Beauty giants are pulling back from Russia

Ten of the world's biggest beauty groups, including L 'Oreal, Estee Lauder, Henkel, P&G and Shiseido, have halted operations in Russia.

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As the conflict between Russia and Ukraine continues and intensifies, the international political situation becomes increasingly severe. In addition to the military conflict, a series of sanctions against Russia are spreading. Led by the United States, a number of countries have announced economic, financial, scientific and technological sanctions against Russia. Now, some of the beauty giants have joined the sanctions.

L 'Oreal, the world's largest cosmetics company, and rival Estée Lauder have both closed stores in Russia and stopped online sales. Estée Lauder, whose brands include Michael Kors, DKNY, Clinique and Bobbi Brown, has been in Russia for more than 30 years, and Russia was one of its strongest markets in the most recent quarter, accounting for about 2.7 percent of the company's revenue.

In addition to L 'Oreal and Estée Lauder, some other world's biggest beauty groups, such as Henkel, P&G and Shiseido, have halted operations in Russia. In 2021, the combined sales of the 10 beauty groups exceeded 800 billion yuan (about 12.543 billion USD), with sales in Russia expected to exceed 16 billion yuan (about 2.51 billion USD).

The suspension of business on the above cosmetic enterprises is difficult to estimate for the time being. However, Russia's cosmetic industry has inevitably suffered a huge impact, both for Russia and the beauty enterprises rooted in Russia, the impact is far-reaching and immeasurable.

The sanctions against Russia by beauty giants make us think – how important it is to produce domestic beauty brands when the beauty market is still firmly controlled by the international giants.

In China, domestic beauty brands are on the rise. Brands like Winona, Perfect Diary and Florasis have all set up their research and development centres and opened offline stores. According to the financial report for the third quarter of 2021 released by Yixian E-commerce, the parent company of Perfect Diary, its Q3 total revenue reached 1.34 billion yuan (about 2.10 million USD), and its gross margin increased by 2.2% to 67.9% year on year; In the first three quarters of this year, Yunnan Botanee Biotechnology Group Co.LTD, Winona’s parent company, achieved operating revenue of 2.113 billion yuan (about 3.313 million USD), up 49.05% year on year. Florasis, who represents Oriental aesthetics, explores the wisdom of ancient China, posted sales of 3.35 billion yuan (over 5.252 million USD) in 2020 and 2.6 billion yuan (about 4.077 million USD) in the first half of this year.

It is time for everyone to realize the importance of local beauty brands, not just international beauty giants. In order to enter the high-end market and compete with international brands, more effort needs to be put into product innovation.