New Ingredients, Online Research Boost Chinese Beauty Industry
The reason for such polarization is complicated and largely attributed to a combination of tighter regulations and disruption in the upstream supply chain, as well as changing consumer appetites for beauty and the good. -being, and growing confidence in the local culture downstream. The global situation is changing, but here is an overview of the trends and issues driving the second largest beauty market in the world.
With the rise of the ingredient / efficacy centric trend in China, ingredients are the centerpiece of product innovations. Aided by the latest cosmetic ingredient management regulations, the industry is now seeing a sudden increase in applications of new ingredients with the National Medical Product Administration (formerly China Food and Drug Administration).
Of the eight approved between 2008 and 2020 by Chinese authorities, four new ingredients have already completed the registration and notification process since June, according to cosmetic ingredient notification information released by the National Medical Product Administration (NMPA). These ingredients are:
- N-acetylneuraminic acid (NANA, SA) as a humectant;
- N-Lauroyl-L-Alanine like Detergent (supramolecular amino acid);
- Beta-Alanyl Hydroxyprolyl Diaminobutyroyl Benzylamide as skin protector; and
- Tissue culture of Saussurea Involucrata as an antioxidant.
All four are subject to a three-year “safety watch period”, during which they are licensed for cosmetic applications, but the allowance will be revoked if safety concerns arise. After the three-year period, the materials will be listed in the Inventory of Existing Cosmetic Ingredients in China (IECIC 2021).
Interestingly, the four new ingredients all come from local biotech or pharmaceutical companies. But reading the April announcement from the National Institutes for Food and Drug Control, it should be noted that of the 37 new cosmetic ingredients accepted by the authority for approval, 20 are from international companies, including hydroxyphenyl propamidobenzoic acid. from Symrise, methyl aminomethyl cyclohexylamine carboxyl-amine HCL from Shiseido and Rhodiola Rosea root extract from Estée Lauder.
What’s happening on the ingredient side also reflects consumer demand for natural / herbal materials with traditional Chinese touches. Take N-acetylneuraminic acid, for example. Although this newly approved ingredient itself is produced with fermentation biotechnology, it is known as an essential component (sialic acid) in edible bird nests, a delicacy with proven skin care benefits.
In line with the three-child policy introduced earlier in China, the NMPA introduced supervision and administration provisions on children’s cosmetics on October 8 after releasing the draft for public comment in June. Entered into force on January 1, 2022, the regulation sets much stricter rules on cosmetic products for children 12 and under. It covers all aspects of product manufacturing and operations management, ranging from registration and notification, labeling, sample inspection to post-market surveillance.
On the product and marketing side, the new regulation clarifies for the first time that the terms “edible” and “food grade” are not acceptable in cosmetic products for children, including toothpaste. And if it is a product suitable for all demographics or all family members, the product will be subject to this new regulation.
Regarding product formulation guidelines, the draft regulation specifies that children’s cosmetics should focus on four main types of functions: cleaning, hydration, sweat absorption / cooling and drying, and sun protection. And the key points are that in the forms:
- The types of ingredients should be reduced and the safety, stability, functionality and compatibility of the ingredients used should be assessed based on the physiology of children, in particular Perfumes and flavors, colors, preservatives and surfactants;
- Ingredients are not permitted for anti-freckle / whitening, anti-acne, hair removal, deodorization, anti-dandruff, anti-hair loss, hair dye and perm purposes; and
- Only ingredients with a history of safe use can be used. Those in the period of safety oversight or with uncertain child safety profiles are not permitted.
Aside from regulations, there is a strong consumer demand for baby / child care products. The average annual growth rate of the Chinese baby / child care market is over 30%, compared to 9% for the overall GDP over the past five years. The gains are attributed to the huge population base, albeit with declining birth rates. Additionally, young parents (25-30) seem willing to spend more on their children, according to some industry reports.
When it comes to specific categories of baby / child care, skin and hair care (especially cleansers and moisturizers), sunscreens and body care remain the most in demand. Meanwhile, sales of children’s oral care products increased significantly, with online sales growth exceeding sales for adults.
Beauty trends are critically dependent on the local regulatory environment. For example, the government recently tackled false and misleading beauty claims.
Regulators have also cracked down on “toxic idol worship” in the entertainment industry. The latter is expected to have much broader implications for fandom culture in China. These media idols promote the products of many beauty brands.
Yet regulations alone do not give the full picture of the market environment. The latest beauty report from Baidu, China’s largest search engine, sheds light on what lies ahead.
Based on its TGI data from January to July 2021, in top tier cities, where consumers tend to be adventurous when it comes to beauty care, the top 5 TGLs are: V-line facelift, serum, device of beauty, anti-aging and eye care. When it comes to purchasing decisions, the main consumer considerations are: product category / type, brand, reputation / word of mouth, application methods and functionality. In addition, the ingredients and the appropriate skin type are of particular concern when purchasing.
The dynamic between hot and cold spots in the Chinese cosmetics market is changing; the broad directions, however, are more or less consistent with the global directions, despite all these twists and turns.
Ally Dai is a Shanghai-based freelance freelance consultant / consultant. She has covered the beauty industry for over 15 years. Previously an editor and industry researcher, she now works on content creation with publishers, event planners and public relations firms in the personal care and life sciences industries.