In Depth: China’s Beauty Brands Shine Online as Foreign Rivals Falter

1. For many years, foreign beauty brands such as those from Europe and South Korea dominated China’s cosmetics market, controlling both retail spaces and technological innovation. However, this began to change as Chinese domestic brands rose in prominence, claiming a greater share of the market and altering the competitive landscape. [para. 1]

2. In 2025, China’s cosmetics market grew by 2.8% to surpass 1.1 trillion yuan (about $159 billion) in annual sales. Domestic brands accounted for 57.4% of this market, outpacing foreign brands for the fourth consecutive year, as reported by the China Association of Fragrance Flavour and Cosmetic Industries (CAFFCI). [para. 2]

3. This surge in market share has led to a boom in capital market activity. Since 2024, numerous domestic cosmetic companies have pursued IPOs to fund expansion. Mao Geping Cosmetics Co. Ltd. initiated this trend with a Hong Kong IPO in late 2024, followed by others like Shanghai Forest Cabin Cosmetics. In 2025, over 40 Chinese beauty firms were preparing IPOs, with Hong Kong surpassing mainland exchanges as their preferred listing destination. [para. 3]

4. The rise of domestic firms can be attributed to their agile business models, which leverage online channels, deep understanding of local consumer trends, and fast-paced product development. Foreign brands have responded by adapting their strategies in China, investing in local startups, or scaling back operations. Market analysts predict ongoing consolidation among leading homegrown companies as the market continues restructuring. [para. 4]

5. Digital sales have become the dominant sales channel. In 2022, online cosmetic sales overtook offline purchases for the first time, and by 2025, online sales of domestic products reached 721.8 billion yuan (65.4% of the total market). Chinese brands excel at using platforms like ByteDance’s Douyin and Alibaba’s Tmall, garnering half of the top 10 spots in Douyin’s 2025 cosmetics GMV ranking. [para. 5][para. 6][para. 7][para. 8]

6. Chinese companies often move faster and are less constrained by bureaucratic processes than their foreign counterparts. Leading Chinese brands get about 70% of their sales from Douyin, while foreign brands derive only 40%. Proprietary apps and data collection underlie their targeted marketing and rapid product development, advantages foreign brands struggle to replicate due to global guidelines and slower innovation cycles. [para. 9][para. 10]

7. Proya, for example, led Tmall’s skincare sales in 2025 with more than 4 billion yuan in revenue, outpacing international giants. Their success was driven by trends like the “morning C, night A” skincare regimen. Packaging and pricing strategies, such as bundling serums and raising prices, led to 76% sales growth, and Proya surpassed 10 billion yuan in annual revenue in 2024. Kans, another domestic leader, used 15-episode Douyin dramas for product placement, collecting 200 million+ views in three weeks, and driving a 143.8% revenue jump in 2023. [para. 11][para. 12][para. 13][para. 14]

8. Consumer priorities have shifted as buyers increasingly scrutinize ingredients and efficacy. In a 2024 iResearch survey, 58.8% of consumers cited ingredients as their main factor in skincare purchases. Domestic brands responded by investing more in research and development, focusing on proprietary formulas and marketing innovations like camellia oil and specially synthesized compounds. [para. 15][para. 16][para. 17][para. 18]

9. The quick evolution of ingredient trends can also disrupt business—Bloomage Biotechnology’s revenue dropped over 30% when hyaluronic acid lost popularity, while Giant Biogene’s emphasis on recombinant collagen boosted its revenue from 1.55 billion yuan in 2021 to 5.54 billion yuan in 2024. Tensions over ingredient authenticity even led to public disputes and falling share prices for major producers. [para. 19][para. 20][para. 21][para. 22]

10. Foreign brands have faced challenges, with several high-profile exits or downsizing: 27 foreign brands withdrew or reduced operations in 2024–2025. Some, like Estée Lauder, boosted sales through aggressive discounting, especially during events like the “Double 11” festival. Others, like L’Oréal, have invested in or acquired stakes in innovative Chinese startups to learn from local industry leaders. [para. 23][para. 24][para. 25][para. 26][para. 27]

11. The Chinese market is highly competitive: 27,000 domestic brands exited in 2025 (over 40% of all local marques) while 17,000 new brands launched. Analysts expect continued consolidation around leading domestic brands. According to Goldman Sachs, successful future branding strategies will focus on high repurchase rates and multichannel distribution. [para. 28][para. 29][para. 30][para. 31]