Analysis of Chinese Beauty and Skincare Brands Going Abroad

Consumer Staples Author: Yiran Xing Editor: Luke Jul 04, 2022 01:37 PM (GMT+8)

The global beauty market has been growing steadily over the past decade, regardless of the economic climate. At the same time, more and more Chinese beauty brands are starting to go abroad.

Cosmetics, medicine, beauty, women, her economy

Multiple factors are driving Chinese companies to accelerate and shift gear in terms of how they internationalize. First, China's economy has entered a new phase of steady growth, and overseas markets have become more attractive compared to the past under the situation of increased domestic competition. Second, the continuous improvement of global infrastructure since the Covid-19 epidemic, including logistics, payment, independent station building and marketing, has made the cost of going abroad drop and convenience improve. Third, members of the new generation of Chinese entrepreneurs often have overseas study or work backgrounds. That gives them a priceless first-hand perspective and an advantage over the previous generation.

The global beauty market has been growing steadily over the past decade, regardless of the economic climate. More and more consumers are actively sharing and communicating their beauty experiences through social media platforms. According to Twitter, there were 460 million beauty and skincare-related tweets on Twitter in 2020. Even under the impact of the epidemic, makeup-related topics still account for nearly 60% of discussions.

At the same time, more and more Chinese beauty brands are starting to go abroad. This is partly because the traffic dividend in China's domestic market is waning, and channel costs are rising. On the other hand, although China has become the world's second-largest beauty market, the volume of overseas markets should not be underestimated. Euromonitor data shows that the global beauty market reached a value of USD 83.7 billion in 2021 and will reach USD 107.6 billion by 2025.

EqualOcean data shows that in recent years, the scale of China's exports of beauty cosmetics and personal care has increased year by year.


Which Chinese beauty brands are currently going abroad? Which markets have these brands chosen? And what are their main products? With these questions, EqualOcean has compiled information on all the beauty brands currently going overseas in China, as shown in the chart below.

LIST of Beauty.png.png

Overall, Chinese beauty brands going abroad show some commonalities and characteristics in terms of going abroad channels, product categories, and market choices.

From the perspective of cross-border channels, Chinese beauty brands have the following 4 types of channels to go abroad.

Category 1: Brands are launched on e-commerce platforms such as Shopee Lazada AliExpress and Amazon, and brand building and product sales are completed based on platform traffic and activities.

Category 2: Brands build their independent overseas stations. Brands cooperate with email marketing, Facebook, and other off-site traffic generation methods to build brand awareness and establish a free flow pool.

Category 3: Brands are stationing themselves in TikTok-Shop and Facebook-Shop, relying on the huge pool of users in social media itself and their marketing to attract target customers.

Category 4: Brands are present on local e-commerce shopping sites or beauty verticals in their target markets. These platforms have a small customer base, but they have the advantage of high stickiness and a strong counterpart.

In terms of the main categories of brands, lipstick, eye shadow and blush are the most common categories of Chinese beauty brands going abroad. The amount of mascara and powder exported is also on the rise.

From the perspective of overseas markets, the cultural and demographic similarities reduce the difficulty of product localization, so Southeast Asia has become a popular choice for many Chinese beauty brands going overseas. In addition, many brands have chosen Japan as their first overseas market.

Southeast Asia is the 'market of the future' for the global cosmetics industry. According to a report by Mintel, the beauty market in Southeast Asia reached CNY 164 billion in 2019 and is expected to reach CNY 304.8 billion in 2025, with a compound annual growth rate (CAGR) of 9.3%, higher than the CAGR of 8.23% for cosmetics in China over the next five years.

So, why do these beauty brands not choose the European and American markets? There are several reasons.

First, the product matching degree is low. Asian and European and American consumers belong to two kinds of skin groups. Asian consumers are mainly yellow-skinned, while European and American consumers are mainly white-skinned. The differences in skin color and texture lead to different concerns about beauty categories, such as the appropriate foundation and eye shadow colors, the effect of makeup, and so on. This also leads to a big difference in makeup habits and flow trends between Europe, America, and Asia.

Second, branding. Looking at global beauty brands, most of the top beauty brands come from Europe and the United States, such as Estée Lauder, P&G, Lancôme, and Chanel. Chinese beauty brands with strong international influence are almost non-existent. Therefore, it is not easy for Chinese beauty brands to gain a certain market share in Europe and the US.


Third, the market space is small. As shown in the chart above, compared to Southeast Asia, Europe and the United States have higher penetration rates of e-commerce. The United Kingdom is as high as 79%, and the United States, even if slightly inferior but also reached 63%. In other words, the development of e-commerce in Europe and the United States is close to saturation, so it is difficult for emerging brands to stand out from the crowd. On the contrary, Southeast Asia, where the penetration rate of e-commerce is not high, is the best choice for emerging brands to enter the market.

Fourth, the ease of localization. Japan and Southeast Asia are both in Asia, and are geographically close to China, with similar cultures and skin colors. Therefore, there are fewer differences in product needs and a better match with the local market, making it relatively easy for new Chinese brands to promote. In addition, Japanese and Southeast Asian consumers have a high preference for color cosmetics and brand loyalty, and they have strong consumer power.

Fifth, policy support. On January 1, 2022, the Regional Comprehensive Economic Partnership Agreement (RCEP) will enter into force, with the first batch of countries including six ASEAN countries including Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam, and four non-ASEAN countries including China, Japan, New Zealand, and Australia. The RCEP will enter into force for Korea from February 1, 2022, and for Malaysia from March 18, 2022.

The implementation of the RCEP agreement will bring the level of goods trade liberalization in Southeast Asia to over 90%. For example, 30% of goods from Cambodia, Laos, and Myanmar enjoy zero tariffs, while 65% of goods from other member countries enjoy zero tariffs.

Compared to Europe and the United States, Chinese products can enjoy better tariff policies in Southeast Asia and Japan, thus enabling Chinese sellers to save a large amount of cost. In addition, trade between countries is easier through customs procedures, and RCEP simplifies the customs clearance process by adopting a highly efficient management process using information technology. This is a great benefit to enterprises with port shipping and foreign trade.