The scope for niche beauty brands in China has grown massively in recent years, and international brands like Shiseido, L’Oréal, and Unilever are making the most of this opportunity with their timely new acquisitions: Drunk Elephant, Skinceuticals, and Tatcha. These products are also transparent, eco-friendly, and untainted by suspicious elements that could damage consumers’ skin. Because of these factors, China’s Gen-Z consumers are easily drawn to them.
But there is more to these brands’ popularity than meets the eye. Chinese consumers have also become extremely fond of using niche skincare products to define their individuality. They want to associate themselves with something new, as the market is inundated with hundreds of skincare items that can fulfill their need for retaining the essence of natural beauty. Therefore, this growing demand has catapulted the Chinese market for niche beauty to ever-greater heights.
According to Research and Markets, that market is currently valued at $62.5 billion (407.8 billion RMB), and buzz is already circulating that it could be worth $9.2 trillion (60 trillion RMB) by 2025. Feeling emboldened by this great outlook, Western beauty brands have been entering the Chinese market, joining hands with the country’s advanced e-commerce platforms Alibaba’s Tmall, WeChat, Douyin, and others that quickly sell out their products.
According to a surprising 2019 Reuters Communications survey of 300 consumers spread across Shanghai, Beijing, and Guangzhou, 92 percent of men preferred niche beauty products, while just 31 percent of women considered the niche factor important. And with Gen Z now being the backbone of the Chinese economy, luxury brands must find items they will enthusiastically love. Zhao Anqing, CEO of the Chinese beauty brand Dairui Daily, says that “in China, young consumers are seeking ways to personalize their overall lifestyle and make a point that they’re very different from older generations. For them, it all comes down to embracing the values of a progressive lifestyle where ‘niche’ matters most.”
Today, Chinese consumers are more subtle in terms of their likes and dislikes, and packaging, brand stories, and branding all make up how they value a brand as “niche.”
China’s market is open to all
Drunk Elephant, Skinceuticals, and Tatcha are all categorized as niche skincare products alongside small players like Milk Makeup and Farmacy. The good news is that even new players like Glossier or famous names like Murad and Topix Pharmaceuticals can be considered part of China’s diverse niche market. All in all, it has become a competitive market for various big and small companies to tap into and win quick sales. To put it simply: The race is on.
Highly efficient e-commerce tools
While the coronavirus pandemic continues to wreak havoc on the West, their beauty brands have come to rely on Chinese consumers to make up for their losses. And they’re doing quite well thanks to the country’s major e-commerce sites such as Taobao and JD.com, where millions of Chinese consumers spend time shopping.
Drunk Elephant launched its flagship store on Tmall in September of 2019, and its next move was a smart one. As part of its first promotional strategy, Drunk Elephant participated in the Double 11 shopping festival and was soon ranked in its top-200 beauty & skincare brands and as a top-ten international brand. This performance prompted Drunk Elephant to introduce a wide range of new products globally on Tmall in December of 2019.
Likewise, Skinceuticals took part in Tmall’s Super Brand Day for the first time in 2020 and surprised everybody with its sales, which were estimated to be far above $15 million (100 million RMB). As a result, it secured the no. 1 position in the beauty category with 100,000 items sold out. It also boasts a global flagship store on Tmall.
This year is another big chance for overseas beauty brands to consider Tmall, which will be launching 800 foreign beauty brands to introduce to young Chinese consumers. Out of these, more than 50 new brands will be incubated. What’s driving this growth? Gen-Z consumers. “Since these young people live their lives constantly surrounded by social media and international multiculturalism, their choice of using beauty products feels totally worldly,” says Liu Yiman, general manager of the Tmall International Commodity Center.
While everything is happening online these days, another interesting phenomenon to see in China is that niche Western brands are enjoying physical presence too. Helping them in their journey is a popular Chinese online cosmetics brand Harmay with its brick and mortar stores popping up in major cities like Beijing, Shanghai, and Chengdu, where it is already selling a great collection of niche international cosmetics and skincare brands, such as SG79|STHLM, Graine de pastel, and Iconic London. Famous local brands are successfully navigating this competition from foreign players in their own unique style. According to Daxue Consulting, one such brand is Perfect Diary which is a dominant local brand to reckon with on various levels.
The reason for niche beauty brands taking off in China is mainly because Chinese consumers are more serious than ever about using products that fully adhere to the concept of going organic. All in all, they want to make sure what beauty products they’re using in their lives should have ethical traits. In short, bruised by the pandemic, they’ve learnt that they can no longer ignore the idea of a safe and healthy lifestyle. At the same time, they want both international and local brands to implement social responsibility under all circumstances. They want to eat healthy and look great without harming nature in a post-Covid era, where the factor of sustainability should rule the roost.