Revenue growth in China’s beauty scene is unlikely to continue | WARC | The Feed

Revenue growth in China’s beauty scene is unlikely to continue

Leading companies operating in the blossoming C-beauty space are reporting strong revenue growth, with Yatsen Holding – owner of the direct-to-consumer (DTC) Perfect Diary brand – also posting impressive profit growth, but the good times aren’t likely to stick around.

What’s happening

The results, reported by Retail in Asia, also note “soft consumer demand and intense competition in the colour cosmetics segment”.

CEO and chair Jinfeng Huang reaffirmed “commitments to pursue brand-building, R&D investments and sustainable growth as the core pillars of our strategic transition in 2022.”

Still, versus Q1 2021, the company is anticipating a decline in quarterly revenue of between 35% and 40%, in part a reflection of the significant release of pent-up demand at the beginning of 2021 as COVID restrictions lifted. 2022 is unlikely to see any similar phenomena.

There are also interesting points of maturity, as more brands – Yatsen included – start to limit discounting in order to protect margins and brand equity.

Bigger ambitions

Increasingly, Chinese brands are aiming outside the country, partnering with Western influencers and e-commerce sites to gain a foothold, per The Business of Fashion.

In particular, Perfect Diary, the Yatsen brand, is noted for its strong use of Chinese social media across Southeast Asia.

What is interesting is not only brand China gaining regard outside the country but within, too. Chinese brands are beginning to top charts on all-important shopping holidays.

Sourced from Retail in Asia, Motley Fool, Business of Fashion, WARC. [Image: Perfect Diary]