Domestic beauty products are ＂out of the circle＂ and it is time to sail overseas
● Our reporter Fu Suying Duan Fangyuan
"When I traveled to Japan during the Spring Festival this year, I actually saw Huaxizi’s counter in Shinjuku, and it was full of China elements, such as’ concentric lock lipstick’, which made people particularly cordial." Wang Wei, who lives in Beijing, told the china securities journal reporter, "I also found that many beauty bloggers in Japan and South Korea often share China brand beauty products in short videos, and the number of hits is very high."
Since 2023, domestic beauty cosmetics have become popular overseas, and gradually gained a foothold in Japan, South Korea and Southeast Asia with great development potential. According to national customs data, the annual export value of cosmetics in 2023 was 26.37 billion yuan, a year-on-year increase of 39.3%. According to industry insiders, in the past two years, domestic beauty cosmetics have made a "good start" by virtue of China elements, accurate positioning, high cost performance and developed cross-border e-commerce, with broad prospects. However, at present, the road to the sea for domestic beauty cosmetics is still in its infancy. Compared with international brands, there is still a long way to go in research and development, design, marketing and channel construction.
At the right time to go to sea
Hua Xizi settled in Amazon, Japan in 2021, and its "concentric lock lipstick" rushed to the top three in the lipstick real-time sales list on the first day of its launch. In 2023, the pace of Hua Xizi’s going to sea was further accelerated. In August, he settled in the head office of Isetan Shinjuku, a high-end shopping mall in Japan, and opened the first overseas seasonal limited offline store.
Gabby Chen, president of Huaxizi International Business, said that the Japanese cosmetics market is very mature and the Chinese and Japanese cultures blend together. Huaxizi chose Japan as the first stop to go to sea, aiming to seek new breakthroughs in the international beauty stage with the help of the tempering of product strength and brand strength in the high-standard market. "Going to Japan has accumulated experience and reputation for us to further explore international markets such as Europe and the United States. Since receiving the first overseas order in 2018, we have sold it to more than 100 countries and regions around the world through brand independent stations and e-commerce platforms. "
Hua Xizi has become a model for domestic beauty brands to speed up going to sea in recent years. Among the domestic beauty brands that go out to sea, in addition to the cutting-edge brands with keen sense of smell in the market, such as Hua Xizi, Hua Zhi and ZEESEA Zise, Betani, Hua Xi Bio and other domestic beauty leaders are the first.
Among the sea destinations, Japan and South Korea, which have mature markets, similar geographical areas and cultural compatibility, have become the first choice for domestic beauty brands. In addition to Hua Xizi’s deep-rooted Japanese market, cost-effective domestic beauty cosmetics are also popular in South Korea. Previously, "China Beauty Makeup sells well in South Korea" also boarded a hot search in Weibo. Data show that in the first eight months of 2023, China’s cosmetics exports to South Korea increased by about 190% year-on-year.
At the same time, domestic beauty brands have also targeted the Southeast Asian market with great development potential. Guotai Junan Securities believes that Japan and South Korea, two mature beauty markets, have high consumer groups, which are suitable for the export of beauty products with outstanding cultural attributes and aesthetic differentiation. Usually, makeup categories are more suitable. In contrast, the economy of Southeast Asia as a whole shows strong growth, and beauty brands are expected to enjoy the consumption upgrade bonus in the above areas.
Taking Betaine as an example, the company began to make efforts in overseas markets in 2023, and the first layout was Southeast Asia. "Southeast Asia has a large population and great market potential. At the same time, Yunnan, where the company is headquartered, has a geographical advantage, which helps the company to better formulate its market strategy." The relevant person in charge of Betaine told the china securities journal reporter.
Outstanding comparative advantage
In recent years, domestic beauty cosmetics have been able to compete in overseas markets, which stems from their comparative advantages in research and development, design, channels and marketing strategies.
A number of people in the industry said in an interview with china securities journal that from the perspective of sub-categories, the categories of domestic beauty products that go abroad are concentrated in the field of make-up, and the emerging new brands are the main ones. In recent years, domestic cosmetics have achieved breakthroughs in many overseas markets with high cost performance, differentiated and visually impactful packaging and materials, and accurate marketing strategies.
The rise of cross-border e-commerce has also paved the way for domestic beauty products to go to sea. According to the above-mentioned Betani related persons, Winona, a brand of the company, has settled in the mainstream e-commerce platforms in Southeast Asia such as Shopee and Lazada. In 2023, Betani set up an overseas business team and set up a Southeast Asia operation center in Bangkok, Thailand, covering Malaysia, Thailand, Indonesia, Singapore, the Philippines and other countries.
In recent years, with the continuous investment in research and development, domestic beauty products have become more and more emboldened to go to sea. Donghai securities believes that domestic beauty cosmetics have a complete industrial chain, which can save a long time compared with overseas brands in many aspects, such as formula debugging, inspection process and trial production scheme, so it is easier to meet the changing needs of consumers.
The person in charge of Huaxi Biology told the china securities journal reporter: "At present, the company has built six R&D platforms, including synthetic biology research and development, microbial fermentation, application mechanism research and development, pilot transformation, crosslinking technology and formulation technology research and development, and developed a series of bioactive products with hyaluronic acid as the core. Among them, hyaluronic acid includes more than 200 products of pharmaceutical grade, cosmetic grade and food grade. "
Tell the "China Story"
While domestic beauty cosmetics are rising rapidly in overseas markets, there is still a certain gap compared with international brands. "On the whole, the domestic beauty brands are still in their infancy, and their market share and brand influence are still limited. There is still a long way to go." A person in charge of a domestic beauty brand told the china securities journal reporter.
"The core technologies of the beauty industry, especially high-end products, are monopolized by overseas brands. The technical content of domestic beauty products is relatively weak and the homogenization is serious. At the same time, overseas brands have occupied a dominant position in the hearts of global consumers after years of accumulation, and domestic beauty cosmetics need to continue to strengthen brand building. In addition, domestic beauty cosmetics have risen rapidly with the help of online platforms, but the sales expenses are large, which will squeeze the gross profit margin of products and is not conducive to the cultivation of long-term competitiveness. " Fu Yifu, a senior researcher at Xingtu Financial Research Institute, told the china securities journal reporter.
He suggested that domestic beauty brands should further enhance their R&D capabilities, improve product quality, and at the same time strengthen the construction of brand power, so as to tell the "China story" well with the opportunity of going to sea. While consolidating the advantages of online channels, we will continue to make efforts offline to make up for the shortage that consumers can’t personally test online, help users make purchase decisions quickly, improve consumers’ perception, and further stimulate consumers’ willingness to buy.
Gabby Chen said that product development and quality control should meet the standards of different countries and regions, including formula review, global skin color matching and environmentally friendly packaging. At the same time, how to balance China elements and international aesthetics in cultural expression is also a big test. In addition, the company is still trying to adapt to the consumption habits of different markets, especially the offline retail experience.
Donghai securities suggested that from overseas experience, going to sea is the only way for the development of head enterprises. Perfect brand matrix is the cornerstone of the company’s outward expansion, and international brands meet different consumer needs through multiple brand matrices and different categories. For example, L ‘Oré al, Estee Lauder and Shiseido have over 20 sub-brands, covering skin care, make-up, perfume and hairdressing.
Source: china securities journal.
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