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(Bloomberg’s Opinion) – Chinese cosmetic brands would possibly, however, be able to take on their foreign rivals, thanks to the Covid epidemic and a wave of patriotic shopping. The growing popularity of domestic makeup products is an example of how pandemic agitation and geopolitical tensions are creating unforeseen winners and losers.
The shares of Proya Cosmetics Co., Guangdong Marubi Biotechnology Co. and Shanghai Jahwa United Co. skyrocketed this year, outperforming the gain in the Shanghai benchmark. Meanwhile, mid-range cosmetic brands, such as Japan’s Shiseido Co. and South Korean Amorepacific Corp., the peak of emerging Chinese festivals, have sunk into more than giant market indices in their home countries.
To perceive replacement, note the replacement in the intake patterns caused by the coronavirus. The blockades forced others to stay home while unemployment greatly increased incomes, encouraging consumers to spend more time online and look for less expensive products. Chinese virtual makeup brands were perfectly placed to deserve it.
Companies like Proya have advanced in teams like live streaming and online celebrities to sell their products. Hangzhou-based cosmetics manufacturer has hired singer-songwriter Cai Xukun as logo ambassador and organizes live broadcast sessions on Alibaba Group Holding Ltd.’s Taobao advertising site, which lasts up to 16 hours a day. Up to 86% of local cosmetics are sold online in China, compared to 58% of multinationals, according to a June report by Goldman Sachs Group Inc.
The virus has helped in a way, stimulating the demand for products that can soothe irritated skin by constantly using face masks. Dr. Yu, a face cream sold through Shanghai Jahwa, recorded a 500% increase in sales in the first quarter compared to last year.
Tensions with the United States and a series of conflicts with countries from the UK to India have also led Chinese consumers to move away from foreign products and look for local alternatives. The disputes have fuelled the nationalist fervor of other young people who already have a less favorable view of foreign brands and are more adapted to virtual commerce. Dr. Yu named one of the most important patriotic brands in a report through the Hong Kong-based South China Morning Post prior to this year.
Others benefited, adding Shanghai Pehchaolin Daily Chemical Co., the country’s largest national skin care company. Last year, its 89-year-old Pechoin logo ranked 7.3% of China’s massive skincare market, only L’Oreal SA, according to Euromonitor data. Khando, owned by Shanghai-based Jala Group, was tied for third with 5.5% with Olay of Procter and Gamble Co.
The trend breaks a fashion order. Color cosmetics and skin care are two of the product spaces in which foreign multinationals have historically dominated. With cash trapped at home and consumers “reorienting” their spending, it’s threatened.
If China’s neighbors are a guide, this substitution may still have a long way to go. Multinationals still account for up to 46% of the country’s massive cosmetics revenues. In Japan and South Korea, its percentage is among adolescents and adolescents. There’s a lot more skin in the game for Dr. Yu.
This column necessarily reflects the perspectives of the editorial board or Bloomberg LP and its owners.
Nisha Gopalan is a Bloomberg opinion columnist covering transactions and banking. In the past she worked for the Wall Street Journal and Dow Jones as an editor and journalist.
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