A few of China’s prime magnificence manufacturers resembling Proya and S’Younger are exploring acquisitions of smaller overseas rivals to develop their portfolios and replicate the success of world leaders like L’Oréal or Estée Lauder amid slowing development at house.
Whereas nonetheless comparatively unknown internationally, these Chinese language manufacturers have discovered vital home success, even capturing market share from international gamers. However a protracted property disaster and issues about wage development and employment safety have dampened shopper spending in China — posing new challenges to their continued development.
Proya Cosmetics’ founder, Hou Juncheng, stated final month that the corporate’s 10-year plan goals to place the agency among the many prime ten globally, a objective that may require an annual income of not less than 50 billion yuan ($7 billion).
To take action, the Hangzhou-based Proya plans “to accumulate some European manufacturers with historical past and expertise”, native media reviews cited Hou as telling shareholders at a gathering.
Proya, which specialises in science-backed skincare at mass market worth factors, turned the primary Chinese language magnificence participant to surpass 10 billion yuan in annual income in 2024.
Compared, Japan’s Shiseido, at present ranked tenth globally, raked in $6.9 billion and market chief L’Oréal generated over $45 billion in income final 12 months.
S’Younger and Ushopal, two distinguished Chinese language magnificence teams, have already made strides in worldwide acquisitions.
S’Younger owns French skincare model Evidens de Beaute and US-brand ReVive, whereas Ushopal added French model Payot to a portfolio that features British skincare label ARgENTUM and French perfume Juliette has a gun.
William Lau, a accomplice at Ushopal, stated the corporate plans to accumulate one to 2 new manufacturers yearly.
Analysts say shopping for overseas manufacturers may help Chinese language magnificence companies diversify income streams and cut back reliance on the home market, however in addition they notice that some comparable efforts by Chinese language style teams had missed expectations up to now.
The wonder and private care market is projected to generate a income of $677.19 billion globally in 2025, versus $41.78 billion in China, German information supplier Statista estimates.
Chinese language manufacturers are more likely to goal premium-positioned European skincare, perfume or haircare manufacturers with valuations below $500 million, stated Gregoire Grandchamp, co-founder of Subsequent Magnificence China, who has suggested Chinese language teams on international offers.
“In coming years, there can be a giant Chinese language firm that would be the Chinese language L’Oréal, Estée Lauder, Shiseido or Amorepacific,” Grandchamp predicted.
International M&A ‘Very Tough’
Acquisitions have lengthy been a development technique for magnificence giants. L’Oréal’s $2.5 billion buy of Australian model Aesop in 2023 added a premium, pure cosmetics model to its portfolio, whereas Estee Lauder’s $2.8 billion acquisition of Tom Ford in 2022 helped enhance its array of high-end perfumes.
Chinese language magnificence manufacturers purpose to borrow from this M&A playbook, however there are issues about their potential to function manufacturers exterior their house turf.
Within the style area, state-owned textile large Ruyi as soon as made headlines for snapping up overseas manufacturers and touting its ambition to change into “China’s LVMH” solely to see these worldwide offers unwound by collectors in a number of quick years.
However Ushopal’s Lau says these challenges will not be distinctive to Chinese language teams, citing examples like Shiseido’s buyout of Drunk Elephant to L’Oréal’s buy of some Chinese language manufacturers that struggled to satisfy expectations.
“International acquisitions are very tough” on the whole and a part of the issue is that corporations typically attempt to localise manufacturers too rapidly after a deal, he stated.
“One of many causes you purchase a model is as a result of it’s a tremendous model, so in the event you then redo the complete DNA of the model, what’s the purpose of shopping for it?” he added.
Mark Tanner, founder and managing director of Shanghai-based advertising and analysis company China Skinny, stated: “Opening doorways to the Chinese language market and capital injections, quite than a wholesale administration takeover” usually tend to succeed.
By Casey Corridor and Sophie Yu; Editor: Himani Sarkar
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