Baby & Child Skincare: A New Emerging Field in the Chinese Market
- Chaileedo Press
- Aug 9, 2023
- 10 min read
Recently, the baby and child care company Runben Bio received approval from the China Securities Regulatory Commission (CSRC) for its IPO on the Shanghai Stock Exchange. If successful, Runben Bio will become the first publicly listed company in China's baby and child care industry. With the continuous improvement of policies and regulations in China, the baby and child care market is experiencing rapid development.
The baby and child care market in China offers both significant opportunities and challenges. While the market is growing rapidly with a high gross profit margin, companies need to navigate strict regulations and an increasingly competitive environment. Companies must focus on product safety, scientific claims, age-appropriate products, brand reputation, and adaptability to succeed in this market.
Leading beauty companies are actively expanding into the field of baby and child care
According to the market insights report on the children's cosmetics market by Chaileedo Intelligence, the compound annual growth rate (CAGR) of the global children's cosmetics market is expected to reach 8.66% from 2019 to 2024, with the market size projected to reach $23.57 billion. In China, the market size for children's personal care products already reached $4.1 billion in 2020, with a CAGR of over 10% from 2015 to 2020. It is expected that the market size for children's personal care products in China will exceed $7.2 billion by 2025.
As the Baby & child care market continues to thrive, leading beauty companies in China are also actively entering the field of baby and child care.
Shanghai Jahwa, representing a well-established Chinese daily chemical company, launched the baby and child care brand Giving in 2013. Giving is the first personal care brand in China to nurture newborns with the natural energy of birth.
In terms of research and development, Giving is also keeping up with the trend. In 2022, Giving launched the Multi-Dimensional Soothing Daily Care/Special Care Cream, which used dual-layer separation technology to extract and study Artemisia annua (Qing Hao). The refined Artemisia annua extract helps improve common skin problems in babies, such as dryness and redness. Giving also released the first national group standard for Artemisia annua extract. By adding fermented essence to glutinous rice and utilizing the Prolipid constant protection technology, continuously improves problematic skin. Additionally, Shanghai Jahwa has formed a partnership with the domestic company Hengshun Vinegar to establish the "Jahwa-Hengshun Beauty Fermentation Research Platform" and jointly launched the exclusive fermented core patent ingredient, "V Yeast Essence," which is applied as a core ingredient in Giving's special care cream.
Apart from Shanghai Jahwa, domestic sensitive skin leader BTN is also actively entering the field of baby and child care with its brand Winona Baby.
Winona Baby inherits the genetic code of its parent brand "Winona" and focuses on baby skin science. It relies on the abundant resources of Yunnan Province to extract plant essences, aiming to create a professional skincare brand that guards the health of babies skin.
Winona Baby performed well in the past year. According to the annual report of its parent company, BTN, Winona Baby achieved a revenue of 101 million yuan in 2022, with a year-on-year growth of over 122%. During the Tmall Double 11 shopping festival, the brand ranked among the top in the baby skincare category on Tmall, ranking fourth, which is an impressive achievement. In April 2023, BTN also held a seminar focusing on atopic dermatitis in children to enhance awareness of baby skincare and further strengthen market recognition and understanding of the brand.
In addition to Shanghai Jahwa and BTN, another domestic beauty company, Chicmax which went public on the Hong Kong Stock Exchange, has also made early moves in the field of baby and child care.
Chicmax launched the baby and child care brand Baby Elephant in 2015. By 2020, Baby Elephant's annual sales exceeded 1.5 billion RMB, making it the leading domestic brand in the Chinese mother and baby care product market. In addition to Baby Elephant. In 2022, Baby Elephant generated RMB655.1 million in revenue, which was 24.8% lower than the revenue generated in 2021. This accounted for 24.5% of the total revenue earned for the year.
As early as 2019, Bloomage Biotech, a leading Chinese hyaluronic acid company, launched a mother-baby hyaluronic acid functional personal care brand. This brand adheres to the brand concept of "caring for baby's skin, starting from pregnancy," and is committed to providing customized care solutions for expectant mothers and babies' skin health.
In addition to the efforts of some listed companies, the baby and child care industry has attracted a lot of attention from capital. Apart from the potential IPO of Runben Bio, according to incomplete statistics, in 2022 alone, children's care brands such as Evereden, MAYKERR, and Turtle Dad have received investments in the range of tens of millions to billions of yuan. Daikesi has secured five rounds of financing in five years, which is sufficient to demonstrate the hotness of this industry.
In a sizzling market environment, three major characteristics emerge
Amid the rise of emerging brands and the strategic layout of leading Chinese makeup brands, the Chinese baby and child care market exhibits three key features.
Firstly, there is an emphasis on the use of natural, organic active ingredients, putting product safety at the forefront.
Take Giving, a baby and child care brand under Shanghai Jahwa, for example. Shanghai Jahwa states that Giving insists on the innovative fusion of natural plant ingredients and skincare technology. Its main concept is "Specializing in the essence of nature to create new life".
In Giving's products, plant extraction technology is its core message. In the New Essence of Naturals Babycare Collection, Utilizing a special " live ∙ burgeon extraction technique " to efficiently retain the fresh energy of primary plants. The Newborn Soothing Relief Collection, uses Innovative NaturalSafe + Technology to maintain healthy skin barrier function which enhances the baby's skin's resilience and endurance. The Newborn Extra-safe Collection selects Featured pure and pollution-free plant burgeons.
The Winona Baby by BTN leverages the rich resources of Yunnan to extract plant essences. The main ingredients used in Winona Baby are extracts from green thorn fruit, purslane, and avocado. Green thorn fruit extract can repair the skin barrier independently, maintaining skin health. Purslane active ingredients can effectively soothe and resist irritation, enhancing skin tolerance.
In addition, the core product of Chicmax is the Safe and Simple Care series of skincare products - 90 Safe Cream. The principal ingredient in the formula is natural organic-certified Red Myrrh Alcohol from Brazil, proven to have anti-inflammatory and soothing properties for sensitive skin, capable of alleviating stimulated skin and strengthening the skin barrier. BLOOMCARE, a baby and child care brand under Bloomage Biotech, incorporates the beneficial VB group ingredients, patented hyaluronic acid, ectoine, and other bioactive ingredients into its products, making them safer to use.
It's not hard to see that domestic children's washing and care products emphasize ingredients derived from natural plant extracts, avoiding direct competition with other international functional skincare brands in terms of ingredient selling points.
Secondly, functional skincare for baby and child care is a hot sub-market domestically.
A spokesperson for Newpage, a subsidiary of Chicmax, once said, "There are not many brands of functional skincare products for baby and child in China. For many baby and child skincare brands, you can't remember their core effects or ingredients. Everyone talks about being mild and additive-free, but that alone is not enough to solve practical problems such as dryness, itching, and redness, but this demand exists."
Currently, brands under some listed beauty companies have started to enter the field of functional skincare for babies and children, such as BLOOMCARE by Bloomage Biotech, Winona Baby by BTN, and Newpage by Chicmax.
These brands pay more attention to common baby and child skin problems, such as eczema, dryness, itching, and swelling caused by skin sensitivity. For example, Winona Baby, under BTN, uses their wealth of experience in adult-sensitive skin care, based on the science of children's skin, and uses characteristic plant extracts to launch care products suitable for baby and child-sensitive skin.
Similarly, Newpage focuses on the care of infant eczema and sensitive skin, with its main product being egg yolk oil. Newpage uses its independently developed Omega-Pro potent ingredient to strengthen the skin barrier, aiming to provide effective protection and nourishment, enhancing the barrier function of infant skin. These products aim to alleviate the discomfort caused by eczema and sensitive skin, offering mild yet effective care for infants.
Third, baby and child care products have become more finely segmented in terms of their usage scenarios and functionalities.
With the development of the economy and the improvement of education levels, the parenting concepts of the new generation of young parents are changing. They pay more attention to meticulous parenting practices and are embracing the concept of "stage-specific care" products. The popularity of this concept has led to a more refined segmentation of product scenarios and functionalities to meet the needs of infants and young children at different stages. Parents are more concerned about the physical, emotional, and cognitive development of their babies, and they seek more personalized and specialized care products to help infants and young children receive optimal care and developmental support at each stage.
Emerging brands have shown particular sensitivity in segmenting product categories and functionalities. For example, the Baby Elephant brand focuses on providing special care for newborns and babies with sensitive skin, and they have taken differentiated considerations in product design. They have even made fine-grained product segmentation based on dimensions such as seasons and age groups to cater to the needs of infants and young children at different stages and with specific requirements.
Hi!papa brand has segmented skincare products based on the pain points and skincare scenarios of users across all school ages. Particularly in the sunscreen category, they have achieved a refined segmentation of product efficacy. They have launched multiple product series targeting different skin types and special needs, including photosensitive skin series, red-sensitive skin series, oil-sensitive skin series, sensitive skin series, and fun and dry-sensitive skin series.
For listed beauty companies, Giving, a subsidiary of Shanghai Jahwa, focuses on 0-3-year-old infants and young children, but their brand is also subdivided into eight categories, including shower gel, special cream, moisturizing lotion, and protective cream. Vinona Baby products are also divided into professional lines, infant and young children lines, and children's lines to meet different consumer needs.
As consumers' demands for product usage needs and scenarios continue to evolve, major baby and childcare brands are actively exploring category segmentation, transitioning from individual products to larger product categories. They are committed to achieving category refinement and diversification to meet the diverse needs of consumers.
In summary, the Chinese baby and child care market exhibits three characteristics: a focus on the use of natural and organic ingredients, an emphasis on product safety, attention to functional skincare for infants and children to address practical issues, and a segmentation of product scenarios and functionalities to meet different stage-specific needs. Emerging brands demonstrate keen insights in segmenting product categories, efficacy, and scenarios, dedicating themselves to meeting the diverse demands of consumers.
Baby and child skincare is a new field
At the beginning of this year, Liu Wei, former director of the Dermatology Hospital of the Air Force General Hospital and head of the Dermatology Department, told Chaileedo that children's skincare is a new field. New regulations not only ensure the safety of children's products but also provide a basis for the research and development of children's products. Liu Wei believes that children have different skin characteristics at each stage of growth, so skincare should be phased and personalized according to these characteristics. With the participation of pediatricians in the cosmetics industry, the development of children's cosmetics will rise rapidly in the next few years.
The Chinese baby and child care market is favored mainly for two reasons.
One is from the market end, the characteristics of the entire baby and child care market determine this, including the fast industry growth rate, high gross profit margin, and the constantly changing market competition pattern.
The industry is growing fast. According to the prospectus data disclosed by Shanghai Shangmei, the mother and baby care product market is the fastest-growing segment of the cosmetics market, with a compound growth rate of 15.1% from 2015 to 2021, exceeding the average growth rate of 14.7% in the skincare market.
Not only is the industry growing rapidly as a whole, but brands within the industry are also growing rapidly. Take the Red Elephant brand as an example, the brand was established in 2015, and its revenue scale increased from 766 million yuan in 2020 to 871 million yuan in 2021, an increase of 13.8%. Runben Shares is a company that focuses on mosquito-repellent products. Its sales of baby and child care series products have grown from 85 million yuan in 2019 to 217 million yuan in 2021. Baolutaiqi focuses on the field of baby and child personal care, and the total revenue achieved in 2021 is about 47.79 million yuan, a year-on-year increase of 114.91%.
In terms of gross profit margin, according to the prospectus, the gross profit margin of the Red Elephant brand was 68.8% in 2021, and the gross profit margin of baby and child skincare products from Runben Shares in the same year was 59.93%. This is already a fairly high level of gross profit margin.
In terms of market competition, in recent years, the baby and child care market has welcomed the influx of many emerging brands, causing significant changes in the market competition pattern. According to the provided data, the CR10 (the market share ratio of the top ten enterprises) of this market was 59.2% in 2011, but it dropped to 30.1% in 2020.
This means that in the past ten years, many new brands have emerged in the baby and child care market, forming fierce competition with traditional big brands. The decrease in market concentration reflects an increase in the number of competitors, and new brands have achieved considerable results in market share.
This change in the competitive landscape may be a positive development for consumers, as more choices mean more product innovation and better price competition. At the same time, for traditional brands, they need to continuously improve product quality and service levels to retain existing customers and attract new ones.
In general, the competitive landscape of the baby and child care market has undergone significant changes, and the rise of emerging brands has brought new vitality and opportunities to the entire industry. Consumers will benefit from more choices and look forward to competition between brands to promote product quality and innovation.
The second reason for the rapid development of China's baby and child care market is the increasingly perfect domestic laws and regulations.
Since 2021, a series of supporting regulations related to the baby and child industry have been issued based on the "Cosmetics Supervision and Management Regulations" to regulate the disorder of the baby and child care industry.
In October 2021, the National Drug Administration issued the "Food-grade Cosmetics are Misleading to Consumers", clarifying that there are no "food-grade" cosmetics. In December 2021, the relevant department issued a popular science article "Don't Use Toys as Children's Cosmetics", directly pointing to the chaos of the "children's dressing table" in the market, and clarified that babies under 3 years old should not use "makeup".
The "Children's Cosmetics Supervision and Management Regulations" strengthens the supervision of children's cosmetics. This includes making children's cosmetics a key category for annual sampling inspection and risk monitoring and listing related operators of children's cosmetics as key regulatory targets. The regulations require children's cosmetics to undergo safety assessments and necessary toxicology tests to complete product safety evaluations. For illegal products, the relevant departments will take punitive measures such as ordering to suspend production and operation.
Strict supervision promotes the compliant development of the baby and child industry. If enterprises cannot adapt to new rule changes and standardize their production and operation behaviors, they may face significant difficulties.
In conclusion, the baby and child care market in China offers both significant opportunities and challenges. While the market is growing rapidly with a high gross profit margin, companies need to navigate strict regulations and an increasingly competitive environment. Companies must focus on product safety, scientific claims, age-appropriate products, brand reputation, and adaptability to succeed in this market.
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