OK, Zoomers: Chinese youth are helping the rise of the cosmetics industry

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It’s fair to say that CNFormulator, a Chinese cosmetics startup, isn’t your mother’s makeup company. Almost every day, its marketing department uploads quick videos to its social media, trying to go viral in the spirit of a TikTok video.

During a recent visit to CNFormulator’s Hangzhou office, the power of branding was highlighted.

“This cream is perfect for the dry skin season ahead,” said one influencer, her performance bursting with energy as she spoke on camera.

Marketing has paid off. Sales have gone viral since the founding of CNFormulator in 2019. Turnover during the June online sales event alone exceeded 20 million RMB ($ 3.1 million). The company aims to achieve annual turnover of RMB 1 billion in 2026.

It would have been unimaginable not so long ago. Chinese branded personal products carried a stigma, resulting in large part from a deadly 2008 scandal in which infant formula was contaminated with a toxic substance.

But over the past two years, Chinese brands have experienced a kind of renaissance. The Gen Z, or Zoomers, who are fueling this trend, are in their teens or early twenties.

“Our target market is dominated by the young generation around 20 years old,” said Pang Ying, founder of CNFormulator.

The company’s selling point is that the quality of its products is comparable to that of its foreign competitors. To this end, CNFormulator has worked with product developers from Japan and Western countries.

Older consumers overwhelmingly preferred foreign cosmetic brands to their Chinese counterparts. But since the Zoomers have been surrounded by Chinese-made products like Huawei and Xiaomi smartphones from birth, they don’t exhibit such strong resistance to domestic brands.

“The image of Chinese brands as being likely cheap and inferior has been dispelled, and the cosmetics market has grown in a sustainable manner,” an industry insider said.

Without bias, Zoomers often make purchasing decisions through social media. This confluence has resulted in the growth of the beauty market.

The rising brand Florasis is also actively recruiting popular influencers. This effort paid off during the June 18 online shopping festival, also known as 618, when Florasis recorded more than RMB 260 million in gross transaction volume on the e-commerce platform of ‘Alibaba Group Holding.

It’s not just startups that have benefited from the boom. Pechoin, founded in 1931, seduces consumers by promoting the brand’s “chinoiserie”. Not only does Pechoin’s products rely heavily on traditional medicine, but the company also adopts works of art with classical Chinese patterns.

Although the cosmetics industry looks promising, challenges remain. Yatsen Holding, a startup that went public last year, recorded a net loss of RMB 380 million in the April-June quarter of this year.

This is typical of emerging market startups that overinvest regardless of the impact on finances. For a business to survive in the newly revived cosmetics industry, maintaining a consumer-focused perspective and protecting the brand will likely be crucial.

This article first appeared on Nikkei Asia. It is reposted here as part of the ongoing 36Kr program partnership with Nikkei.

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