Looking at the data from January to July this year, the retail sales of cosmetics showed growth in the first six months, down 4.1% yoy, with only a decline in July. Today, the National Bureau of Statistics released the retail sales data for social consumer goods in July 2023. The total retail sales of social consumer goods in July reached 3.6761 trillion yuan ($505 billion), a year-on-year increase of 2.5%. From January to July, the total retail sales of social consumer goods amounted to 26.4348 trillion yuan ($3.6 trillion), a year-on-year increase of 7.3%. From January to July, the national online retail sales reached 8.3097 trillion yuan ($1.14 trillion), a year-on-year increase of 12.5%. Among them, the online retail sales of physical goods amounted to 6.9856 trillion yuan ($959.6 billion), an increase of 10.0%, accounting for 26.4% of the total retail sales of social consumer goods. In the cosmetics category, the total retail sales of cosmetics in July 2023 amounted to 24.7 billion yuan ($3.4 billion), a year-on-year decrease of 4.1%; from January to July, the total retail sales of cosmetics amounted to 231.5 billion yuan ($31.8 billion), a year-on-year increase of 7.2%. Looking at the data from January to July this year, the retail sales of cosmetics showed growth in the first six months, with only a decline in July. This may be due to consumers purchasing cosmetics according to their needs during the 618 shopping festival, resulting in lower overall demand in July and a more conservative consumption trend. However, considering the overall situation of the previous year, there has not been a significant change in the total amount. (Data source: National Bureau of Statistics) According to the historical data released by the Bureau of Statistics, the retail sales of cosmetics showed significant growth from 2018 to July 2020, with the highest year-on-year increase of 9.4% in 2019. The retail sales of cosmetics in July 2022 reached 25.3 billion yuan ($3.5 billion), the highest in recent years. However, the retail sales of cosmetics in July this year were lower than in previous years, recording negative growth for the first time. (Data source: National Bureau of Statistics) In terms of customs data, in July, China imported 27,824.4 tons of beauty and cosmetic products, with an import value of 9.61 billion yuan ($1.32 billion). From January to July, the total import volume of beauty and cosmetic products nationwide was 210,000 tons, a year-on-year decrease of 12.7%; the import value was 75.28 billion yuan ($10.34 billion), a year-on-year decrease of 10.1%. The Bureau of Statistics stated that in July, the national economy continued to recover, and high-quality development made solid progress. However, it is also necessary to recognize that the global political and economic situation is complex, domestic demand is still insufficient, and the foundation for economic recovery still needs to be strengthened.

Natura & Co said Aesop's profitability in China was slightly under pressure as the group accelerated its store opening program. Natura & Co, a leading global beauty company, has reported another quarter of sales growth and improved profit margins in its second-quarter 2023 financial report. Despite facing certain challenges, the company showcased solid performance across its business units. In the second quarter, Natura & Co achieved consolidated net revenue of R$ 7.8 billion ($1.6 billion), representing a 1.9% increase in constant currency (a decrease of 4.1% in BRL). The growth was primarily driven by strong performance in Natura & Co Latam, which experienced solid constant currency growth. Notably, Natura & Co achieved a gross margin of 65.4%, a significant improvement of 430 basis points compared to the second quarter of the previous year. The company's adjusted EBITDA margin also showed improvement, increasing by 230 basis points to 9.7% compared to the same period last year. This positive trend in profit margins was observed across all three business units: Natura & Co Latam, Avon International, and The Body Shop. Despite this progress, net income still faced challenges, with a reported value of R$ (732) million ($147.5 million), although it demonstrated a slight improvement compared to the previous year's figure of R$ (767) million ($154.5 million) for the same period. Underlying Net Income also improved, reaching R$ (219) million ($44.1 million) compared to R$ (262) million ($52.8 million) in Q2-22. The company ended the quarter with a strong cash position of R$ 3.7 billion ($745.4 million). In the second quarter of 2023, Natura & Co achieved significant milestones, particularly in the Natura-Avon integration in Latin America. Wave 2 of the integration commenced in Peru and Colombia, yielding compelling initial results. These markets witnessed substantial cross-selling between brands and remarkable productivity growth, leading to greater prosperity for beauty consultants. As the company enters the second half of the year, it plans to roll out Wave 2 in Brazil and expects similar positive outcomes. ESG (Environmental, Social, and Governance) remains at the forefront of Natura & Co's strategy. The company proudly announced its approval from the Science Based Targets initiative (SBTi) for its ambitious plan to reduce absolute scopes 1, 2, and 3 Greenhouse Gas emissions by 42% by 2030 from a 2020 base year. This target aligns with the trajectory required by the Paris Agreement to limit global warming to 1.5°C. Analyzing the performance by business unit, Natura & Co Latam achieved a net sales of BRL 5.46 billion ($1.1 billion) up 5.8% in constant currency (a decrease of 1.7% in BRL). The Natura brand delivered double-digit growth, driven by strong performance in Brazil, supported by price increases, better mix, and successful campaigns during Mother's Day and Valentine's Day. In Hispanic Latam, net revenue grew by 30% in constant currency, despite challenging situations in several countries, with Peru and Colombia being notable contributors. The Avon brand in Latam experienced a decline of 4% in net revenue in the Beauty segment, while Home & Style saw a decrease of 28.5% in Brazil, aligning with the company's portfolio optimization strategy. Adjusted EBITDA margin for Natura & Co Latam improved by a solid 250 basis points to 13.3%, benefiting from strong gross margin improvement. For Avon International, revenue achieved BRL 1.5 billion ($302.2 million) down 1.3% in constant currency (a decrease of 8.1% in BRL). However, the TMEA and CEE, driven by discipline in executing our higher pricing strategy and improvements in channel’s dynamics (despite the expected hit in the distribution network of -15% YoY due to ongoing changes in the commercial model). The Beauty category was up +3% YoY, while Home & Style continuing last quarter’s trend, with a steep decline amid the planned portfolio reduction of more than 50% of SKUs. In the second quarter of 2023, The Body Shop reported a decline in net revenue. The company's Q2-23 net revenue reached BRL 800 million ($161.2 million), representing a decrease of -12.5% in constant currency (CC) and -12.0% in Brazilian Real (BRL). The decline in revenue was primarily driven by a mid-single-digit decrease in combined sales of core business distribution channels, including stores, e-commerce, and franchises. This decline was slightly worse than the performance observed in the previous quarter (Q1-23). Its retail sales through the core business distribution channels showed a sell-out Same Store Sales decrease of -3.5%. While this indicates a challenging quarter for The Body Shop, the company remains committed to addressing these challenges and finding ways to improve its performance. In April 2023, Natura & Co made a significant announcement regarding the sale of Aesop. The company entered into a binding agreement with L'Oréal to sell Aesop for a total enterprise value of $2.525 billion. The closing of the transaction is expected to occur in the third quarter of 2023. As a result of this agreement, Aesop has been classified as discontinued activities. Despite the impending sale, Aesop demonstrated strong performance in terms of revenue. In the second quarter, Aesop achieved revenues of BRL 759 million ($152.9 million), representing an impressive growth of +16.4% in constant currency (CC) and +14.2% in Brazilian Real (BRL). The growth was driven by all regions, except for the Americas, where there were no significant store openings to boost year-over-year (YoY) growth. Asia, in particular, experienced sequential revenue growth (+18% in Q2) compared to the previous quarter (+14% in Q1). This growth was influenced by Korea's return to growth amid an improving macroeconomic environment and internal efforts to enhance retail performance. The company's signature stores also played a crucial role, totaling 293 in Q2-23 (an increase of 18 over the last twelve months) and achieving a same-store sales growth of +8%. In addition, China is slightly pressuring profitability as the Group ramp up store opening schedule. From a distribution channel perspective, retail and wholesale channels showed solid growth, although e-commerce performance was relatively softer. Combined same-store sales growth, including retail, department store concessions, and Aesop.com, reached +8%. The fragrance category continued to outperform Aesop's overall top-line growth, following the trend observed in previous periods. Fabio Barbosa, Group CEO of Natura & Co, expressed satisfaction with the second-quarter performance, which built upon the positive momentum observed in the first quarter. He highlighted the low-single digit top-line growth at constant currency and the significant improvement in adjusted EBITDA margin. The improvement in gross margin, driven by mix effects, partially offset by investments and inflation, played a crucial role in the positive outcome. Barbosa also mentioned that net income was still impacted by high financial expenses, which are expected to be addressed upon closing the sale of Aesop, anticipated to occur in Q3-23.

LVMH reported revenue of €42.24 billion for the first half of 2023, representing a 15% increase from the previous year. Organic revenue growth for the same period was 17%. The Perfumes & Cosmetics business achieved revenue of €4.028 billion, reaching a new high since the pandemic. LVMH, the global leader in high-quality products, reported revenue of €42.24 billion for the first half of 2023, representing a 15% increase from the previous year. Organic revenue growth for the same period was 17%. All the company's business units, apart from Wines & Spirits, achieved double-digit organic revenue growth in the first half of the year. Among them, the Perfumes & Cosmetics business achieved revenue of €4.028 billion, reaching a new high in nearly five years. Perfumes & Cosmetics business revenue exceeded 4 billion euros, reaching a New High LVMH continued its strong performance in the first half of 2023. Overall, the company achieved revenue of 42.24 billion euros, with organic growth of 17%. In detail, the Wines & Spirits business unit's revenue was 3.181 billion euros, with an organic year-on-year decline of 3%. The Fashion & Leather Goods business unit's revenue showed a significant organic year-on-year increase of 20% to 21.162 billion euros. The Perfumes and Cosmetics, and Watches and Jewelry business units had an organic year-on-year revenue growth rate of 13%, reaching 4.028 billion euros and 5.427 billion euros, respectively, with the Perfumes and Cosmetics business achieving a new high in five years. The revenue of the Selective Retailing business grew by 26% year-on-year to 8.355 billion euros. In addition, LVMH's recurring operating profit increased by 13% in the first half of the year, reaching 11.574 billion euros. The operating profit margin reached 27.4% of revenue. The group's net profit increased by 30% to 8.481 billion euros. In the first half of 2023, LVMH's Perfumes & Cosmetics business achieved a year-on-year revenue organic growth of 13%, reaching €4.028 billion, with a profit from recurring operations of €446 million, up 15% year-on-year. In terms of geographical regions, Asia (excluding Japan) accounted for 34% of LVMH's revenue from the Perfumes & Cosmetics business, far exceeding Europe (excluding France) and the United States, both at 19%. Looking at the performance over the past five years, the revenue of LVMH's Perfumes & Cosmetics business exceeded €3 billion and reached €3.236 billion in the first half of 2019. However, in the first half of 2020, due to the global pandemic, the revenue of its Perfumes & Cosmetics business fell by 28.8% to €2.304 billion. But in the first half of 2021, when the pandemic's impact began to weaken, the revenue of LVMH's Perfumes & Cosmetics began to rebound significantly, with organic growth of 37% year-on-year, returning to €3 billion. In the first half of 2022, revenue reached €3.618 billion, surpassing the pre-pandemic level of 2019. In 2023, revenue broke through €4 billion, reaching a new high in five years. LVMH stated that that the Perfumes & Cosmetics business group achieved a 13% organic revenue growth in the first half of 2023, thanks to successful innovation and a highly selective distribution policy. Profit from recurring operations also increased by 15%. Christian Dior had exceptional performance, strengthening its leadership in key markets. Sauvage remained the world's top-selling fragrance, while J'adore and Miss Dior continued to see success. The Maison's makeup line, particularly Dior Addict Lip Maximizer and Forever Skin Correct foundation, also contributed to the strong results. Skincare also had excellent performance, particularly in the premium segment in Asia with its iconic Prestige range. Guerlain continued to expand, driven by its Abeille Royale skincare and high-end perfumery collection l'Art et la Matière, enriched with new Jasmin Bonheur creations. Givenchy's new fragrance Gentleman Society was well-received, and Benefit expanded its Professional skincare range. Fenty Beauty's latest product, Hella Thicc mascara, quickly became one of Maison's top sellers. The Selective Retailing revenue was up 26%, with Sephora outperformed In addition to the strong overall performance, the Selective Retailing business, which includes Sephora and DFS, saw a significant increase in revenue of 26%. In the first half of 2023, driven by the recovery of international travel, LVMH's Selective Retailing business achieved a historically high revenue of €8.355 billion. The operating profit also doubled from €367 million in the first half of 2022 to €734 million in the first half of 2023. LVMH stated that Sephora continued its strong performance globally, and outperformed in North America, Europe, and the Middle East. Sephora also continued to expand its distribution network, with its first store in London's Westfield, which opened in March this year, achieving tremendous success, and ranking among the top 20 globally, significantly exceeding its target. Sephora also expanded its reach through a partnership with Kohl's in the United States. As for its duty-free business, LVMH's DFS saw good growth thanks to the recovery of international travel. However, LVMH also noted that although DFS's revenue has increased, it is still below the pre-pandemic level of 2019, and the return of international travelers to flagship destinations in Hong Kong and Macau has been relatively slow compared to other regions. In France, the strong performance of the Parisian destination hotel La Samaritaine confirmed its attractiveness as a destination, especially with the increasing number of Asian tourists. The thriving Le Bon Marché continued to develop innovative concepts and benefited from a loyal French customer base and the return of international travelers. Looking at the past five years, the Selective Retailing business unit achieved revenue of over €7 billion, reaching €7.098 billion in the first half of 2019. However, due to the global pandemic, revenue dropped by 32% to €4.844 billion in 2020. In the first half of 2021, there was a slight increase with organic growth of 12%, reaching €5.085 billion. In the first half of 2022, the Selective Retailing business continued to recover, achieving an organic growth of 30% to reach €6.63 billion, but it had not yet returned to the pre-pandemic level of 2019. In 2023, revenue of the Selective Retailing business unit surged by 26%, surpassing €8 billion for the first time and reaching €8.355 billion. LVMH said, in the second half of the year, Sephora plans to expand its presence in key markets such as North America, France, the Middle East, and China. This includes extending its partnership with Kohl's in North America. In the United Kingdom, Sephora will invest in opening a second store by the end of the year. Sephora's iconic Champs-Élysées location, which has been fully renovated, will also reopen. Sephora will continue to expand its store network and invest in its omnichannel strategy to improve the entire shopping experience for customers. The product range will also be expanded to include promising categories such as haircare, fragrances, and sun care. Looking at the performance of LVMH's Perfumes & Cosmetics business and the Selective Retailing business unit, which includes Sephora, over the past five years, although LVMH was also significantly impacted by the pandemic, it was able to quickly recover to pre-pandemic levels within two years. Bernard Arnault's visit to China underscores the ambition of the Chinese market In terms of regions, both Europe and Asia saw strong business growth. It is worth mentioning that the Asian region, including the Chinese market, remains the largest market for the LVMH group, contributing 34% of its revenue, which is an increase from the same period last year. The United States achieved 3% organic growth in the first half of the year. Japan achieved 31% organic growth in the first half of the year. The rest of Asia, excluding Japan, achieved 23% organic growth in the first half of the year, with Q2 accelerating further to a YoY increase of 34% on an organic basis, making it the fastest-growing market among all regions. Europe achieved 22% organic growth in the first half of the year. Although LVMH's Perfumes & Cosmetics business has continued to grow in revenue in recent years, its growth rate is lower than the overall level of the group. At the same time, the trend of the past few years shows that the proportion of its beauty business in LVMH's overall business has also declined. In the first half of 2019, its Perfumes & Cosmetics business accounted for 12.9% of the total revenue, which fell to 9.85% in the first half of 2022 and slightly declined to 9.54% in the first half of this year. Meanwhile, within the Perfumes & Cosmetics business, the proportion of its revenue in Asia (excluding Japan) to the total beauty business revenue is also showing a downward trend. In the first half of 2020, the revenue from Asia (excluding Japan) accounted for 49% of LVMH's Perfumes & Cosmetics business, close to 50%, while by 2023, the proportion had declined to 34%. For China, the world's second-largest cosmetics market, LVMH is also vying for every inch of ground. Under the conditions of the declining Perfumes & Cosmetics business and the continuous decline in the Asian market, LVMH urgently needs the Chinese market to boost its Perfumes & Cosmetics business. After the easing of pandemic restrictions this year, LVMH has launched a series of activities in China to revive the Chinese market. After achieving a good start to the first quarter earnings report this year, LVMH CFO Jean Jacques Guiony said LVMH Group is very optimistic about the Chinese market in 2023, and the next time will herald promising prospects for development. In the second quarter, Jean Jacques Guiony expressed great satisfaction with the rebound in the Chinese market, which accounts for a large part of sales in Asia. In March of this year, LVMH made several important personnel changes. Among them, the most important personnel change was the appointment of former L’Oréal China CEO Stéphane Rinderknech as Chairman and CEO of LVMH's Beauty Division, responsible for all perfume and cosmetics business under LVMH. In 2016, when Stéphane Rinderknech served as the CEO of L’Oréal China, the company's business in China showed a downward trend. But just two years after he took over, in 2018, L’Oréal’s growth rate in the Chinese market reached the highest level since 2007. At the same time, the group's three major brands became the largest market in the world in the Chinese market. The appointment of Stéphane Rinderknech, who is very familiar with the Chinese market, reflects LVMH's ambition to revive the Chinese market. In addition to personnel appointments, LVMH has also begun to lean towards the Chinese market in R&D. In April of this year, LVMH followed in the footsteps of international giants such as L’Oréal and Estée Lauder, unveiled its first high-end cosmetics R&D center in Shanghai. It was reported that this is the largest R&D center established by LVMH in Asia, with skincare and makeup and color development laboratories, product testing rooms, and other product innovation development laboratories. The main task of the center is to carry out a series of R&D innovations for the Chinese market and consumers, to continuously enhance the innovation and vitality of the Chinese market. In addition, in June of this year, Sephora grandly unveiled the second store in Asia and the first future concept store in China on Nanjing East Road in Shanghai's core business district, bringing consumers a large number of exclusive high-quality selections, professional store services, and innovative digital makeup preparations, as well as a comprehensive upgrade of consumers' beauty shopping experience. In addition to the above series of actions, LVMH President Bernard Arnault's visit to China further reflects LVMH's emphasis on the Chinese market. At the end of June this year, Bernard Arnault appeared in Beijing and Chengdu, China, accompanied by his daughter Delphine Arnault, his youngest son Jean Arnault, and Louis Vuitton CEO Pietro Beccari. The presence of several key executives in China after the relaxation of pandemic restrictions also indirectly demonstrates LVMH's eagerness to revive the Chinese market. As luxury giants continue to increase their stake in beauty, the Chinese market has become a battleground for global luxury giants. After Kering reportedly acquired perfume brand Creed for €3.8 billion, the competition for the beauty market among luxury goods has entered a white-hot stage, with the Chinese market likely to become the main battleground for these luxury giants' beauty businesses.

Coty China confirmed Kevin Chen's departure to CHAILEEDO and stated, "We greatly appreciate the contributions Kevin Chen has made to the development of Coty China in such a short period." Recently, according to the National Enterprise Credit Information Publicity System, there have been changes in the corporate information of Coty (China) Investment Co., Ltd. (hereinafter referred to as "Coty China"). Kevin Chen is no longer the legal representative and has resigned from the position of Chairman and CEO. His position has been succeeded by Chen Liyi. As a senior veteran who previously served for many years at L'Oréal China, Kevin Chen's appointment as the leader of Coty China was highly anticipated by the industry. However, this change means that his tenure as the CEO of Coty China was less than six months. Regarding this matter, CHAILEEDO immediately sought confirmation from Coty China, and Coty China exclusively responded to us, stating, "Since July 20th, Ms. Chen Liyi, the Executive Vice President of Coty Asia Pacific, has temporarily assumed the role of responsible person for Coty China's business." Kevin Chen has already resigned. After six months, another leadership change at Coty China Reviewing Kevin Chen's brief tenure at Coty China, CHAILEEDO discovered that on March 17th of this year, at the launch event of Lancaster series, a high-end skincare brand under Coty Group, Kevin Chen made his first appearance as the General Manager of Coty Group China. (Credit: Kevin Chen from Coty China) Subsequently, in April of this year, Kevin Chen led Coty China's participation at the 3rd China International Consumer Products Expo(CICP) held in Hainan, signaling Coty Group's strong focus on the Chinese market. At the expo, Coty showcased its latest products and research technologies in skincare, perfume, and makeup, among other fields, featuring its nine flagship brands. Following this expo, Kevin Chen officially assumed the role of legal representative for Coty China, succeeding Guilhem Julien Souche. On May 10th, concerning the leadership change at Coty China, an insider from Coty China confirmed the news to the media, stating, "The group will continue with its existing China strategy, and the localized team will bring more local insights." At that time, due to Kevin Chen's years of experience as an executive at L'Oréal China, and his extensive expertise in skincare business management, this appointment was viewed by the industry as an important move by Coty Group in the Chinese market and high-end skincare sector. However, CHAILEEDO found that Kevin Chen made few public appearances as the CEO of Coty China after May of this year until recently when he stepped down. CHAILEEDO noticed that besides resigning from the management of Coty China, Kevin Chen's associated companies such as Coty Trading (Shanghai) Co., Ltd. and Coty International Trading (Shanghai) Co., Ltd., for which he previously served as the legal representative and responsible person, have also undergone recent changes, with Chen Liyi taking over as the legal representative for all of them. Coty China confirmed Kevin Chen's departure to CHAILEEDO and stated, "We greatly appreciate the contributions Kevin Chen has made to the development of Coty China in such a short period." Based on the initial public appearance, Kevin Chen's tenure as the CEO of Coty China was less than six months, and if we calculate based on his time as the legal representative of Coty (China) Investment Co., Ltd., it was only 95 days. CHAILEEDO further analyzed that the duration of previous legal representatives at Coty China has mostly been over six months. According to public reports, Kevin Chen's predecessor, Guilhem Julien Souche, served as the CEO of Coty China for a remarkable two years. Therefore, Kevin Chen's short departure from the company does not align with Coty China's past practices. Regarding this matter, CHAILEEDO made further inquiries to Coty China about the reasons behind Kevin Chen's "swift" departure. In response to the question of whether Kevin Chen voluntarily resigned or for other reasons, Coty China only replied, "Former General Manager of China, Kevin Chen, resigned after mutual consultation." The successor comes from Unilever and has previously focused on skincare Before taking on the role of General Manager of Coty China, Kevin Chen had served for many years at the beauty giant L'Oréal and was also a key decision-maker in L'Oréal China's skincare business. Public information shows that Kevin Chen joined L'Oréal China in 2012 as the Retail General Manager for L'Oréal's Luxe division. He was responsible for retail management, customer relations, and the formulation and implementation of operational strategies for all high-end brands under L'Oréal at that time. With his keen market sense and accurate channel predictions, Kevin Chen quickly developed emerging retail businesses. In just two years, he achieved rapid growth in the business. Subsequently, he expanded L'Oréal China's channels in e-commerce, Sephora, and travel retail, laying a solid foundation for the explosive growth of L'Oréal China's high-end brands in later years. In 2016, Kevin Chen was officially promoted to Vice President of L'Oréal China and General Manager of the Active Cosmetics Division. He played a role in driving the channel development of La Roche-Posay in the Chinese market and introducing the new brand CeraVe. Later, Coty Group appointed Kevin Chen as the General Manager of Coty China, clearly recognizing his achievements during his tenure at L'Oréal China. These achievements include his experience in managing high-end skincare business and his familiarity and insights into Chinese consumers and channel layout. Coty Group CEO Sue Y. Nabi previously emphasized, "Focusing on skincare is the key to Coty's deep cultivation of the Chinese market and driving rapid growth of the group's business in China and globally." High-end skincare is indeed a key focus for Coty Group's efforts in the Chinese market, which aligns well with Kevin Chen's past experience. It is worth mentioning that according to publicly available information, Chen Liyi, the Acting General Manager and Executive Vice President of Coty Asia Pacific, previously worked at Unilever and served as President of the North Asia region for Unilever's skincare category. Like Kevin Chen, she also has experience in managing skincare products in the beauty industry. Coty China also confirmed to CHAILEEDO that Chen Liyi had previously worked in the skincare department at Unilever. (Credit: Chen Liyi, from Coty China) "Recruiting and Strengthening Local R&D" - Focusing on the Chinese Market CHAILEEDO noticed that in May of this year, Coty Group released its financial report for the third quarter of the 2023 fiscal year. The report showed that the net revenue from the core business in the third quarter of 2023 was $1.289 billion, a year-on-year increase of 9%. For the first three quarters of the 2023 fiscal year, Coty Group's net revenue was $4.203 billion, a year-on-year increase of 2%. The report also revealed that sales in the Asia-Pacific region remained stable in the third quarter, and the trend in the Chinese market was gradually improving. It is worth mentioning that in July of this year, Coty Group raised its performance expectations for the fourth quarter and the 2023 fiscal year. It is expected that sales for the three months ending June 30 will increase by 12% to 15% compared to the same period last year, and the sales for the entire fiscal year will increase by 10% to 11% year-on-year. It is understood that this is the third time Coty has raised its performance expectations this year. In addition, CHAILEEDO also noticed that in the past two years, Coty Group has significantly accelerated its layout in the Chinese market, especially in the high-end skincare sector. In March of this year, Coty Group focused on launching a new product line for the high-end skincare brand Lancaster in the Chinese market and announced actress Guan Xiaotong as its spokesperson. As of now, Lancaster's offline boutique stores have opened in Hangzhou and Nanjing. At the same time, the official flagship stores on Tmall and Douyin (Chinese version of TikTok) have started operations. Previously, Orveda, Coty Group's ultra-high-end skincare brand, which debuted at the China International Import Expo, will officially enter the Chinese market in the second half of this year. The brand's accounts on social media platform Weibo and Xiaohongshu are already active. It is reported that in addition to introducing high-end skincare brands, Coty Group will also focus on strengthening its local research and development efforts by expanding its local R&D team. In April of this year, Caroline Andreotti, Chief Business Officer of Coty Group's luxury beauty division, publicly stated, "Coty Group has an R&D center in Shanghai, and in the future, we will continue to enhance the strength of the R&D center and the skincare team." CHAILEEDO noticed that Coty Group is actively recruiting for senior scientist positions based in Shanghai for local skincare research and development. The job description on Coty's official website specifically mentions, "By establishing close connections with the global skincare research and innovation team, contribute to the development and growth of the discovery and innovation platform for the skincare category in China." (Credit: from Coty Group) In April of this year, Caroline Andreotti stated to the media, "In the future, Coty will comprehensively tap into the Chinese skincare market, and it is expected to double the sales of the group's skincare business by the 2025 fiscal year." Clearly, Coty Group's efforts in the Chinese market will continue, and how Coty China will break through in the high-end skincare sector remains the biggest suspense.

According to a recent report by Yomiuri Shimbun, in 2022, South Korea surpassed France to become the largest importer of cosmetics in Japan. At the same time, after a gap of five years, France once again replaced Japan as the largest importer of cosmetics in China. In 2022, French cosmetics exports to China reached 4.551 billion US dollars, surpassing Japan's 4.506 billion US dollars, accounting for 25.37% of the total import value of cosmetics in mainland China. As the influence of Japanese and South Korean cosmetics has waned in the Chinese market, domestic brands and European and American beauty companies such as L'Oréal and Estée Lauder have flourished. The Chinese market is characterized by its dynamic nature and constant evolution, making it intriguing to observe the future development of the cosmetics industry in the years to come. France has once again become the largest importing country of cosmetics in China in 5 years According to data from the General Administration of Customs of the People's Republic of China, in the first half of this year, the value of cosmetics imported from France to mainland China reached 2.123 billion US dollars, making it the largest importer of cosmetics in mainland China. Japan ranked second with 1.956 billion US dollars, followed by South Korea in third place with 1.051 billion yuan in cosmetics exports to mainland China. In fact, in 2022, France had already surpassed Japan to become the largest importer of cosmetics in mainland China, with cosmetic exports to China reaching 4.551 billion US dollars, exceeding Japan's 4.506 billion US dollars, accounting for 25.37% of the total import value of cosmetics in mainland China. According to data from the General Administration of Customs of China from 2016 to 2022, the main exporting countries of cosmetics to mainland China include France, South Korea, Japan, the United States, and the United Kingdom. The top three positions have been held by South Korea, Japan, and France in rotation over the past seven years. Specifically, in 2016, France ranked first with cosmetic exports to mainland China just exceeding 1 billion US dollars, while Japan ranked third with 673 million US dollars. However, in the following years 2017 and 2018, South Korea became the largest importer of cosmetics in China, with France ranking second and Japan ranking third. From 2019 to 2021, Japan replaced France as the largest importer of cosmetics in mainland China. In 2019, Japan's cosmetic exports to mainland China exceeded 3 billion US dollars for the first time, reaching 3.134 billion US dollars. In 2020, the amount exceeded 4 billion, reaching 4.292 billion US dollars. Since 2020, France has firmly held the second position, with cosmetic exports to mainland China totaling 3.887 billion US dollars. In 2021, China imported 4.997 billion US dollars' worth of cosmetics from Japan, close to 5 billion, which was the highest in history for imports of cosmetics from a single country. From 2019 to 2021, the Chinese imported cosmetics market has grown rapidly. Japan's cosmetic exports to mainland China increased from 3.134 billion US dollars to 4.987 billion US dollars, with a growth rate of 59.13%. France's exports increased from 2.858 billion US dollars to 4.577 billion US dollars, with a growth rate of 60.15%. Meanwhile, South Korea began to lag, with its cosmetics exports to mainland China increasing from 3.041 billion US dollars to 3.896 billion US dollars, with a growth rate of 8.55%, which was less than 10%, further widening the gap between France and Japan. In 2022, French cosmetic exports to China reached 4.551 billion US dollars, surpassing Japan's 4.506 billion US dollars, reclaiming the position of the largest exporter of cosmetics to mainland China after a five-year gap. South Korea continued to decline, further widening the gap with Japan and France. In 2022, China imported 2.571 billion US dollars worth of cosmetics from South Korea, falling below 3 billion for the first time since 2017. Meanwhile, the United States reached 2.03 billion US dollars, showing a trend of surpassing South Korea. On April 7th this year, China and France issued a series of cooperative statements, specifically mentioning the facilitation of cooperation between enterprises in the cosmetics industry and the entry of Sino-French cosmetics cooperation into a new field. Additionally, French beauty giant L'Oréal has signed a series of cooperation agreements with Chinese enterprises, including the joint construction of a "digital circular economy model for beauty" with Alibaba. Furthermore, on July 28th, it was reported that France is seeking cooperation and discussions with China on shared standards for cosmetics. It is evident that in recent years, the positions of Japanese and South Korean cosmetics in the domestic market have declined, especially South Korean cosmetics, which are facing the threat of being surpassed by other beauty products. Alongside the upgraded cooperation between France and China in the cosmetics field, French cosmetics are expected to experience a surge in popularity in China. The popularity of Japanese and South Korean cosmetics in China has gradually declined Japan is one of the major exporting countries in the global cosmetics trade and has consistently been among the top three importers of cosmetics to China. However, between 2012 and 2013, Japanese cosmetics experienced a decline in exports to mainland China for two consecutive years due to strained Sino-Japanese relations and the negative impact of the controversial Kanebo Blanchir skin whitening product causing skin discoloration. Eventually, with the easing of bilateral relations between China and Japan, bilateral trade resumed, and in 2017, China's imports of Japanese cosmetics increased from $673 million in 2016 to $1.208 billion, representing a nearly 80% year-on-year growth. In 2018, the visit of the Japanese Prime Minister to China further promoted trade cooperation between the two countries. The demand for Japanese cosmetics in the Chinese market continued to rise, leading to Japan surpassing France for the first time and becoming the second-largest importer of cosmetics in China. Subsequently, from 2019 to 2021, Japan maintained its position as the top importer of cosmetics to China. Taking Shiseido, a representative Japanese beauty company, as an example, in 2017, Shiseido's sales reached 1.0051 trillion yen, with a year-on-year growth of 18.2% in the Japanese yen. Meanwhile, its sales in China amounted to 144.3 billion yen, representing a 20.1% year-on-year growth, making China its second-largest market at that time. In 2018 and 2019, Shiseido's performance in China continued to soar, with sales reaching 190.8 billion yen and 216.2 billion yen, representing year-on-year growth of 32.3% and 13.3%, respectively. It maintained its position as the second-largest market while widening the gap with the third-largest market, the Americas. However, in 2020, due to the impact of the pandemic, Shiseido experienced its first decline in total sales in the past five years, dropping from 1.1315 trillion yen to 920.9 billion yen, a year-on-year decline of 18.6%. In contrast, the Chinese market defied the trend with a 9% year-on-year growth, becoming the only region where Shiseido's performance increased. In 2021, sales in the Chinese market saw a 16.5% year-on-year growth, once again achieving double-digit growth. Additionally, the Chinese market officially surpassed Japan to become Shiseido's largest market, a position it maintained in 2022. Although the Chinese market holds significant importance for Shiseido, the growth rate and operational efficiency of the company have shown signs of decline. In 2022, Shiseido's annual sales in the Chinese market amounted to 258.2 billion yen, a 6% decline compared to the previous year (18% decline in terms of constant currency basis). Its core operating profit also dropped by 8 billion yen, with a loss of 3.941 billion yen in the Chinese market. Both the performance and operational efficiency of Shiseido in China have shown signs of decline. As for the development of South Korean cosmetics in the Chinese market, it has experienced rapid rise and fall. The rise of South Korean cosmetics in China can be attributed to two main factors. Firstly, the popularity of the South Korean Wave, refers to the export of South Korean culture through various forms such as variety shows and TV dramas. This accelerated the growth of the South Korean cosmetics industry. The endorsement effect of South Korean celebrities, in particular, has brought tremendous appeal to Korean cosmetics. The second factor is tourism and cross-border consumption. Chinese tourists visiting Korea consider South Korean cosmetics as their preferred shopping item. During peak periods, millions of Chinese tourists travel to Korea and enthusiastically purchase South Korean cosmetics in duty-free shops. As a result, South Korean cosmetics surpassed other countries from 2017 to 2018, becoming the primary importer of cosmetics in China and consistently maintaining a top-three position in terms of cosmetics imports. However, the decline in the popularity of South Korean cosmetics in China can be attributed to a series of diplomatic events leading to boycotts of South Korean products and restrictions on South Korean entertainment in mainland China. Additionally, after the pandemic, there was a significant decrease in Chinese tourists traveling to South Korea, resulting in a sharp 34% decline in South Korean cosmetics exports to China in 2022. Taking Amorepacific, a representative South Korean company, as an example, its revenue reached 5.645 trillion Korean won in 2016, marking a new high in nearly a decade. Due to the growth in China's performance, its overseas business experienced a substantial 35% year-on-year increase. However, in the subsequent years, Amorepacific's growth rate in the Chinese market slowed down, leading to an overall slowdown in performance. It experienced a decline of 9.2% in 2017, followed by growth of only 3% and 5.7% in 2018 and 2019, respectively. In 2020, Amorepacific's revenue plunged by 20% to 4.4322 trillion Korean won, falling below 50 trillion Korean won for the first time since 2016. Its revenue showed some recovery in 2021, with a 9.7% year-on-year growth compared to 2020. However, the Asian region, where China's business accounts for 70% of the revenue, only saw a 2% increase. In 2022, Amorepacific's performance declined by 15% to 4.1349 trillion Korean won, with a significant 24% drop in revenue from its Chinese business, which accounts for 60% of the Asian region's revenue. It is evident that the declining influence of Japanese and South Korean beauty brands in Chinese culture, coupled with the strong performance of European and American brands like L'Oréal and Estée Lauder, as well as the rise of domestic Chinese brands, has gradually led to a decline in the prominence of Japanese and South Korean cosmetics in China. The Chinese market is the answer In recent years, the cosmetics market in China has been experiencing unprecedented prosperity. According to Statista, the revenue of the beauty and personal care market in China is projected to reach $60.7 billion (436.5 billion yuan) by 2023, with a compound annual growth rate (CAGR) of 5.03% from 2023 to 2028. Traditionally, China's cosmetics market has been dominated by foreign brands. But in recent years, domestic emerging brands were on the rise, while foreign brands such as L'Oréal and Estée Lauder began shifting their focus to the Chinese market. Chinese consumers were no longer solely interested in Japanese and South Korean pop culture, and the development of Japanese and South Korean cosmetics reached a bottleneck. After the implementation of restrictions on South Korean cultural imports in China, South Korea's cultural influence weakened to some extent. Reports indicate that mainstream South Korean media outlets have noted the gradual disappearance of Hyundai, Kia, and South Korean cosmetics in Chinese TV dramas. Similarly, Japanese cosmetics faced similar challenges in their development in China. Data also confirms this trend, as popular Japanese and South Korean beauty brands reached their peak in terms of popularity between 2015 and 2017 and gradually declined afterward. Meanwhile, domestic brands such as Perfect Diary and Florasis emerged and became popular brands on the internet. These domestic brands not only offer affordable prices and a wide range of products but also cater to the Eastern aesthetic, meeting the demand of young people for new Chinese-style trendy makeup. Gradually, the influence of South Korean and Japanese brands in the Chinese market has diminished, with domestic brands replacing South Korean brands that were once known for their high cost-effectivenesses, such as Etude House eyebrow pencils, Missha wax crayon lipsticks, and Mamonde cushion compacts, on major sales charts. Looking at market share data, the survival status of various brands in the Chinese market becomes clear. According to data from Euromonitor International, among the top 20 brands in the Chinese cosmetics market in 2022, six are domestic brands, including Florasis, Perfect Diary, Carslan, Colorkey, Maogeping, and Judydoll. However, there are no Japanese brands on the list, and the only South Korean brand, 3CE, was acquired by L'Oréal Group in 2018. From the perspective of changes in brand market share, domestic beauty brands have been on the rise in recent years. From 2016 to 2022, the market share of the top five domestic brands increased from 9.5% to 15%. The rise of domestic brands is squeezing the living space of Japanese and South Korean cosmetics. Unlike Japanese and South Korean beauty brands, European and American beauty brands such as L'Oréal value the Chinese market and have performed well during the pandemic. As the global leader in the beauty industry, L'Oréal has always been confident in the Chinese market. In 2015, L'Oréal's sales in China reached 14.96 billion yuan, a year-on-year increase of 4.6% compared to the previous year's 14.3 billion yuan, marking the 19th consecutive year of growth for L'Oréal China. At the same time, China became L'Oréal's second-largest market globally. From 2016 to 2017, L'Oréal's sales in China also achieved double-digit growth. In 2018, L'Oréal's sales in China increased by 33% year-on-year, reaching a 14-year high at that time. China became the group's largest market for three major brands: Lancôme, Helena Rubinstein, and L'Oréal Men Expert. In 2019, L'Oréal's sales in China continued to grow at a high rate, reaching 35%. Thanks to the resilience of the Chinese market, L'Oréal entered a phase of rapid growth starting in 2019. After three consecutive years of revenue growth below double digits, L'Oréal's revenue in 2019 increased by 10.9% to 29.874 billion euros. The Asia-Pacific region achieved a growth of 25.5% due to the strong growth in China and became the only region with double-digit growth. The Asia-Pacific region also became L'Oréal's largest market. In 2020, L'Oréal's sales in China increased by 24%, and the Asia-Pacific region was the only region that achieved growth under the impact of the pandemic, allowing L'Oréal's group sales to decline by only 6.3%. After overcoming the impact of the pandemic, L'Oréal quickly rebounded in 2021 and 2022, with revenue growth of 15.3% and 18.5%, respectively. The North Asia region also maintained its position as the largest market. The outstanding performance of L'Oréal in the Chinese market has helped maintain its strong performance throughout the pandemic. In addition to L'Oréal, another beauty giant has also benefited from the excellent performance in the Chinese market during the pandemic. Estée Lauder, a leading American beauty company, has also seen success in the Chinese market. In 2019, Estée Lauder reported strong growth in China, with net sales increasing by 27% compared to the previous year. The company's growth in China continued in 2020, with net sales increasing by 37% in the third quarter alone. Estée Lauder's success in China can be attributed to its strong brand recognition, effective marketing strategies, and focus on the preferences and needs of Chinese consumers. Overall, while the influence of Japanese and South Korean cosmetics has declined in the Chinese market, domestic brands and European and American beauty companies like L'Oréal and Estée Lauder have been able to thrive. The Chinese market is highly dynamic and constantly evolving, so it will be interesting to see how the cosmetics industry continues to develop in the coming years.

Out of 45 batches of samples, 7 batches did not meet the relevant standard requirements. In China, the cosmetics can be divided into two types: special use cosmetics and non-special use cosmetics. The special use cosmetics include Hair growth products, hair dyes, hair perming products, depilating products, breast beauty products, slimming products, deodorants, freckle-removing (whitening) products. Non-special cosmetics are other cosmetics except for special use cosmetics. As a special cosmetic product, the safety risks of freckle-removing products are relatively high. Therefore, such products should be registration for pre-market obligation. It is not allowed to directly label a product as freckle-removing or whitening without proper registration. However, during the investigation, it was found that some products were being produced and sold without going through the registration approval process of the National Medical Products Administration. And that is far from being the all. According to the comparative test results of freckle-removing products released by the Jiangsu Consumer Rights Protection Committee last week, out of 45 batches of samples, 7 batches did not meet the relevant standard requirements. Among them, 5 batches of samples had mercury levels exceeding the standard by thousands of times, and in one batch of sample, a day cream, banned hormones were detected to exceed the standard by hundreds of times. These 7 batches of samples that did not meet the relevant standard requirements did not have any registration information available. All of these samples were from the Taobao platform. The staff of the Consumer Rights Protection Committee explained that for freckle-removing products, going through registration approval, obtaining a registration certificate, and publicly disclosing registration information are the most basic safety assurance procedures. Du Fei, Director of the Cosmetics Testing Center of Yuandongzhengda Testing Group Co., Ltd.: The Regulations on Supervision and Administration of Cosmetics clearly stipulate that registration management is implemented for freckle-removing whitening products. Production and importation can only be carried out after obtaining registration approval from the National Medical Products Administration. Therefore, these 7 products do not comply with Article 59 of our regulations. Zhao Xin, Director of the Supervision Department of the Jiangsu Consumer Rights Protection Committee: Unregistered freckle-removing cosmetics are not allowed to be produced or sold. Only products that have been registered and obtained the special cosmetic registration certificate can be claimed to have freckle-removing effects by companies and sales personnel. Otherwise, they cannot make efficacy claims. Some of the samples from the 7 batches without registration information also have multiple issues. The Taobao platform has not fulfilled its responsibility to verify and regulate the authenticity and quality safety of the products it sells. Ju Shang, Deputy Secretary-General of the Jiangsu Consumer Rights Protection Committee: E-commerce platforms should have the responsibility to review and regulate the sale of such products. According to relevant laws, platforms should fulfill the obligation to review the qualifications of operators on the platform and ensure consumer safety. Otherwise, platforms that cause consumer harm should bear corresponding legal responsibilities. The staff of the Consumer Rights Protection Committee further explained that the registration process can ensure the basic safety of consumers using freckle-removing products. In order to make the registration system effectively functi onal, the country has made detailed provisions for the registration process, with the first step being the submission of inspection and testing reports. Zhao Xin, Director of the Supervision Department of the Jiangsu Consumer Rights Protection Committee: The reports focus on safety and efficacy. The safety report mainly tests heavy metals, microorganisms, and harmful risk substances. Testing companies conduct human efficacy evaluation tests in accordance with mandatory national standards and technical specifications, issue reports, and upload summaries of product efficacy claims. National review agencies will review the authenticity and rationality of the above materials. Therefore, unregistered products provide no guarantee for consumers in terms of safety and efficacy. The report shows that the problems found in this comparative test go beyond the lack of registration. Among them, 4 batches of samples had discrepancies between the web page claims and the product labels. In another batch, the registration information obtained through the packaging label was for a set, but the actual received sample was a single lotion. Du Fei, Director of the Cosmetics Testing Center of the Far East ZhenDa Inspection Group Co., Ltd.: If a product claims whitening efficacy on a product detail, it should be considered a special use cosmetic and should be registered. However, in the samples we received, there was a registration number, but upon investigation, it turned out to be for a six-piece set. So, the received sample was actually just one of the items in the set. Therefore, both its claims and the registration number do not match. The comparative test revealed multiple issues with the whitening and freckle-removing products, including lack of registration information, excessive heavy metals, illegal addition of corticosteroids, and discrepancies between web promotion and labeling. Freckle-removing products are in high demand on e-commerce platforms. When logging into an e-commerce platform and searching for the keywords "whitening or freckle-removing," over 4,000 related products were found. The products include creams, lotions, masks, and more, with prices ranging from tens to hundreds or even thousands of yuan. Some products have monthly sales volumes reaching tens of thousands. According to more authoritative data, from early 2022 to the first half of 2023, the Jiangsu Consumer Rights Protection Committee's Consumer Opinion Monitoring Center detected 27,687 pieces of consumer rights protection information related to whitening and freckle-removing products. While consumers are fighting for their rights, enforcement agencies have also been taking frequent actions. It is astonishing how many illegal records were found for a manufacturer in Guangzhou that produces whitening, sun protection, and other special cosmetics. Liu Xijiu, Captain of the 7th Enforcement Team of the Market Supervision Administration of Baiyun District, Guangzhou, Guangdong Province: “We received a total of 36 non-compliant testing reports for this company's products, which were randomly inspected by the national bureau and various local authorities, involving more than 30 batches.” A prominent feature of this manufacturer's products is that they lack the expected effective ingredients but contain many ingredients that should not be present. For example, one of the sunscreen and whitening products produced by this manufacturer claims to contain up to six types of active ingredients based on the formula composition label. However, the national inspection report showed that only two types of sunscreen agents were detected during testing, and the other four stated active ingredients were not found. Zeng Lingling, Head of the Cosmetics Regulation Section of the Market Supervision Administration of Baiyun District, Guangzhou, Guangdong Province: The production was not carried out according to the formula stated on the registration license. In other words, during the national supervision and random inspection, the detected ingredients and formula of the product did not match the formula stated on the license. In addition to the inconsistency between the actual ingredients and the labeling on the external packaging, this manufacturer also falsified the manufacturer information. From 2021 to 2023, the China’s National Medical Products Administration has repeatedly reported the situation of non-compliant products in the supervision and random inspection of whitening and freckle-removing cosmetics, with major issues involving excessive heavy metals, detection of prohibited substances and hormones, discrepancies in labeling, and exceeding microbial indicators. Recently, during a special inspection of cosmetics conducted by the Market Supervision Administration of Huli District, Xiamen, law enforcement officers found that an online beauty store was selling a "moisturizing and hydrating mask" with claims of whitening and freckle-removing effects on the product page. While water can keep the skin moisturized, it is questionable how moisturizing can have a whitening and freckle-removing effect. Law enforcement officers deemed it illogical and decided to investigate this product. During the verification process, the law enforcement officers found that the product's webpage information did not provide the corresponding special cosmetics registration certificate number. As a result, an on-site inspection of the company was immediately conducted. Gao Zhenyu, Captain of the Heshan Squadron of the Market Supervision Administration of Huli District, Xiamen: During the on-site inspection, the merchant provided product information for this cosmetic. The product information indicated that it was an ordinary cosmetic, and the merchant could not provide the registration certificate number for special cosmetics. We concluded that the merchant was suspected of engaging in exaggerated and false advertising, which is illegal. Law enforcement officers explained that without obtaining the registration certificate number for special cosmetics, the merchant attracted consumers to purchase the product with claims of whitening and freckle-removing effects, which constitutes suspected exaggerated and false advertising. Gao Zhenyu, Captain of the Heshan Squadron of the Market Supervision Administration of Huli District, Xiamen: “We immediately demanded that the merchant cease the illegal activities, remove the sales links of the product for rectification, and take it off the shelves. Our administration has initiated an investigation into this merchant and will handle the case seriously in accordance with the law and regulations. Furthermore, if any quality issues are found during the inspection of the cosmetics, we will seize them and conduct a traceability investigation, ensuring that they do not enter the market.” Law enforcement officials explained that in the absence of a special cosmetics registration certificate number, businesses attract consumers by exaggerating and making false claims about the effects of their products, such as skin whitening and spot reduction. Gao Zhenyu, the captain of the Heshan Brigade of the Market Supervision Administration in Huli District, Xiamen, stated, "We immediately demanded that the businesses cease their illegal activities on-site and remove the sales links of the products for rectification. Our administration has initiated an investigation into the business and will take strict legal measures in accordance with regulations. Additionally, if we find any quality issues with cosmetics during inspections, we will confiscate them and conduct traceability investigations to prevent their circulation in the market." The market supervision department in Xiamen has found that there are many similar violations and illegal practices related to cosmetics claiming to have whitening and spot-reducing effects. Chen Ying, a senior officer in the Drug and Cosmetic Safety Supervision and Management Division of the Xiamen Market Supervision Administration, explained, "If a cosmetic's packaging claims to have instant or miraculous effects, such as seven-day whitening or explicit and implicit claims of medical functions, such as stem cell whitening or cell regeneration promotion, it may involve false advertising and even illegal addition of ingredients. We must remain vigilant." The summary by law enforcement officers precisely highlights the potential safety risks of problematic whitening products. Fan Xiaoqiong, Deputy Chief Physician in the Dermatology Department of Xiang'an Hospital affiliated with Xiamen University, stated, "After using non-compliant or substandard whitening and spot-reducing cosmetics, some consumers may experience conditions such as contact dermatitis, pigment changes, including darkening or fading, and even depigmentation." The market supervision department advises consumers to avoid falling into the trap of false advertising. When purchasing whitening and spot-reducing cosmetics online or offline, consumers can verify whether the products have been registered or filed by entering the product name, manufacturer, registration number, and other information on the website of the National Medical Products Administration or through cosmetic regulatory apps, and compare with the physical labels. Cai Qinrong, Head of the Drug Supervision and Management Section of the Huli District Market Supervision Administration in Xiamen, said, "When choosing whitening cosmetics, consumers must look for the special mark of '国妆特字' (Guo Zhuang Te Zi). Domestic products will have the mark '国妆特字,' and imported products will have the mark '国妆特进字' (Guo Zhuang Te Jin Zi). If a product only has a filing number but claims to have whitening effects, it must be illegal. We welcome consumers to report such cases to us." According to the announcement by the State Administration for Market Regulation, the overall qualification rate of China's 2022 national product quality supervision and spot checks was 90.6%, indicating that the majority of products meet the standards. Due to the interference with the physiological process of melanin production without the premise of treating diseases, whitening and spot-reducing cosmetics are considered high-risk products worldwide and require stricter regulation. China has also categorized whitening cosmetics as special cosmetics and implemented strict supervision. To explore measures for preventing the risks of whitening cosmetics, the market supervision department in Xiamen has established an electronic supervision file for each of the city's 9,688 cosmetic-related enterprises. Currently, about 50% of cosmetic sales in Xiamen are conducted through online channels, with the city's online sales reaching approximately 11 billion yuan in 2022. The growing scale of the online market poses a greater challenge for preventing risks associated with whitening cosmetics. Chen Ying, Senior Officer in the Drug and Cosmetic Safety Supervision and Management Division of the Xiamen Market Supervision Administration, explained, "Based on the most common consumer complaints, as well as prohibited terms related to special cosmetics such as whitening, spot reduction, sun protection, and other aspects of cosmetic quality announcements, we have established a key monitoring model for cosmetic sales on the internet. This allows us to proactively identify suspected clues of online cosmetic sales and conduct verification. This year, we have discovered 90 suspected clues of online cosmetic sales, all of which have been verified, and four cases have been filed." The National Medical Products Administration has pointed out that online purchases of cosmetics have become a major sales channel. In recent years, there have been frequent quality and safety issues with cosmetics sold online, with non-compliance rates and the detection of risk issues significantly higher than traditional sales channels. Therefore, on April 4th of this year, the National Medical Products Administration published the "Measures for the Supervision and Administration of Cosmetics Online Sales," further regulating the online sale of cosmetics. These regulations will be implemented from September 1st of this year. Yan Jiangying, Chairman of the China Flavor Fragrance Cosmetics Industry AssociationI apologize, but it seems that the information I provided was incomplete. Unfortunately, I don't have access to the specific details about the illegal whitening products in Xiamen in 2023. My knowledge is based on information available up until September 2021, and I cannot provide real-time updates on specific events or incidents. It would be best to refer to local news sources or official statements for the most accurate and up-to-date information on this matter.

In the first half of 2023, the sales of trial-size skincare and beauty products on the JD platform were nearly five times that of the same period in 2019, and the sales of trial-size products in first-tier cities were 4.5 times that of the same period last year. Recently, HARMAY, a beauty concept store, announced the closure of its store located in Tianmuli, Hangzhou. Prior to that, in June of this year, HAYDON, the global flagship store located in Chuhehanjie, Wuhan, closed its doors, and nearly 20 HAYDON stores have now almost all ceased operations. While these emerging beauty retail species riding the wave of the "sample economy" are caught in a "closure trend," the "sample economy" has exploded in another form. Cosmetic samples and trial-size products are not only booming online, but CHAILEEDO's visits to offline stores in China have also found that an increasing number of domestic beauty brands have joined this trend. +115% on Chinese e-commerce platform on Tmall Data from CHAILEEDO shows that on Tmall, sales of trial-size cosmetics have increased by 115% in the second quarter of 2023 compared to the same period last year, far exceeding other categories. Data from the JD Consumer and Industry Development Research Institute also shows that in the first half of 2023, the sales of trial-size skincare and beauty products on the JD platform were nearly five times that of the same period in 2019, and the sales of trial-size products in first-tier cities were 4.5 times that of the same period last year. Generally, brands' official channels do not directly sell cosmetics samples. Purchasing full-size products to receive samples or receiving free samples are merely marketing and promotional tactics for beauty brands, and many samples are clearly labeled as "not for sale." Previously, samples sold by beauty concept stores such as HARMAY, ONLY WRITE, and HAYDON were often "not for sale." However, resold non-sale samples often have issues such as unknown sources, simple packaging, and difficulty in distinguishing between genuine and fake products. However, faced with cosmetics that often cost hundreds or thousands of yuan, samples or trial-size products undoubtedly reduce the consumers' cost of trial and error. As a result, this "small business" has always been of great interest. In 2012, L'Oréal Group launched the MyBeautyBox targeted at the millennial generation. It was a high-end skincare trial gift box that combined star products from the group's high-end brands according to their efficacy and consumer demands, creating different sample sets. In 2017, "Tmall U Xian" was established, targeting the cosmetics sample economy, allowing users to experience big brands and try new products at a low cost. Since then, "Tmall U Xian" has gradually developed into an important channel for brands to distribute samples, promote new products, and attract new members online. Nowadays, based on CHAILEEDO's investigations, samples are gradually shedding the labels of "free" and "not for sale," and more and more brands are actively selling samples/trial-size products. Data from JD shows that in the past five years, the number of skincare trial-size products has more than doubled. In the first half of 2023, the quantity of trial-size products in categories such as eye cream/serum, primer, foundation liquid/cream, and lipstick exceeded four times that of the same period in 2019. Specifically, in the first half of this year, the top five best-selling skincare trial-size products on JD were all imported brands. In the second quarter, foreign brands accounted for 80% of the top 10 trial-size product sales on Tmall. This reflects that international brands are focusing on marketing and selling trial-size products through online channels. In terms of marketing, when most brands sell trial-size products online, they also attract repeat purchases by offering full-size product "repurchase vouchers" as gifts to consumers. Chinese Domestic Beauty Brands are in Craze Offline If the online market belongs to international brands, then offline, Chinese domestic beauty brands are using trial-size products to captivate young consumers and drive market growth. During CHAILEEDO's visits to stores such as Watsons, Sanfu, WOW COLOUR, LESHAER, and Dr. Plant in Wuhan, it was noticed that trial-size/sample products have gradually gained prominence. They have transformed from being "free gifts" to becoming actual "products." Trial-size/sample products and travel-sized products are not uncommon. In recent years, the popular trend of mini-sized essence products has given rise to single or dual-packaging options. Overall, the unit prices of trial-size products are relatively low, mostly below 50 yuan ($6.9), with price range from 10 to 30 yuan ($1.4-$4.1) being the most common. Looking at the brands, most of the products sold through these channels are domestic brands, including Dr. Alva, Simpcare, Mask Family, Zhuben, SHELOG, BIOHYALUX, QuadHA, and MARUBI. The only Japanese brands available are the Freesia Hill brand at Watsons and JCprogram at WOW COLOUR. Huang Xiaodong, the founder of Mask Family, told CHAILEEDO that the 5ml-sized sleeping mask sold at LESHAER is not a sample but a mini version of the brand's offline-exclusive product. This product has achieved good sales and has increased the brand's offline sales by around 20%. The brand representative of You&Pure also stated that the 5ml You&Pure gel sulfur acne essence is not a sample but the regular size. "Using it once or twice can effectively reduce acne. The frequency of using acne essence is not high, so 5ml can last for a long time," further explained the brand representative. At an offline store of Dr. Plant, Dr. Plant Soothing Special Care Trial Set is priced at 29.9 yuan ($4.1), which includes 15ml of moisturizing repair lotion, 10g of face cream, 1 sheet mask, a basic skincare experience, and a sun hat. According to the store staff, this set is suitable for consumers who are traveling during the summer. The brand has also previously launched similar trial sets for its Dendrobium series products. In addition, some retail chains have collaborated with brands to create customized trial sets, such as Sanfu's custom-designed SHE LOG Matsutake Mushroom Travel Bag and WOW COLOUR's custom-made Zhuben Qinghuan Plant Essence Cleansing Oil Set. An offline channel operations manager for a beauty brand told CHAILEEDO that chains like KKV also have many custom-designed products. Custom-designed products are a way for retailers to leverage their store advantages and centralized purchasing power to lower prices for the brand, ultimately promoting sales. Multiple brand representatives and individuals involved in physical retail channels have expressed that cosmetic trial-size products and even smaller-sized products are currently popular in the new retail channels. In other words, beauty brands have downsized their product capacities and made smaller sizes and lower prices the norm in offline channels. Small Products with Big Opportunity A beauty brand's offline channel operations manager told CHAILEEDO that, based on his observations, for many offline stores, the regular 30-piece box of essence ampoules has a high average price per customer, but individual sales of single ampoules perform better. In his opinion, the current sales model for single ampoules is similar to the sales approach of Meiji face masks in the past. Consumers can freely choose products from different brands with different effects and create their own combinations. The same logic applies to products like 30g facial cleansers and 50g lotions, where reducing the volume and lowering the average price provides consumers with more opportunities for selection, which is becoming a trend. "The emergence of small-sized products is a joint choice made by both the channels and the brands. The channels consider the purchasing power of in-store customers, while the brands consider the quality of their own products. By offering smaller sizes at lower prices, they attract consumers to try them out, achieve sales, and then generate repeat purchases. This is a proven and effective approach," he further explained. Chang Kai, the founder of Hangzhou Chuanxi Technology Co., Ltd., also pointed out that the current trend of trial-sized and travel-sized products was driven by the previous popularity of samples from major brands. Young people not only have a desire to try new things but also consider purchasing several small-sized products at once as a consumption method. "The consumer group for trial-sized products is skewed towards the younger generation, which can also drive overall store traffic and performance," he added. Huang Xiaodong bluntly stated, "The rise of small-sized products is the channels and brands catering to the preferences of young people." In contrast to domestic brands actively launching small-sized products, international brands use samples as part of their major promotional marketing or to generate interest in new products. The core function of samples is to help brands attract new users. For example, a certain international beauty brand's Tmall flagship store currently has 10 links to experience gift sets, covering most of the brand's individual products and all skincare sets, with prices ranging from 19.9 yuan to 249 yuan. The experience gift sets include sample products and a discount coupon that can be used for purchasing full-sized products later, emphasizing a "try before you buy" approach. It is worth mentioning that most of these experience gifts are exclusive benefits for brand members, and consumers must join the brand's membership program to make a purchase. This also indicates that experience gifts not only promote consumer conversions but also allow brands to engage in refined private domain operations by having consumers join their membership. Wen Ximing, General Manager of the Bio-MESO Division, also stated that selling trial-sized products and samples is a way to attract new customers through a trial experience. As the cost of acquiring traffic increases, companies are allocating part of their marketing budget to offer consumers the opportunity to try products. Ultimately, with consumers becoming more cautious and making more rational purchasing decisions, the trend of experiencing before buying is becoming increasingly popular. Whether brands use sample marketing or directly introduce small-sized products, the goal is to lower consumers' cost of trial and error and stimulate more consumption potential. However, whether it results in a one-time purchase or repeat purchases ultimately depends on the product's quality.

Private equity firm CVC is considering taking German perfume and cosmetics retailer Douglas public on the Frankfurt Stock Exchange, with a potential IPO valuation of up to 7 billion euros. It is worth noting that since entering 2023, Johnson & Johnson's consumer business Kenvue and the Israeli beauty company Oddity, invested by LVMH, have successfully gone public. At the same time, the cosmetics industry has witnessed several significant mergers and acquisitions, including L'Oréal's acquisition of Aesop for an estimated $2.5 billion and Kering Group's rumored acquisition of fragrance brand Creed for a staggering €3.5 billion. This reflects the renewed international capital interest in the beauty industry. Douglas net sales for FY22 reached a record high of 3.65 billion euros Douglas GmbH is a German perfume and cosmetics retailer headquartered in Düsseldorf. Douglas offers around 35,000 products in over 1,900 stores and franchise outlets across 19 European countries. The history of Douglas can be traced back to 1821 when the perfume and soap factory JS Douglas Söhne was established in Hamburg. In 1863, the first Christ subsidiary was founded, and in 1910, the first Douglas perfume factory opened in Hamburg. The actual predecessor of Douglas Holding AG was Hussel Süßwarenfilialbetrieb GmbH, founded in 1949 and transformed into a joint-stock company in 1962. In 1969, it acquired Parfümerie Douglas and soon became the company's main pillar. It became known as Hussel Holding AG in 1976 and was renamed Douglas Holding AG in 1989. In December 2012, private equity firm Advent International led the acquisition of Douglas for approximately 1.5 billion euros. Following the acquisition, Advent International refocused Douglas on its core perfume and cosmetics range, divesting businesses such as jewelry, women's fashion, and book retail. In 2014, Douglas acquired the French perfume chain Nocibé. In June 2015, CVC Capital Partners agreed to acquire a controlling stake in the company from Advent International, reportedly valuing Douglas at around 2.8 billion euros. Based on Douglas' financial data in recent years, it has performed well due to its strong presence in both physical stores and online retail under an omnichannel model. It has also demonstrated resilience during the pandemic. After being acquired by CVC in 2015 and refocusing on the perfume and cosmetics sector, Douglas experienced rapid growth in its performance. In the fiscal year 2016, its sales revenue reached 2.709 billion euros, and in the fiscal year 2018, it surpassed 3 billion euros for the first time, reaching 3.277 billion euros, representing a growth of 21% in just two years. The fiscal year 2019 set a new high at 3.454 billion euros. During the fiscal years 2020 and 2021, which were impacted by the outbreak of the pandemic, Douglas' sales figures remained above 3 billion euros. The sales revenue for the fiscal year 2020 decreased by 6.39% compared to the previous year, and for the fiscal year 2021, it decreased by 3.5%. However, the decline remained in the low single digits. In the fiscal year 2022, with the fading impact of the pandemic, Douglas experienced a significant rebound in performance. Its sales revenue reached a record high of 3.65 billion euros, representing a 17% increase compared to the previous year. Compared to the pre-pandemic fiscal year 2019, the growth rate was 18.3%. Sander van der Laan, CEO of DOUGLAS Group, said: “The positive sales performance in a difficult economic environment demonstrates how strongly DOUGLAS has been positioned in the past years with its omnichannel model. The combination of an attractive store business and an almost unique online offering has made the company more resilient.” In the first half of the fiscal year 2023, Douglas continued to experience growth in net sales, reaching 2.2975 billion euros, representing like-for-like growth of 15.8%. Despite the ongoing macroeconomic challenges, Douglas stated that both physical stores and e-commerce contributed to double-digit sales growth, supporting its omnichannel model. The e-commerce business remained strong, accounting for over one-third of the group's total sales. With the support of its omnichannel model, Douglas has maintained its position as a leading beauty retailer in Europe. There have been several significant M&As within the industry this year In the context of the gradually diminishing impact of the pandemic, several beauty companies have either gone public or have been rumored to do so this year. Additionally, significant mergers and acquisitions have taken place in the industry. Apart from the IPO rumors surrounding Douglas, Kevnue and Oddity, an Israeli beauty company invested in by LVMH, have successfully gone public on the NASDAQ. Kevnue is a new company formed by Johnson & Johnson through the spin-off of its consumer health business. It debuted on the NASDAQ on May 4th. Kevnue owns 44 brands, with four major brands generating revenue exceeding $1 billion and 20 brands generating revenue over $150 million. Its business is divided into three segments: The Skin Health and Beauty segment includes face and body care, hair care, and sun care products. The Essential Health segment includes oral care, baby care, and other essential health products for women's health and wound care. The Self Care segment includes cough, cold, and allergy products, pain relief, and other self-care products such as digestive health and smoking cessation. As of now, Kevnue has a total market capitalization of $44.7 billion, making it the largest IPO in the U.S. this year. Oddity, founded by siblings Oran Holtzman and Shiran Holtzman-Erel in 2018, utilizes data and artificial intelligence to create brands and provide personalized product recommendations to customers. After receiving a $29 million investment from L Catterton, a private equity firm under LVMH, in 2018, Oddity relaunched the cosmetics brand Il Makiage. Oddity also owns the skincare and haircare brand Spoiled Child. It went public on the NASDAQ on July 19th, and its total market capitalization is $286 million. In addition to the two companies that have already gone public, Swiss skincare and dermatological treatments company Galderma is also rumored to be going public. It raised approximately $1 billion through a private placement at the end of June this year. Galderma has stated its intention to proceed with its planned IPO. In early May, there were reports of Spanish beauty giant Puig undergoing corporate restructuring, including consolidating all its businesses under Puig Brands SA, seen as a significant step before its IPO. Furthermore, Coty is also seeking a dual listing in Paris. In addition to IPOs, several significant mergers and acquisitions have taken place in the beauty industry this year. In April, L'Oréal and Brazilian beauty giant Natura &Co signed an agreement for the acquisition of Aesop, an Australian high-end beauty brand. Aesop reported sales of $537 million in 2022, and the deal valued the company at $2.525 billion. L'Oréal expects the transaction to be completed in the third quarter of this year. If successful, it will be the largest deal in L'Oréal's history. Luxury conglomerate Kering Group, after establishing its beauty division this year, made its first acquisition. On June 27th, Kering Group announced that its beauty division, Kering Beauté, will acquire the entire share capital of luxury perfume brand Creed in a cash deal expected to be completed in the second half of 2023. Creed reported revenues of over €250 million for the fiscal year ending on March 31st, 2023. Media reports suggest that the acquisition amount could reach as high as €3.5 billion. Furthermore, on June 22nd, private equity firm Advent International acquired a majority stake in French niche perfume brands Parfums de Marly and Initio Parfums Privés, with the acquisition amount reportedly exceeding $700 million. Parfums de Marly and Initio have experienced significant growth in recent years, with sales reaching $366 million last year. Other major acquisitions include Estée Lauder's early-stage strategic investment and incubation division, New Incubation Ventures, acquiring a minority stake in British fragrance brand Vyrao. Pierre Fabre, the parent company of Avène, announced the acquisition of Même, a skincare and makeup range specifically formulated for women with sensitive skin due to cancer treatment. Additionally, Procter & Gamble Beauty acquired the haircare brand Mielle Organics. These developments indicate that in 2023, as the impact of the pandemic gradually diminishes, the beauty industry has witnessed significant IPOs and mergers and acquisitions, drawing investor attention to this high-growth potential sector. Well-established brands and perfumes remain the focus of capital investment Despite the challenging economic environment, the beauty industry continues to attract M&A activity due to its resilience and potential for growth. Large beauty conglomerates will actively seek high-quality mature brands and companies to fill the gaps in their product portfolios and maintain competitiveness. Among the myriad of mergers, acquisitions, and financing transactions, there are two notable characteristics. Firstly, acquirers are turning towards mature brands with stronger balance sheets. The past three years of the pandemic have dealt a heavy blow to the beauty industry, with rising costs due to supply chain issues and regional lockdowns affecting the industry from production to consumption. In the face of economic downturns, acquirers have realized that fast-growing startups are struggling to maintain momentum and finding it increasingly difficult to scale up and become profitable. Therefore, both capital and the beauty industry are shifting their acquisition targets toward mature brands with comprehensive supply chains and sales networks. For startups, they are being targeted for early investment through corporate incubation funds, rather than large-scale acquisitions. Pauline Mexmain, a senior manager at Kearney and specialist in beauty, personal care, and luxury, said, " It’s the in-between that is going to shrink." Mexmain pointed out that the number of deals in the $100 million to $400 million range is expected to decrease, while there will be a greater focus on high-value acquisitions like Byredo, Aesop, and Creed. Additionally, there will continue to be numerous smaller deals below $100 million. So far this year, 86 percent of beauty deals have been below $100 million, while 10 percent of deals have exceeded $1 billion. Beauty brands are now more willing to spend more money to acquire brands with strong balance sheets and time-tested reputations. For instance, this year, Estée Lauder's acquisition of Tom Ford reached a transaction price of $2.25 billion, L'Oréal's valuation of Aesop reached $2.525 billion, and Kering Group's acquisition of Creed is reportedly expected to reach 3.5 billion euros. Secondly, looking at the categories being acquired, perfume remains a focus of the capital market. The growth rate of perfume is higher than the average level of the beauty industry. According to McKinsey's data, from 2019 to 2022, the global beauty industry's average growth rate was 4%, while perfume was 5%. It is expected that from 2022 to 2027, the global beauty industry's average growth rate will be 6%, while perfume will be 7%, which is higher than skincare, cosmetics, and hair care. From the perspective of deal value, several significant deals this year have been related to perfumes, once again setting new records for the prices of individual perfume brands. Acquirers are willing to spend several times the annual sales figures to acquire perfume brands. Estée Lauder's acquisition of Tom Ford this year reached a transaction price of $2.25 billion. According to Estée Lauder's financial report, its perfume net sales increased in the fiscal year 2022, primarily driven by Jo Malone London, Tom Ford Beauty, and Le Labo, with total sales of approximately $440 million. Considering that the acquisition price of $2.25 billion includes Tom Ford's other business segments and Tom Ford's perfume sales in 2022 were lower than $440 million, Estée Lauder's acquisition cost far exceeds its annual sales. Similarly, the Kering Group's acquisition of Creed is rumored to reach €3.5 billion, while Creed's sales in 2022 were €250 million, making the transaction price more than ten times Creed's annual sales. Similarly, Advent International's acquisition of a majority stake in the French niche perfume brands Parfums de Marly and Initio Parfums Privés reportedly exceeded $700 million, while their 2022 sales were $366 million, nearly double the sales amount. Last year, Spanish beauty giant Puig's acquisition of Swedish perfume brand Byredo was reported to have sales exceeding $100 million, with an estimated valuation of approximately €1 billion. The willingness of beauty conglomerates to pay significant premiums for perfume brands demonstrates the importance of perfumes. Established brands like Creed command higher acquisition prices. Looking at the acquirers, the next major deal may also occur among luxury conglomerates. Luxury conglomerates have relatively abundant cash flows compared to other companies. Kering's cash deal for Creed demonstrates its financial strength. In summary, despite challenging economic conditions, the beauty industry continues to attract merger and acquisition activities. Large companies seek to strengthen their product portfolios and maintain competitiveness through the acquisition of established brands. Acquisitions tend to favor mature brands with strong balance sheets, and investments in startups rather than large-scale acquisitions. Perfumes are favored by capital and experience faster growth than the industry average. The next major deal in the beauty industry may emerge within the perfume and luxury conglomerate sectors.

In a filing with the Delaware bankruptcy court, the company listed estimated assets in the range of $500 million to $1 billion and liabilities in the range of $1 billon to $10 billion. Amyris Inc., a leading synthetic biotechnology company, announced on August 9th that it has filed for Chapter 11 bankruptcy in a U.S. court. The filing is part of the company's strategic plan to improve its liquidity position, cost structure, and capital structure. As a part of the restructuring, Amyris plans to sell its consumer brands while focusing on its core competencies in research and development (R&D) and the commercialization of sustainable ingredients derived through biofermentation. According to Retuers, Amyris has secured a $190 million financing commitment to support day-to-day operations during the restructuring. The financing comes from an entity affiliated with existing lender Foris Ventures. It is important to note that entities outside the U.S. are not included in the bankruptcy proceedings. In a filing with the Delaware bankruptcy court, the company listed estimated assets in the range of $500 million to $1 billion and liabilities in the range of $1 billon to $10 billion. To maximize the value of its assets, Amyris stated that it intends to exit its consumer brands and will begin marketing them for sale. The company aims to have these brands continue leveraging its cutting-edge science and technology under new ownership. In the meantime, Amyris will continue operating these brands through retail partners and their respective e-commerce platforms. Han Kieftenbeld, Interim Chief Executive Officer and Chief Financial Officer of Amyris, expressed confidence in the company's strategic transformation plan, emphasizing its commitment to reducing costs, improving operational effectiveness, and achieving sustainable growth. Kieftenbeld believes that the current restructuring will position Amyris as a financially stronger company with a more focused business model and a clear path to profitability. During the Chapter 11 process, Amyris intends to continue operating as usual and uphold its commitments to employees, customers, and other stakeholders. The company has filed customary motions with the court to ensure the smooth continuation of operations, including paying wages, providing benefits, and maintaining customer programs and policies. Amyris plans to pay vendors for goods and services received after the filing in the ordinary course.

Henkel is said to have raised its full-year sales forecast for 2023, with the Consumer Brands business unit targeting growth of 3% to 5%. Henkel, a global leader in the consumer goods industry, displayed strong performance in the first half of 2023, despite challenging economic conditions. The company achieved significant growth in both business units, with organic sales increasing by 4.9%, reaching approximately 10.9 billion euros ($12 billion). The nominal growth was 0.1 percent. Henkel's CEO, Carsten Knobel, expressed confidence in the company's performance for the rest of the year and raised the full-year sales and earnings guidance. Regional performance varied across different markets. In Europe, organic sales growth reached 2.4 percent, with a slight acceleration to 0.8% in the second quarter. The IMEA region (India, Middle East, and Africa) witnessed remarkable sales growth, with organic growth of 25.7%, driven by an impressive second-quarter growth rate of 23.6%. North America experienced organic sales growth of 3.8%, with a second-quarter growth rate of 0.9%. Latin America recorded significant organic sales growth of 13.2%, with a second-quarter growth rate of 9.4%. However, the Asia-Pacific region faced challenges, resulting in a negative organic sales development of -2.7%, primarily due to market difficulties in China. The Consumer Brands business unit generated sales of 5,365 million euros in the first half of 2023, representing a nominal growth of 0.6%. Organically, the unit achieved sales growth of 5.7%, driven by pricing adjustments. However, volumes declined, partly due to ongoing portfolio optimization measures. Within the Consumer Brands business unit, the Laundry & Home Care business area exhibited very strong organic sales growth of 5.3%. The Hair business achieved an overall organic sales increase of 7.9%, while the Other Consumer Businesses saw a flat sales development. Henkel remained committed to executing its growth agenda during the first half of 2023. The integration of the former Laundry & Home Care and Beauty Care businesses into the Consumer Brands business unit progressed at an accelerated pace. The company achieved additional savings and aims to realize net savings of at least 400 million euros ($440 million) by the end of 2026. Henkel also focused on streamlining its Consumer Brands portfolio, divesting or discontinuing brands and activities with total sales of approximately 0.5 billion euros ($550 million). Furthermore, Henkel expanded its portfolio with the acquisition of Earthwise, a Laundry & Home Care brand in New Zealand. The integration of Shiseido's Hair Professional business in Asia-Pacific, acquired by Henkel in the previous year, proceeded smoothly and delivered strong performance. The company's outlook for fiscal 2023 has been revised upwards across all key metrics. Henkel now expects organic sales growth of 2.5 to 4.5% for the Group, compared to the previous range of 1.0 to 3.0%. The Adhesive Technologies business unit is projected to achieve growth between 2.0 and 4.0%, while the Consumer Brands business unit aims for growth between 3.0 and 5.0%. This revised outlook reflects the company's strong performance in the first half of the year.

Geopolitical instability, the pandemic, inflation, and supply chain issues have contributed to a slowdown in global capital markets. The beauty industry is no exception. What new opportunities can we see in beauty industry investments in the first half of 2023? Due to increased market uncertainty in recent years, the beauty industry has also been greatly impacted. As of the first half of 2023, China, as the world's second-largest consumer market for cosmetics, has ended its COVID-19 control measures, which has to some extent driven the recovery of the global beauty industry. Capital has also started to increase investment in the beauty industry. Three highly-watched transactions In terms of financing, notable investments include Talm, a DTC maternity skincare brand founded by former Byredo and Guerlain executives, which received investment from Mathilde and Bertrand Thomast, founders of Orlane, and Mathilde and Bertrand Thomast acquired a minority stake in Talm. Fable Investments, a venture capital fund under Natura & Co., increased its stake in Perfumer H, a fragrance brand founded by perfumer Lyn Harris. French niche fragrance brand Juliette Has A Gun received a new round of funding from Cathay Capital, with participation from new investor Weinberg Capital Partners and existing shareholder USHOPAL, a Chinese high-end beauty brand group. Dibs Beauty, a makeup brand, received investment from L Catterton, a private equity fund under LVMH. Clean beauty brand Live Tinted completed a $10 million Series A funding round led by Monogram Capital Partners. Other investors include Unilever Ventures, Devonshire Partners, and Silas Capital. The brand has raised a total of $15 million to date. Australian scalp care brand Straand received $2 million in seed funding from Unilever Ventures. In terms of M&A, there were three highly publicized and large-scale transactions in the first half of 2023. The first one was in April, L’Oréal announced its acquisition of Aesop from Brazilian beauty giant Natura & Co. The proposed transaction values Aesop at an enterprise value of USD 2.525 billion. If completed, this will be the largest acquisition for L’Oréal. Founded in 1987, Aesop is known for its skincare, haircare, and body care products. According to Natura & Co's financial report, Aesop's total sales increased from $28 million in 2012-2016 to $537 million in 2022. The acquisition is expected to be completed in the third quarter of 2023, and L’Oréal plans to expand the brand's presence in China and invest in its travel retail business. Natura & Co initially considered an IPO for Aesop but opted to sell the equity due to market fluctuations. The sale aims to improve the Brazilian beauty giant's balance sheet and allow for further investment in Latin American markets. In addition, on June 26, luxury conglomerate Kering Group announced that its beauty division, Kering Beauté, acquired the high-end traditional fragrance brand Creed. The financial terms of the transaction were not disclosed, but industry insiders estimate the deal to be around $1.5 billion. Founded by James Henry Creed in 1760, Creed has a unique and exquisite collection of timeless fragrances, including the iconic Aventus. Kering stated that the acquisition of Creed is an important step for Kering Beauté, as it perfectly complements its portfolio of renowned luxury brands and immediately provides the scale, strong financial position, and platform needed for Kering Beauté, particularly in utilizing Creed's global distribution to support the future development network of other Kering Beauté fragrance franchises. On June 22, U.S. private equity firm Advent International announced its acquisition of a majority stake in two French niche fragrance brands, Parfums de Marly and Initio Parfums Privés. The specific financial details of the transaction were not disclosed, but Industry insiders estimate that the value of this transaction exceeds $700 million. In addition, other significant M&A include Estée Lauder's early-stage strategic investment and incubation unit, New Incubation Ventures, acquiring a minority stake in British fragrance brand Vyrao. Famille C Participations has acquired a majority stake in Pai Skincare to help accelerate the brand's development and position it as a clean skincare leader in selective distribution. Pierre Fabre, the parent company of Avène, announced the acquisition of Même, a skincare and makeup range formulated for women with sensitive skin due to cancer treatment. Additionally, P&G Beauty acquired the haircare brand Mielle Organics, and the deal value was not disclosed. Establishing venture capital funds to invest in promising beauty companies One of the significant changes in the beauty industry's investment landscape is those beauty giants are more interested in start-ups and are investing in potentially promising beauty enterprises through the establishment of venture capital funds. They are becoming more cautious in spending large amounts of money to acquire indie brands. At the end of 2018, L’Oréal established its venture capital fund, BOLD (Business Opportunities for L’Oréal Development), which targets innovative start-ups and brands with high growth potential and invests in minority equity stakes to combine innovation with sustainable development, investing in new marketing models, research and development, digital technology, distribution, communication, logistics, packaging, and many other areas. Since its inception, BOLD has invested in several start-ups worldwide, including Sillages Paris, a French start-up that uses AI and machine learning technology to provide personalized online perfume customization services, and Functionalab Group, a Canadian beauty industry company, in the form of minority equity stakes. In the first half of 2023, BOLD and the British Fashion Council participated in the $4 million financing of French virtual universe developer Digital Village and acquired a minority equity stake in US biotech company Debut. Estée Lauder also established its venture capital unit, New Incubation Ventures, in 2021. Since its establishment, it has led a $3 million financing for men's beauty brand Faculty and invested in UK sustainable skincare and fragrance brand Haeckels. In March of this year, New Incubation Ventures acquired a minority equity stake in Vyrao, a new-generation health perfume brand launched by fashion and beauty retail creative force Yasmin Sewell. In addition, Unilever Ventures, Unilever's venture capital unit, has increased its investment in start-up niche brands since its establishment, including US emerging cosmetics brand Beauty Bakerie, US clean beauty start-up Saie, and natural skincare brand True Botanicals. In 2023, Unilever Ventures invested $2 million in seed funding for pure beauty brand Live Tinted and Australian scalp care brand Straand. Acquiring minority equity stakes in start-ups means less risk. Spending a huge amount of money to acquire a mature brand requires a longer period to achieve investment returns, and if the acquired company's performance declines, it will hurt the entire group's performance. Investing in start-ups can provide investment returns in the short term. According to Statista data, the average deal value per M&A in the beauty industry dropped sharply from $247 million in 2019 to $107 million in 2022. Although the number of M&A deals in 2022 increased by only one case compared to 2019, from 174 to 175, this also indicates that beauty giants are becoming more cautious about their acquisition investments. The fragrance remains the most attractive category to investors Despite the current challenging economic environment, M&A will continue to play a driving role in the beauty industry due to its resilience and growth potential. Large beauty conglomerates will seek smaller but higher-quality brands and companies to fill gaps in their product portfolios and remain competitive. Even with continued market uncertainty in the first few months of 2023, the attractiveness of the beauty industry to investors remains stable. According to BOF, the beauty industry's EBITDA profit margin averages between 15% and 25%, and McKinsey predicts that the skincare, haircare, cosmetics, and fragrance industries will achieve a compound annual growth rate of 6% globally by 2027. In these examples of M&A and investments, fragrance remains one of the most attractive categories to investors. In recent years, several major M&A deals in the beauty industry have occurred in the fragrance category. In 2022, Spanish beauty giant Puig acquired a majority stake in Swedish fragrance brand Byredo, with an estimated valuation of up to €1 billion. In addition to Puig, Estée Lauder, and L'Oreal also showed strong interest in Byredo. On April 28th of this year, Estée Lauder acquired high-end brand Tom Ford for $2.25 billion, beating out other bidders including Gucci's parent company Kering Group, and it will become Estée Lauder's largest acquisition to date. The acquisition was largely due to Tom Ford's fragrance and beauty business. On June 26th, Kering Group announced that its beauty division, Kering Beauté, had reached an agreement to acquire all the shares of the high-end fragrance brand Creed. The all-cash transaction is expected to be completed in the second half of 2023, with Creed's revenue exceeding €250 million. The transaction amount is estimated to be around $1.5 billion. Advent International, a private equity firm based in the United States, revealed on June 22 that they had acquired a controlling interest in two French niche fragrance brands, Parfums de Marly and Initio Parfums Privés. While the exact financial terms of the deal were not disclosed, insiders in the industry estimate that its value exceeds $700 million. In recent years, the rise of independent brands has been a key trend disrupting the competitive landscape of the beauty industry. These fast-growing, agile, and innovative new brands have made the market more fiercely competitive, and beauty giants have joined in investing in independent brands to grasp the latest trends and increase their influence. Overall, fragrance and independent brands will be important trends in M&A in the beauty industry. In the short term, M&A is expected to continue, but the number of transactions will decrease. In this uncertain economic environment, acquirers in the beauty industry will become very cautious, requiring them to focus on identifying target beauty brands with rapid growth and profitability. M&A in the beauty industry will focus more on quality rather than quantity.

The China regional business performed poorly in the Kose travel-retail channel, with the ratio of consolidated sales declining from 17% last year to 12% this year. The Kose Group has reported strong financial results for the first half of 2023, reflecting its continued growth and solid performance in the cosmetics industry. During this period, the company achieved a notable increase in net sales, driven by double-digit growth in its key markets, particularly Japan and Tarte. Despite facing challenges in South Korea with lower sales, Kose managed to offset the impact through its robust performance in other regions. In H1 2023, Kose recorded net sales of ¥144.2 billion ($1 billion), representing a significant year-on-year increase of ¥13.6 billion ($94.9 million) or 10.5%. This impressive growth can be attributed to the exceptional performance of its Cosmetics segment, which accounted for 81.1% of the total net sales. The segment witnessed a substantial YoY increase of 10.8%, reaching ¥117.0 billion ($816.4 million). Tarte emerged as the leading contributor to the sales growth in the cosmetics segment, supported by strong performances from DECORTÉ, SEKKISEI, and ONE BY KOSÉ. These brands experienced robust sales and contributed to the segment's higher profitability, which was further enhanced by lower cost of sales and increased overall sales. In addition to the Cosmetics segment, the Cosmetaries segment also demonstrated positive growth, with net sales amounting to ¥26.2 billion ($182.8 million), representing an 8.6% YoY increase. Within this segment, Kose's brands, such as Visée and CLEAR TURN of KOSÉ Cosmeport, performed well, particularly in the Japanese market. The segment's profitability improved due to higher sales and effective cost management. Kose's major group companies, including ALBION, Kose Cosmeport, and Tarte, Inc., played a significant role in driving the company's overall sales growth. ALBION achieved sales of ¥25 billion ($174.4 million), with ¥22.1 billion ($154.2 million) in Japan and ¥2.8 billion ($19.5 million) in Asia/Others. Kose Cosmeport reported net sales of ¥16.3 billion ($113.7 million), with ¥16 billion ($111.6 million) in Japan and ¥0.3 billion ($2.1 million) in Asia/Others. Tarte, Inc. recorded sales of ¥25.6 billion ($178.6 million), with ¥20.8 billion ($145.1 million) in North America and ¥4.7 billion ($32.8 million) in Europe/Others. Major brands like DECORTÉ and SEKKISEI also contributed strongly to the company's overall sales, with DECORTÉ achieving sales of ¥43.7 billion ($304.9 million) and SEKKISEI recording sales of ¥6.7 billion ($46.7 million). Regionally, Kose experienced significant sales growth in its domestic market, Japan, with net sales amounting to ¥87.5 billion ($610.5 million), representing a remarkable YoY increase of 15.5%. Sales of high-end brand products in prestigious department stores and specialty cosmetics stores remained strong, while major prestige skincare brands witnessed a recovery in sales in drug stores and other mass retail channels. Demand for makeup brands also surged, contributing to the overall sales growth in Japan. In China, sales were impacted by the delayed recovery in demand in early 2023. However, sales rebounded in offline channels, particularly department stores. While e-commerce sales during the 618 shopping festival were higher than the previous year, cumulative sales were sluggish. In addition, the China regional business performed poorly in the Kose travel-retail channel, with the ratio of consolidated sales declining from 17% last year to 12% this year, and the travel-retail business in Korea also trending down. Overall sales in Asia declined 11.5% to 31.9 billion yen ($222.6 million). On the other hand, Kose witnessed remarkable sales growth in North America, primarily driven by Tarte's success. The launch of new products backed by successful promotions on social media platforms, coupled with the increasing availability of Tarte products in stores and the impact of the yen's depreciation, contributed to a significant YoY sales increase of 31.2% in North America, reaching ¥21.6 billion ($150.7 million). The "others" region, including Europe, also experienced strong sales growth of 41.1% to ¥3.1 billion ($21.6 million), largely driven by the success of Tarte products. Looking ahead to the second half of 2023, Kose expects a 10% increase in sales in China (excluding travel retail). However, the company anticipates a slower economic recovery than initially expected. To address intensifying competition, Kose plans to strengthen its e-commerce channels by adding a new platform. The company also aims to conduct promotional activities with a focus on its new AQ line. In department stores, Kose plans to open new stores and reinforce flagship stores to raise awareness of DECORTÉ high-end products. With its strong performance in H1 2023 and positive outlook for the second half of the year, Kose aims to achieve a total net sales target of ¥305 billion ($2.13 billion) for 2023, representing a significant YoY increase of 15.8%. The company's commitment to innovation, brand strength, and strategic expansion positions it well for continued success in the competitive cosmetics market.