WHY THE OPPORTUNITY FOR CLEAN BEAUTY IN CHINA IS NOW

5 Key things you need to know in order to succeed in the world’s most competitive and dynamic market

The recent lifting of animal testing requirements on imported cosmetics and rising consumer preference for natural ingredients present a huge opportunity for clean beauty in China. So how can brands make traction in the world’s second largest beauty and personal care market in the world? We have identified 5 key areas of focus in order to win in China:

1. Digital - but not as you know it

Savvy, young Chinese consumers are evolving quickly – they are amongst the most well researched and sophisticated in the world. They are driving fundamental change in the industry, forcing both international and domestic beauty brands to have a deep understanding of how to activate a multitude of touchpoints. Thanks to the Great Firewall, the Chinese digital landscape is completely unique. Brands needs to understand how to leverage different channels for different functions, and results. It’s expensive, it’s noisy, and it’s complicated. Chinese APPs are to the 21st Century what American malls were to the last one.

“Each brand needs to prioritize certain platforms. For e-commerce, we believe the time when you only need to win on Taobao is gone. Today you need to find your consumers on different platforms. Many brands are experimenting with live streaming, private traffic and rethinking about offline.” Says Valentine Chen, Co-Founder of Sober Beauty, China’s first clean beauty make up brand.

What does this mean for beauty? FOCUS. You can’t do it all, for online, double down on key platforms which will make a difference: RED (for brand building), Tmall (for driving sales), and Wechat (for community building).

“Social media for beauty continue to be focused around Red, Weibo, Douyin, BiliBili & WeChat. For imported western brands the major ecommerce platforms continue to be Tmall Global, Taobao, JD, etc. However we are seeing growth potential in the live-stream based ecommerce growth of Douyin and Kuaishou.” Says Julian Reis, Founder & CEO of SuperOrdinaryCo.

 2. Offline is still Key

Yes, Chinese consumers search for information online and are big on ecommerce. However, they also value and love offline experiences. And as with everything in China, it’s got to be smarter, more exciting, digitally integrated – and don’t forget, selfie-worthy. A great example of a local player doing this well is Harmay. The multibrand beauty destination has throngs of fans queuing for hours to try the latest niche beauty brand

Offline also offers a unique chance to educate consumers about clean beauty (still a new and evolving concept for Chinese beauty buyers), try products and understand formulas.

Last month, Tata Harper, showcased their range of clean beauty products at SKPS in Beijing. Unable to travel due to border closures, Tata Harper herself zoomed in from her home in the United States to explain the products and the ingredients and efficacy of each one.

3. Your competitors are not who you think they are

Gone are the days of putting your competitors in the same basket: ie; other Western brands. Today, the market is as diverse as it is competitive. Chinese consumers have proudly embraced local brands from beauty, to fashion, to F&B and hospitality. Local brands have one key advantage over Western counterparts: they’re Chinese. They are savvier when it comes to taking risks and optimizing social media. The moment is most definitely now for Chinese brands.

“We believe with the increasing influence of social media no brands western or local get an automatic advantage in credibility. In fact even more effort is involved in establishing credibility than the past due to the huge increase in beauty brands. Lets also not forget the strength of the Japanese and Korean brands in the china market. In order to succeed you really need to have a long term commitment towards winning over the Chinese consumer, proving that you are offering a great product. Additionally we believe to win, we need a team with very strong local knowledge with the ability to navigate the complex and competitive china environment.” Says Julian Reis, Founder & CEO of SuperOrdinaryCo.

Venture Capital Groups are backing brands left, right and center, arming them with hefty investments for online and offline growth. Yatsen Holding Ltd. raised over $600 million in a U.S. IPO at the end of 2020, putting the company at a market value of $7.82 billion. The group has several well-known beauty brands under it’s portfolio including China’s home-grown DTC beauty brand, Perfect Diary, and most recently acquired British prestige skincare brand Eve Lom.

“Western brands might still have some edge — consider the common perception of China consumers who think the ingredients resources are more reliable. But the key to clean beauty is not just the ingredients it’s also the formula. It might be a key communication angle for a clean beauty brand in China to focus on how to educate the market from this perspective.” Says Gaby Chen, Head of Beauty at Lane Crawford, China.

“Clean Beauty is a fantastic opportunity for both Chinese and Western Brands. Chinese players have many advantages to launch new brands in their market and they receive massive capital support from local VC and PE funds. Of course, I do believe that in the premium segment, western brands have their advantages. For example, we are now launching a brand name La Rosee which is now the leading French brand in Clean Beauty, their big advantage is that they have very high quality products.” Grégoire Grandchamp , co-founder Next Beauty (investor and partner for western beauty brand in China) 

4. Clean beauty is not just a product, it’s a lifestyle

Clean Beauty is still a relatively new concept among many Chinese consumers and can be easier to communicate as a lifestyle concept, rather than a product choice. This will include store decoration (online and offline), packaging design (artistic and zero waste), collaboration choices, creative activities and so on. Sustainability and environmental impact is becoming a decision factor among Chinese consumers, while it is not a key driver yet, our research shows that the trend is only accelerating. “Consumers are showing their commitment to the environment and green earth with action: such as choosing paper straws & or becoming vegan with alternative meat options (Beyond Meat). The shift is happening fast and has evolved considerably within 1 year. I see the same potential of market shift for clean beauty in China within the near future.” Says Gaby Chen, Head of Beauty at Lane Crawford, China.

As a business, this is why we have a dedicated service offering supporting brands in this area. The topic of ‘green life’ is popular on many social media channels, which can be easily linked to organic, superfoods and other keywords shared with clean beauty. In WeChat the search volume of the term “Green Life” has grown 26.33% in past 90 days, and on lifestyle APP Xiaohongshu there are over 460,000 articles related to “Green Life” on Weibo, China’s equivalent of Twitter, the hashtag “Green Life” has over 719,000 interactions.

5. Education is needed

It’s an exciting time to be in China as a beauty brand, especially in the Clean Beauty category. However, there are many areas where brands need to focus on delivering clear messaging and education. “For Clean Beauty, one of the foremost challenges is to explain what clean beauty is. Because it actually does not have a clear definition yet. Each brand, each retailer might look at it somewhat differently. But behind, the bigger challenges are the need to educate the consumer about why they should care, and the values they represent. We believe we are at the beginning, and it could develop fast once all the brands, big and small begin working together towards a cleaner and greener beauty industry.” says Sober Beauty’s Valentine Chen.

I believe that many of the recently formed trends in consumer preference and behavior are only going one direction, making China not just an opportunity for global clean beauty brands, but a ‘must.’ 

“Chinese consumers (specially post 90s and 00s) are getting more interested by the concept of Clean Beauty, but in fact, the Chinese translation of “Clean Beauty” does NOT exist yet …. I have the impression that Clean Beauty is more perceived as “Conscious Beauty” i.e. Sustainable, Eco-responsible and Socially Responsible. The angle of clean beauty as  “Clean Formula” (with no harmful ingredients for the skin) is less developed, Chinese consumers love high-performing products with immediate results especially when they buy skincare products.” adds Next Beauty’s Grégoire Grandchamp

If you’re interested in finding out more about opportunities for Clean Beauty in China, please join our event on July 14th. The Luxury Conversation brings together industry experts in Shanghai to share how clean beauty brands can capitalize on opportunities in the market with products, education, tech and marketing.

 WEDNESDAY, 14 JULY 2021 

16:00 – 17:00 China (UTC +8) | 10:00 – 11:00 EU (UTC +2) | 09:00 – 10:00 UK (UTC +1)

https://luxuryconversation.com/event/china-briefing-clean-beauty/

Carol Zhou, SVP of China Business Innovation & Investment for Shiseido. Carol helps shape the next phase of transformation for the company. Previously, she has held a number of management positions at multinational firms such as Unilever, Burberry, L’Oréal, and Marriott where she has led global strategy & innovation functions across regions and categories. Carol received her undergraduate degree from New York University's Stern Business School and her MBA from Hong Kong University of Science and Technology.

William Lau, CEO of Bonnie & Clyde. With 15 years of experience in brand strategy and entrepreneurship, working with fashion, beauty startups and fortune 500 companies, William started his entrepreneurial career early on with his own creative brand agency, supporting clients such as GQ, Lululemon, Pepsi, and DreamWorks. He most recently led the brand entry for one of the fastest growing niche luxury fragrance brand, Juliette Has A Gun, and continues to operate as the VP of Branding for global luxury skincare such as Chantecaille and Natura Bissé. 

Valentine Chen, Founder of SOBER BEAUTY, the first Chinese clean beauty makeup brand. Having previously worked at L’Oreal and Estee Lauder in Paris and Shanghai, she has 10+ years experience in product development and branding. Valentine was born and raised in Shanghai and graduated from ESCP Europe.

[Moderator] Chloe Reuter, Founding Partner & Vice-Chair of Gusto Luxe & Gusto Collective, a leading integrated agency helping luxury brands grow in Asia with consulting, creative solutions, and digital innovation. She lives in Shanghai and speaks fluent Chinese. She is also Co-Founder of The Luxury Conversation. 

This event is invitation-only.