20 Overseas Beauty Brands "Disappeared" in China
- Chaileedo Press
- Aug 9, 2023
- 8 min read
Since 2020, there have been at least 20 international brands that have closed their overseas flagship stores on Tmall.
"Afterwards, we will temporarily suspended our service in Chinese market." Recently, the overseas flagship store of the Japanese organic cosmetics brand Naturaglace ceased operations in China, customer service personnel told CHAILEEDO.
Among the thousands of overseas beauty brands entering the Chinese market, it is common for brands like Naturaglace to quietly "disappear" in cross-border e-commerce channels. They either enter the Chinese market with great fanfare or quietly and silently “leave”.
The demise of overseas beauty brands in cross-border channels reflects the cooling of the enthusiasm for overseas brands entering China and also reflects that cross-border e-commerce, as the first stop for entry into China, has difficulty meeting the long-term development needs of overseas brands.
20 overseas beauty brands have "disappeared"
Earlier this year, the global famous beauty brand Huda Beauty officially closed its overseas flagship store on Chinese e-commerce platform Tmall. At that time, the customer service personnel of the store told CHAILEEDO that this was their only official channel in China.
As a well-known influencer-founded brand, the news of Huda Beauty store closure immediately sparked widespread discussion, with comments like "unable to adapt to the local market" and "even a brand that is so popular in other countries cannot compete with Chinese domestic beauty brands." In fact, prior to this, many overseas influencer-founded beauty brands such as FLOWER Beauty and Victoria Beckham Beauty had also faced the fate of closing their overseas flagship stores.
Moreover, according to incomplete statistics from CHAILEEDO, since 2020, there have been at least 20 international brands that have closed their overseas flagship stores on Tmall. Among them, at least five international beauty brands have closed their cross-border e-commerce channels and "temporarily bid farewell" to the Chinese market.
CHAILEEDO found that among the brands that closed their stores, there were quite a few well-known beauty brands, such as amplitude, a high-end cosmetics brand under the Japanese beauty giant Pola, Too Faced, a cosmetics brand under Estée Lauder, and OPTE, a beauty device brand under Procter & Gamble.
Looking at this year, international beauty brands such as therapuez, a Korean skincare brand, Naturaglace, a Japanese organic cosmetics brand, senegence, an American beauty brand, and LOOKFANTASTIC, a European skincare and beauty online store, have all closed their overseas flagship stores.
Among them, Naturaglace, the organic cosmetics brand, has a high level of recognition in Japan. Its parent company is one of the earliest developers of organic natural cosmetics in Japan. The brand claims that its products are free of risky ingredients such as mineral oil, tar-based pigments, and synthetic fragrances. Senegence, the American beauty brand, started with lip gloss products and currently has over 300 products, including anti-aging skincare and cosmetics, sold by thousands of independent distributors worldwide.
Regarding the withdrawal of overseas beauty brands, industry insiders in China have told that, "With the progress of Chinese domestic beauty brands in brand building and product quality, international beauty brands don't have much advantage. For international niche beauty brands, they face awkward situations in terms of recognition and cost-effectiveness."
Some industry insiders have also previously stated to CHAILEEDO that "some overseas beauty brands do not have long-term plans for the Chinese market. They have a short-term arbitrage mindset and often withdraw in the face of low sales to minimize losses."
Cross-border e-commerce struggles to become a brand
According to documents released by the General Administration of Customs in 2018, China regulates cross-border e-commerce goods as personal-use imported items and does not enforce requirements for first-time import permits, registrations, or filings. This means that cross-border e-commerce channel products do not need to be registered according to Chinese regulations.
The head of a certain international beauty brand once told the media, "Compared to traditional foreign trade, the cross-border e-commerce model does not require businesses to establish legal entities overseas (in China), and products can be marketed through a B2C model before applying for domestic product registration, greatly reducing the preparation time for brands to enter the market in terms of time and cost."
As a result, with favorable policies and strong support from e-commerce platforms, the trend of overseas brands entering China has risen. The cross-border e-commerce channel has prospered in recent years, providing opportunities for hundreds of overseas beauty brands to test the Chinese market.
At that time, the head of Tmall Global, a cross-border e-commerce platform, stated, "The new format of cross-border e-commerce has become a touchstone for imported niche brands to start businesses in the domestic market." It is reported that as of May this year, there are more than 46,000 global brands on Tmall Global. The platform introduced over 8,000 new brands in the past year, and launched over 4 million new global products.
However, the lenient regulations have led to rapid industry development but have also exposed many problems. For example, to this day, many consumers still complain on social and complaint platforms about difficulties with after-sales service and the inability to guarantee product quality when purchasing from overseas flagship stores, and even instances of counterfeit international brands.
According to data from the Hei Mao Complaints Platform, there have been over 8,700 complaints regarding "overseas flagship stores" to date. In recent years, although platforms have continuously strengthened regulation, the disorder in the cross-border channel continues due to lenient policies. Consumers still face difficulties in safeguarding their rights when purchasing cosmetics through cross-border e-commerce channels, as well as issues with product quality guarantee.
Moreover, in terms of overseas beauty brands entering China, the attractiveness of the cross-border channel seems to be declining, especially for beauty brands that hope to have a long-term presence in the Chinese market.
According to industry analysis, on the one hand, due to the existence of channels such as overseas shopping and purchasing, if overseas beauty brands do not have a good pricing system, it is easy for price confusion to occur after entering the cross-border e-commerce channel. For example, the prices of products in Huda Beauty's overseas flagship store were higher than those in overseas shopping channels, offering no price advantage.
On the other hand, for beauty brands that have just entered the cross-border channel, they often rely on establishing online social accounts and collaborating with key opinion leaders (KOLs) and influencers to generate buzz. However, once the social hype fades away and there is no subsequent action, the brand seems to fall into a state of neglect. For example, KKW Fragrance, Kim Kardashian's perfume brand, initially connected with Viya's livestreaming when entering China, but now the hype has long gone. Huda Beauty has relied on joining Li Jiaqi's livestreaming to quickly increase brand popularity and sales.
In today's increasingly competitive flow of traffic, especially in the face of Chinese domestic beauty brands that are adept at online traffic strategies, the approach of international beauty brands seems to struggle to truly enhance their “visibility” in the Chinese market.
Therefore, for overseas beauty brands that hope to have long-term development in the Chinese market, relying solely on the cross-border e-commerce channel seems insufficient to meet the demand for deep interaction with Chinese consumers and to establish brand value.
According to General Administration of Customs of the People’s Republic of China, due to factors such as the pandemic, China's cross-border e-commerce import volume reached 527.8 billion yuan ($73.2 billion) in 2022, a decrease of 0.8% compared to the previous year. Although China's cross-border e-commerce import volume reached 276 billion yuan ($38.3 billion) in the first half of this year, a growth of 5.7% and a rebound. Industry insiders believe that the "Pareto principle" phenomenon more pronounced with factors such as weak consumption, industry reshuffling and others, making it even more difficult for overseas niche beauty brands to stand out in the Chinese market.
A brand which goes in craze in online should focuses on offline channels
Through cross-border e-commerce platforms, brands tend to explore market demand at a lower cost, extensively cover consumers nationwide, validate product acceptance, and then consider entering offline channels and opening physical stores in the form of general trade. Going viral online and establishing a foothold in the Chinese market through offline presence is a common choice for overseas niche brands.
Recently, there have been voices in the industry about overseas influencer-founded brands such as Fenty Beauty and Sunday Riley entering offline channels by partnering with Sephora. Huda Beauty, which closed its stores earlier this year, is also considering a return to the Chinese market in a different form.
With the recovery of offline channels, the increase in online advertising costs, and the relaxation of animal testing regulations by regulatory authorities, some overseas beauty brands are already considering the possibility of exploring the Chinese market beyond cross-border e-commerce.
In this regard, some industry insiders believe that "for some overseas beauty brands with their own traffic, they should conduct market research before exploring cross-border channels. They should not blindly hold activities close to consumers offline, but rather gain a deeper understanding of consumers' reactions to the brand before considering the issue of opening stores online and offline."
Some industry insiders also point out that "imported products are naturally 'unfamiliar,' 'expensive,' and 'slow,' and Chinese consumers cannot see them offline. If they rely only on product details, it is difficult to understand their product strength and technological background."
It should be noted that just last month, GROWN ALCHEMIST, a brand under L'Occitane, announced its entry into the Chinese market and chose Sephora as its exclusive channel, without opening a cross-border e-commerce channel. In addition, they also opened a four-day "Skin Aesthetics Laboratory" in Shanghai, allowing consumers to "see" the brand offline and truly understand its positioning and image, rather than just relying on social media promotion through online channels.
Recently, the American skincare brand MALIN+GOETZ also announced that its first mainland China store debuted in Shanghai on August 8th. It was officially introduced to the Chinese market in September 2019, opening overseas flagship store on Tmall. However, since last year, this minimalist skincare brand from New York has actively expanded its offline presence and interacted with consumers, including entering SKP department store and opening pop-up stores in cities.
Some industry insiders believe that "offline physical channels are an important means to deepen consumers' understanding and impression of the brand and convey the brand's value. They cannot be replaced by online channels, especially in the current recovery of offline channels. Overseas niche brands should have more in-depth interactions with consumers."
It is worth mentioning that cross-border e-commerce platforms seem to have realized this issue as well. In May of this year, Tmall Global identified content creation as an important direction and planned to use short videos, live streaming, and other content formats to present overseas product features in a more comprehensive way, helping merchants tell brand stories and improve sales conversion rates.
Dong Zhenzhen, General Manager of the Import Division of the Brand Business Development Center of Taotian Group, stated, "Behind each UV is a vibrant consumer, and behind each SKU is the treasure of a century-old brand or the new achievement of a professional brand. How can we effectively introduce these new products to Chinese consumers? Content creation is key."
"Never go to war without proper preparation." With the increasing competitiveness of domestic beauty brands, the short-term trial of overseas niche brands through cross-border e-commerce channels are undoubtedly not conducive to their long-term development in China. Conducting thorough research on Chinese consumers' needs, communicating brand tone and product advantages in a more in-depth manner with consumers may be the right path.
Overall, from the current perspective, opening overseas flagship stores is still the most cost-effective way to enter the Chinese market. However, as more brands consider long-term development in the Chinese market, cross-border e-commerce may no longer be the preferred option.
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