Beauty war in China, western premium vs local mass?

In 2018 China beauty market size is estimated at about USD 60 billion, the #2 country in the world after the USA.

Current e-commerce accounts for 28% of the total market share, in which Taobao and Tmall are still the largest distributional channel (70% of the online sales are done via Tmall and Taobao).

By 2025, China’s beauty market is expected to reach the market size of USD 10 trillion.

Every brand would love to have a juicy bite on it. Today at least 40,000 beauty brands are vigorously competing on attracting the money from Chinese consumers’ wallet.

Current competitive landscape is divided into two camps:

western premium brands vs local mass brands

40% of top 500 beauty brands (ranked by online sales by surveying all brands on Taobao and Tmall) are of Chinese origin. Local brands have been rapidly procreating and growing; thanks to their deep understanding of Chinese consumer, strong acumen in digital marketing, increasing collaboration with overseas OEM/ODM vendors which also serve global premium brands, and above everything else low pricing strategy targeted at a much younger generation.

The rise of local beauty brand could happen at lightning speed. Such as:

Makeup brand: PerfectDiary

Its Tmall flagship debut in August 2017, and now it is already on the list of the top 10 best selling brands (based on the monthly data during January 2019) with a price range between RMB39~300. During double 11 shopping festival in 2018, it hit RMB100 million sales revenue in less than 2 hours.

 

 

 

PerfectDiary puts less emphasis on Wechat but throws tons of money on LittleRedBook and KOL endorsement. Its official fan club followers on LittleRedBook have far outnumbered international brands like MAC or L’Oreal. Many imitators hope to follow its secret recipe and mechanism.

 

Makeup must be visually attractive on the face and that is why LittleRedBook Pinterest-like display is extremely helpful to showcase the product color then grab the viewer’s attention. However, skincare might need tactics in another direction. So here comes:

Skincare brand: HomeFacialPro

Established in December 2014, launched its Tmall store in August 2016, it achieved the RMB 300 million sales target within one year. Some even proclaimed it should be the #1 home-grown dermatology skincare brands at truly affordable price. Unlike PerfectDiary, HomeFacialPro bets its marketing game on Wechat, not LittleRedBook. It is said since 2016 the company has collaborated with over 1500 Wechat KOL accounts and pushed at least 6200 articles for the branding advertising purpose.

It does not mean foreign brands do not stand a chance to gain the beauty territory in China. Welcome,

Spanish skincare: Martiderm

Founded in 1952 in Barcelona, Martiderm is the inventor of proteoglycan anti-aging ampoules-the innovative amber glass format.

This unknown premium Spanish brand set up Tmall store in September 2016 and reached sales of RMB20 million in less than 6 months. It is estimated to sell on average 25000 ampoules daily on Tmall.

One more “dark horse” case from Spain: Sesderma

Its foray into the China’s online market started in June 2017. During one year span, its sales volume is said to project to 100 million.

Some conclude Sesderma’s quick win should be attributed to one mastermind company GoLong: the cross-border e-commerce service provider (or so called TP: Tmall Partner”). Basically, Golong is responsible for Sesderma’s online store operation, supply chain management and brand marketing. Golong was incorporated in 2014 in Hangzhou and last year raised RMB200 million in Series A.

Never has the dynamics of beauty war between the two camps become so sophisticated incommensurate with the digital maturity of Chinese consumer behaviors.

 

By: Cecilia Wu