China’s $52 billion beauty market is experiencing a transformative phase as consumers reevaluate their spending habits amid economic slowdown. Global beauty giants like L’Oreal, Estee Lauder, and LVMH face challenges adapting to changing consumer priorities and the rising preference for local brands.
Evelyn Zhu, a branding professional from Hangzhou, reflects this change, emphasizing a move towards essential skincare products over extravagant beauty hauls. This shift poses a considerable challenge for international brands that have long relied on China’s beauty market for growth.
Analysts point out that economic challenges aside, multinational beauty companies are slow to adapt to changing consumer preferences. The discerning Chinese consumer is now more focused on high-efficacy products, causing a decline in lifestyle-driven luxury and premium brands.
Local brands like Botanee Biotech’s Winona are gaining ground by addressing specific concerns, such as combating redness, a prevalent issue among women. While global beauty giants witness a dip in sales, Botanee’s revenue is projected to grow nearly 18% in 2023, showcasing the success of catering to localized needs.
Despite efforts by international brands to boost sales through deep discounts, data indicates that this strategy may not be as effective as desired. Even during peak shopping events like Singles Day, the impact of discounts on sales remains limited.
Jefferies’ analysis reveals a decline in sales for LVMH’s beauty division and Estée Lauder Companies in China. Shiseido, which heavily relies on the Chinese market, adjusted its profit forecast due to slower demand, compounded by a boycott of Japanese products.
The challenge for multinational beauty companies lies in adapting to China’s new normal of single-digit growth, foregoing the pursuit of past euphoric growth. The market landscape demands a more rational approach that aligns with the shifting priorities of the Chinese consumer.
As the beauty industry navigates this transformation, the emphasis on understanding and meeting local preferences becomes paramount for sustained success in the ever-evolving Chinese market.
