1. Yatsen Holding, the New York-listed owner of makeup brand Perfect Diary, said it remains open to further beauty-brand acquisitions, though scaling its existing portfolio is the immediate priority, according to founder and CEO David Huang. [para. 1][para. 3] The company, which acquired French brand Galénic, Dr. Wu's mainland China business, and British label Eve Lom between 2020 and 2021 and also owns Little Ondine and Pink Bear, has followed a multibrand strategy since its founding, with skincare now accounting for more than 70% of revenue. [para. 2][para. 4]
2. In the second quarter, skincare revenue jumped 40.4% to 816.1 million yuan ($121.6 million), representing 71.5% of total sales, up from 53.5% a year earlier, while color-cosmetics revenue fell 35.8% as the company grappled with "structural headwinds amid heightened competition." [para. 5] Overall revenue rose 5.1% to 1.1 billion yuan, but net losses widened to 90.8 million yuan from 19.5 million yuan a year earlier; third-quarter revenue is expected to be flat to down 10% year on year. [para. 6]
3. Huang said the boundary between skincare and makeup is becoming less distinct as skincare-derived technology is increasingly applied to cosmetics, creating new synergies in technology, distribution channels, consumer insights, and innovation culture. [para. 7][para. 8] Perfect Diary, once Yatsen's main growth engine and still its flagship brand, began repositioning its products around the integration of makeup and skincare in 2023 as Chinese consumers became more focused on ingredients. [para. 9]
4. Chinese consumers are increasingly scrutinizing ingredient lists and prioritizing efficacy over brand heritage; a 2024 iResearch survey found 58.8% ranked ingredients as their top consideration when buying skincare products. [para. 10] Clair Dai, head of Perfect Diary's overseas business division, described a shift from simply looking for skincare ingredients added to makeup to expecting makeup itself to provide skincare benefits, citing the Biolip Essence Lipstick, marketed as a three-in-one lipstick, lip serum, and lip mask. [para. 11] Johnny Chen, general manager of Dr. Wu's mainland business, said consumers now have increasingly specific needs and skin concerns, making broad, one-size-fits-all products less likely to meet those needs. [para. 12]
5. The executives' comments come six months after Yatsen agreed to raise about $120 million through a private placement of yuan-denominated convertible senior notes and warrants, with proceeds earmarked for research and development, global supply-chain integration, overseas expansion, and strategic mergers and acquisitions. [para. 13] Yatsen is leaning more heavily on research and AI to differentiate its products, spending 37.3 million yuan (3.3% of revenue) on R&D in the second quarter. [para. 14] Chief Scientific Officer Cheng Jing said AI is being used to screen active ingredients, identify biological markers, determine ingredient combinations, and design new molecules for potential active skincare ingredients. [para. 15]
6. The emphasis on science reflects a broader industry shift: average R&D spending among China's listed beauty-related companies rose from 2.4% of revenue in 2020 to 3.2% in the first half of 2025, according to the China Association of Fragrance Flavour and Cosmetic Industries. [para. 16] China's cosmetics market grew 2.8% last year to more than 1.1 trillion yuan, with domestic brands holding 57.4% of the market, surpassing foreign brands for a fourth consecutive year. [para. 17]
7. Huang said China will remain Yatsen's main market for now, even as the company explores opportunities in other parts of Asia and Europe. [para. 18]
AI generated, for reference only
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