Imported beauty market wilted in China

In China, after farewell to the continuous decline in total cosmetics imports so far this year in July, another decline was shown in August.

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According to data from the General Administration of Customs of People’s Republic of China, China's total imports of beauty cosmetics and toiletries amounted to 12.82 billion yuan($1.83 billion), down 6.42% year-on-year in August this year. The number of imported cosmetics was 41055.1 tons, down 0.03% year-on-year.

So, does this mean that imported beauty products are not in craze in China?

Imported beauty is expected to decline 10%-15% for the year

According to the official website of the General Administration of Customs of People’s Republic of China, the total value of China's imports and exports was 2.73 trillion yuan(about $390 billion), up 10.1% year-on-year from January to August this year. Among them, total imports were 1.182 trillion yuan (about $170 billion), up 5.2% from last year. The total exports of goods were 1.548 trillion yuan(about $221 billion), up 14.2%.

Specifically, in the cosmetics industry, the total import of beauty cosmetics and toiletries was 97.26 billion yuan(about $13.9 billion), down 4.6% compared to the same period last year from January to August this year. The number of cosmetics imports was 28.17 thousand tons, down 7.3% year-on-year.

CHAILEEDO found that there was a 5.18% year-on-year growth in China's total imports of cosmetics only in July of 2022. The other months have seen a decline of varying degrees.

From the specific data, China's cosmetics imports amounted to 12.93 billion yuan(about $1.85 billion), a decline of 14.37%, which is the most obvious downward trend, followed by a decline of 9.2% in April. In this regard, an industry veteran believed that "this year, affected by the Chinese epidemic control in March and April, both logistics and online and offline product sales are almost stagnant. So naturally, there is much decline."

Furthermore, the decline in total imported cosmetics is related to the overall decline in Chinese cosmetics retail. From January to August 2022, China’s retail sales of cosmetics declined 2.7 percent year-on-year, according to previous statistics from CHAILEEDO. Among them, April was the nadir, down 22.3% year-on-year. Since then, although it has warmed up, growth has not been steady.

Currently, online is still the main channel for imported beauty sales. A Taobao shopkeeper engaged in the sale of imported beauty said the country's logistics and freight were greatly affected by the repeated epidemic, but also affected the enthusiasm of consumers for shopping for imported beauty. Only in the first quarter of this year, the overall performance of its stores is expected to decline by 30% compared to last year.

"The overall Chinese economy is down this year, so it's normal for sales of imports to drop." An imported cosmetics trader told CHAILEEDO, "It is predicted that it will be at least about 10%-15% lower than last year this year in all ways."

The top three ranks of Korean cosmetics are in jeopardy

From the perspective of the main importing countries, Japan, France and South Korea are the major cosmetic importing countries in China. From January to July in 2022, the import amount from these three countries reached 49.14 billion yuan(about $7 billion), accounting for 58% of the total cosmetics imports from January to July. It occupied half of the cosmetic import amount.

After analyzing the total amount of cosmetics imported from Japan, France and South Korea in the past 12 years, CHAILEEDO found that France always held the position of the first importer of cosmetics in China during the 6-year period from 2011 to 2016. However, in the following 5 years, its first ranking was occupied by Korea and Japan successively.

And as you can see from the data below, this year (January-July), France returned to No.1 as the top cosmetic importer in China with an amount of 20.28 billion yuan(about $2.9 billion) after five years. The amount is near twice as much as South Korea.

In terms of the amount of cosmetics imported by China from Japan, France and Korea, the position of Korea has changed several times over the past 12 years, but now the gap between Japan and France is getting bigger and bigger. CHAILEEDO also found that in the first half of this year, Korean companies haven’t ranked among the top 10 global cosmetics. Obviously, that is closely related to the economic, political and cultural factors between China and South Korea.

It is understood that the golden decade of Korean cosmetics in China is from 2009 to 2018. Data from the General Administration of Customs of People’s Republic of China shows that the growth rate of Korean cosmetics in China reached a peak in 2015 with imports increasing 233% year-on-year. However, since 2016, THAAD has intensified and the Korean flow has gradually cooled under the ban on Korea in China.

It is worth mentioning that data from the General Administration of Customs of People’s Republic of China shows that from January to July this year, the amount of cosmetics imported from the United States reached 9.464 billion yuan(about $1.35 billion), narrowing the gap with South Korea to 1.036 billion yuan(about $148 million) from 6.143 billion yuan(about $877 million) in the same period last year. As a result, South Korea has maintained its ranks as one of the top three importers of cosmetics in China for at least 12 years, which is in jeopardy.

Imported beauty is struggling

As the tough environment in economy for the first eight months, are there any opportunities for imported beauty this year?

An industry insider who has been engaged in the cosmetics industry for more than 30 years believes that "imported beauty has been struggling. It will continue to decline this year. For the reason for this depression, the epidemic is only one aspect. The main cause is the macroeconomic control of the national economy. Now people have no money in their pockets so the demand for imported cosmetics is declining year by year. Fewer consumers are picking cosmetics."

Since 2021, imported beauty brands can be said to have "failed" one after another. At the end of July, CHAILEEDO found that Estee Lauder Group's brand GLAMGLOW may have quietly retreated from the Chinese market. The same group's makeup brand Too Faced also announced the closure of its Tmall overseas flagship store in June this year.

In this regard, an anonymous imported cosmetics agent told CHAILEEDO that "Many agents, including us, do not want to conduct imported products. Because of the short sales period of imported products, high prices, and harsh conditions, as well as the market movement in all aspects need Chinese agents to operate. So the peak demand for imported products declines in the year by year ."

But at the policy level, China still attaches great attention to imports. The four sessions of the China International Import Expo has been successfully held last year. And the regulation of the import of ordinary cosmetics exempted from animal testing also loosen. Some industry insiders told CHAILEEDO that "the expansion of imports is a long-term strategy in China."

It is worth mentioning that in July this year, Aesop, a brand of Natura&Co Group, announced to the public that it would open its first domestic physical store in Shanghai.

In addition, from the consumer level, 52.65% of consumers prefer to buy imported products according to CHAILEEDO data. From the market environment, the relevant person in charge of Taobao Global Shopping has also introduced that the number of niche brands in small cosmetic countries such as Germany, Australia and Denmark has reached an average growth rate of 60% in the past three years.

Overall, the current Chinese cosmetics consumer demand is flat. Coupled with the impact of the epidemic and other factors overlapping, the imported beauty market is cold this year. The pressure of growth is inevitable. However, from the perspective of the market and policy environment, imported beauty into China will be a continuous and long-term trend.