Visitors check out cosmetic products at Procter & Gamble (P&G)'s booth at the sixth China International Import Expo in Shanghai, Nov 9, 2023. [Photo/VCG]
International beauty and skincare giants in China are shifting their focus to performance-based products from luxury offerings to better serve increasingly practical Chinese consumers.
This trend reflects a strategic adaptation as companies like L'Oreal and Procter & Gamble respond to changing consumer preferences in China, where functionality and value for money are becoming more important than high-end branding.
Tina He, a beauty analyst at Mintel Group, a consumer product consultancy, said: "Chinese consumers are becoming more practical, prioritizing function-based quality over high-end price tags. This shift in consumer behavior presents an opportunity for high-end skincare brands to attract new customers by offering more entry-level products."
First-half global sales of L'Oreal, the global beauty leader, rose 7.3 percent year-on-year to 22.12 billion euros ($24.21 billion), driven by strong performance across all divisions, particularly in dermatological beauty and consumer products.
Nicolas Hieronimus, CEO of L'Oreal, said he is pleased with the company's performance, highlighting the acceleration of L'Oreal Luxe, the dynamism of consumer products and continued market share gains in dermatological beauty and professional products, which saw a remarkable 16.4 percent like-for-like growth (that is, sales growth achieved by the same number of stores a year ago — a measure adjusted for new or divested businesses).
On the Chinese mainland, L'Oreal's dermatological division has made significant strides, with SkinCeuticals and CeraVe leading the charge. However, the beauty market in China faced a downturn in the second quarter, partly due to tough comparisons with the previous year and ongoing low consumer confidence, said the company.
In North Asia, growth was primarily led by dermatological beauty and professional products, bolstered by the success of Kerastase. L'Oreal Paris and Maybelline New York drove low single-digit growth in the consumer products division, according to its financial report.
Meanwhile, P&G, another international beauty giant, reported a 9 percent year-on-year decline in fiscal year 2024 in China, due to soft market conditions and specific challenges faced by its SK-II brand. Despite these setbacks, P&G's baby care business saw a 6 percent year-on-year sales growth.
Andre Schulten, chief financial officer of P&G, said of the Chinese market prospects, "We expect it over time to go to maybe mid-singles (single adults aged 31 to 45), so more in line with what we see in other developed markets."
Analyst He said Chinese domestic beauty brands should use unique ingredients like herbs to differentiate themselves in the market. - China Daily/ANN
