- Chinese beauty brands outperform global brands at home
- But weak consumer sentiment poses challenge to continued growth
- Proya plans foreign deals to meet 10-year plan
- Proya targets global top-10 status, $7 billion annual revenue
- Ushopal plans to acquire one to two new brands annually
SHANGHAI, June 10 (Reuters) – Some of China’s top beauty brands such as Proya and S’Young are exploring acquisitions of smaller foreign rivals to expand their portfolios and replicate the success of global leaders like L’Oreal or Estée Lauder amid slowing growth at home.
While still relatively unknown internationally, these Chinese brands have found significant domestic success, even capturing market share from global players. But a prolonged property crisis and concerns about wage growth and employment security have dampened consumer spending in China – posing new challenges to their continued growth.Proya Cosmetics’ (603605.SS), opens new tab founder, Hou Juncheng, said last month that the company’s 10-year plan aims to position the firm among the top ten globally, a goal that would require an annual revenue of at least 50 billion yuan ($7 billion).
To do so, the Hangzhou-based Proya plans “to acquire some European brands with history and technology”, local media reports cited Hou as telling shareholders at a meeting.
Proya, which specialises in science-backed skincare at mass market price points, became the first Chinese beauty player to surpass 10 billion yuan in annual revenue in 2024.
In comparison, Japan’s Shiseido (4911.T), opens new tab, currently ranked tenth globally, raked in $6.9 billion and market leader L’Oreal (OREP.PA), opens new tab generated over $45 billion in revenue last year.S’Young and Ushopal, two prominent Chinese beauty groups, have already made strides in international acquisitions.
S’Young owns French skincare brand Evidens de Beaute and U.S.-brand ReVive, while Ushopal added French brand Payot to a portfolio that includes British skincare label ARgENTUM and French fragrance Juliette has a gun.
William Lau, a partner at Ushopal, said the company plans to acquire one to two new brands annually.
Analysts say buying foreign brands can help Chinese beauty firms diversify revenue streams and reduce reliance on the domestic market, but they also note that some similar efforts by Chinese fashion groups had missed expectations in the past.
The beauty and personal care market is projected to generate a revenue of $677.19 billion globally in 2025, versus $41.78 billion in China, German data provider Statista estimates.Chinese brands are likely to target premium-positioned European skincare, fragrance or haircare brands with valuations under $500 million, said Gregoire Grandchamp, co-founder of Next Beauty China, who has advised Chinese groups on global deals.
“In coming years, there will be a big Chinese company that will be the Chinese L’Oreal, Estée Lauder, Shiseido, or Amorepacific,” Grandchamp predicted.
GLOBAL M&A ‘VERY DIFFICULT’
Acquisitions have long been a growth strategy for beauty giants. L’Oreal’s $2.5 billion purchase of Australian brand Aesop in 2023 added a premium, natural cosmetics brand to its portfolio, while Estee Lauder’s (EL.N), opens new tab $2.8 billion acquisition of Tom Ford in 2022 helped boost its array of high-end perfumes.
Chinese beauty brands aim to borrow from this M&A playbook, but there are concerns about their ability to operate brands outside their home turf.
