foreign brands poses significant challenges,” one respondent commented. While export figures indicate growth, it’s evident that Chinese beauty brands still have a long way to go in terms of gaining recognition and acceptance in overseas markets.
So, what lessons can be drawn from this wave of outbound beauty brands, and what lies ahead for Chinese beauty brands seeking international expansion?
Behind the significant surge in export volume lies a notable trend, particularly evident in countries like Thailand, South Korea, and Japan, where the growth in Chinese beauty and skincare exports has been even more pronounced. According to reports from Yicai, from January to November 2023, China’s export of beauty and skincare products to South Korea soared from 258 million yuan to 935 million yuan compared to the same period in 2022. Similarly, exports to Thailand surged from 47.637 million yuan to 1.043 billion yuan. Data from the Japan Cosmetic Importers Association reveals a staggering 45% year-on-year increase in the import of Chinese cosmetics in the first half of 2023, reaching approximately 6.1 billion yen (around 300 million yuan).
The remarkable growth in beauty exports is not merely coincidental but reflects a growing trend among Chinese beauty brands seeking international markets. This burgeoning trend in beauty exports holds the promise of significant expansion. “Chinese beauty brands venturing abroad are driven by the imperative of growth. With the domestic cosmetics market becoming increasingly saturated and overall industry growth slowing down, going global is no longer a choice for most brands but a necessity,” remarked Qian Yiru, Senior Analyst at EqualOcean, to Entrepreneurial Frontiers. Observations from Entrepreneurial Frontiers indicate that the development of domestic e-commerce and social media platforms, along with the international success of Chinese film and television dramas, has played a crucial role in elevating the global influence of Chinese cosmetics.
“There was a fortuitous moment in 2019 when several prominent Japanese beauty bloggers discovered Chinese makeup styles on Little Red Book and began emulating them. This sparked widespread interest,” noted Guo Xiruo. At that time, videos featuring “Chinese makeup” by Japanese beauty bloggers experienced a surge in popularity, and fashion magazines gradually introduced “Chinese makeup” to the public eye. Characteristics such as “pursuit of fair complexion, emphasis on lipstick, mature beauty, and sophisticated makeup” became synonymous with Chinese makeup in the eyes of some Japanese consumers. According to Guo Xiruo, the popularity of “Chinese makeup” resonated with a demographic in Japan aged from high school to their late twenties, who increasingly preferred rebellious, fresh, and unconventional makeup styles over the traditional natural look that had dominated Japanese beauty trends for the past two decades. The rise of “Chinese makeup” also presented an opportunity for Chinese cosmetics brands to expand into the Japanese market.
In the view of a senior executive at Juyi Group (parent company of brands such as Judo and Kose), in recent years, Chinese beauty brands have significantly enhanced their brand strength and product quality. Innovations in colour, packaging design, and product formulas have made Chinese beauty products increasingly appealing. “In an industry facing saturation, Chinese cosmetics brands often adopt bold or personalized packaging designs, giving them distinct labels that quickly attract attention when entering new markets,” commented Guo Xiruo. Brands like Huazhixiao, with a focus on Chinese elements and national trends, and Huaxizi, founded by a seasoned Cosplay enthusiast, have captured more overseas consumers with their distinctive characteristics.
Currently, brands like Huazhixiao, Perfect Diary, Huaxizi, and Judo have successfully expanded overseas and continue to broaden their presence abroad. However, it’s evident that the current trend of Chinese beauty brands going global primarily revolves around makeup brands. According to a senior executive at Juyi Group, makeup trends change rapidly, and new trends attract consumers to try new products, presenting an opportunity for makeup brands to expand into overseas markets. Skincare trends, on the other hand, tend to change more slowly, and consumer acceptance thresholds are higher. Next, Chinese skincare brands are eager to venture abroad, but it’s clear that going global is no easy task.
“Diverse markets present distinct sets of challenges,” noted Guo Xi. “When venturing into international territories with beauty brands, there are common hurdles that arise, three of which I find particularly detrimental. These include issues with personnel management, cognitive barriers, and the complexities surrounding product inventory and logistics.”
The first challenge revolves around organizational structure. “The capability of leaders in overseas markets to effectively manage international operations determines half of the venture’s success. Frequent personnel changes hinder the progress of overseas endeavours, a common hurdle faced by many emerging national cosmetics brands. Just as strategies are established, a new leader is appointed, necessitating the repetition of the process. This impedes the accumulation of valuable experience. Frequent personnel changes can significantly erode trust from partners, particularly in the Japanese market. Many individuals from China fail to notify partners upon leaving, exacerbating the issue,” Guo elaborated.
Regarding cognitive challenges, Guo explained, “Some brands, ranking in the top three or five within domestic markets, often perceive their business models to be highly successful and mature, motivating them to directly replicate these strategies overseas. They aspire to rapidly grow their market share or revolutionize the industry, but the reality is not as simple.” He further noted, “Chinese beauty brands typically prioritize and appreciate web traffic, but these methods may not be applicable in mature beauty markets like Japan and Korea, although they may prove successful within Southeast Asian markets.”
Japan’s consumer journey typically begins with product awareness gained through Key Opinion Leaders (KOLs). Potential customers subsequently delve into internet searches, predominantly using Google or Yahoo, to further explore the brand. Assuming satisfactory results, they then proceed to experience the product in offline settings. Having completed their tactile examination, the consumer may opt for immediate purchase in-store or choose to place an order via e-commerce platforms such as Amazon. Guo Xiruo contends that, unlike other markets, evocative sales pitches delivered via popular live streams, touting highly discounted items, have little sway on the discerning Japanese customer.
In Japan, the ascent of beauty brands to dominance defies the conventional notion of a single breakthrough point reliant on platform-specific traffic. This deviation is greatly influenced by the distribution and nature of sales channels. Beauty product sales predominantly occur through one of three channels: third-party platforms like Amazon Japan, Rakuten, and Qoo10; various brick-and-mortar establishments, ranging from large retailers to smaller shops; and finally, brand-specific official websites or standalone sites, operating independently of third-party platforms.
For brands aiming to establish themselves, their initial step often involves joining third-party platforms, a process that is both smooth and expedient. Subsequent progress depends on whether the brand chooses to expand its physical store presence or focuses on enhancing its official website. Guo Xiruo suggests that for brands prioritizing offline operations, achieving a presence in 20,000 to 30,000 storefronts is a significant milestone. However, to date, no Chinese beauty brand has reached such a scale. Alternatively, brands can opt to cultivate and develop their official brand website or standalone sites. Some Japanese brands have thrived using this approach, generating sales revenues equivalent to ¥40 billion (approximately RMB 2 billion) on their official websites. Mr. Guo further emphasizes that in the Japanese market, a company could potentially dominate through either its standalone site or physical stores. However, there has yet to be a leading brand that achieved supremacy solely through a third-party e-commerce platform. Guo points out, “Firstly, Japan lacks platforms like Tmall and JD.com, resulting in dispersed platform traffic. It’s overly simplistic to assume that a brand’s success on Amazon Japan alone signifies overall triumph.”
In the South Korean market, Chinese brands encounter similar hurdles. An industry insider in the beauty sector, known by the pseudonym Yu Sheng and residing in Korea, shared with “Jiemian News · Frontline of Entrepreneurship” that, “Korea itself serves as a major hub for cosmetics, boasting numerous homegrown brands. For foreign brands seeking to penetrate the Korean market, unless they are significantly renowned, the challenge is immense.” Drawing from Yu Sheng’s firsthand experiences, Chinese beauty brands are conspicuously absent from Korean duty-free shops or department stores, with only mentions of the popular Chinese brand “Huaxizi” circulating among female colleagues. He further suggests that Korea’s traditional mindset, which tends to favour domestically produced goods, leads to a high level of trust in local cosmetic products among the populace. Additionally, biases held by international consumers toward the quality of Chinese products present a significant obstacle. Yu Sheng notes that many Koreans previously held the perception that Chinese products “appear satisfactory but fail to meet expectations in practical use.” However, this perception is gradually shifting. “With Xiaomi’s entry into the Korean market, attitudes have begun to change,” he observes. Xiaomi’s products, spanning mobile phones, air purifiers, microwave ovens, and electric bicycles, have gained widespread acceptance in Korea, influencing perceptions of Chinese-made items beyond the beauty industry. “The improvements in design, packaging, and quality of Chinese products represent a positive shift,” he concludes.
At this nascent stage of their journey, the expansion of China’s cosmetic brands into mature markets like Japan, South Korea, Europe, and America, as well as emerging markets like Vietnam and Indonesia, presents a diverse array of trajectories and strategies, each beset with a myriad of challenges. From a holistic perspective, the progress of domestic cosmetic brands venturing abroad is still in its infancy, far from achieving stability.
The market’s Matthew effect is becoming increasingly apparent, with a substantial gap persisting between national brands and traditional giants like L’Oréal and Estée Lauder, unlikely to narrow in the short term. Moreover, within the same market, similarly positioned domestic brands are at risk of mutual undercutting. The longstanding labels of ‘low price’ and ‘cost-effective’, in the long run, could hinder the transition towards a more luxury-oriented development for Chinese cosmetic brands. Additionally, the challenges of product certification and compliance loom large, as emphasized by Qian Yiru.
Guo Xiruo suggests that if domestic brands choose to venture into mature markets like Japan, South Korea, Europe, and America, while securing longer-term branding benefits, shortcuts taken in the initial development stages would eventually need revisiting and rectification. Currently, domestic skincare brands are also initiating their overseas expeditions. However, skincare, being further removed from trending fashion and requiring a greater emphasis on technical prowess, formulation, ingredients, etc., faces significantly higher barriers to overseas expansion compared to cosmetics.
As a frontline worker in the cosmetics industry, Yu Sheng highlights certain unique qualities of the Korean market that warrant attention for skincare brands seeking to penetrate it. “It is crucial to prioritize the category of face masks. In Korea, regardless of gender, daily use of face masks is commonplace; some even apply them twice a day,” emphasized Yu Sheng. Koreans typically prefer purchasing their cosmetics from physical locations. At primary beauty retail conglomerates in Korea, such as OliveYoung, “face masks account for approximately 20% of sales.” Secondly, Korean skincare products are often sold in bundled packages, a departure from Western offerings. These sets, comprising toners, lotions, and essences, are particularly appealing to young professionals, offering both economic benefits and a compelling method of attracting youthful clientele. This approach may serve as a model for domestic skincare brands seeking to differentiate themselves. However, the question arises: where can we expect the distinguishing traits and strengths of Chinese cosmetics to establish their foothold on a global scale?
In a prior interview with China Cosmetics magazine, Gerald Renner, secretary-general of the European Cosmetic Association, emphasized the extraordinary emphasis placed by Japanese brands on quality as they launched into the international beauty market, ensuring that all their products embodied premium characteristics. Korean brands, on the other hand, captivated consumers with unexpected innovation. Drawing from the export success of Japanese and Korean cosmetics to Europe and America, Renner suggests that the unique features and advantages of Chinese cosmetics might align with the country’s rich plant resources or traditional herbal heritage. Indeed, such strengths, unique to China and unparalleled worldwide, underscore the immense potential that China holds. Despite the arduous journey that Chinese beauty brands face in their overseas ventures, beyond achieving sales growth, what intrinsic values can they ultimately contribute to the world?
