The Chinese beauty brand industry is expected to continue shedding weaker brands in 2024 as the need for differentiation becomes more pressing. Industry insiders reported this to Yicai on July 2.
Under current conditions, the entire industry will be restructured in two to three years. Some companies that adjust their products will grow, while others that do not will be eliminated as restructuring could continue into the second half of the year, they added.
Last week, VNK, once a leading cosmetics brand, closed its flagship store on Tmall, and its other channels, such as its WeChat account, WeChat mini program, and Douyin platform, were suspended or shut down. During the 2020 Double 11 shopping festival, the sales volume of VNK’s flagship store exceeded 10 million yuan (1.4 million U.S. dollars).
The showdown began last year when another brand called It’s Focus became the first local beauty brand to close down that year. In the following months, many local brands, including Colorpedia and Fomomy, issued store closure or liquidation notices. This news was unexpected as Fomomy was the top-selling brand on Douyin and Taobao.
According to insiders, major e-commerce platforms have favored new beauty brands in recent years, leading to the emergence of a large number of newcomers. However, this trend has created an influx of entrepreneurs who often turn to original equipment manufacturers or original designers, resulting in a weak competitive barrier. Because products are nearly identical and customer loyalty is low, popularity fades quickly and brands that fail to raise more capital are forced to close their businesses, they explain.
Source: Rossa Primavera
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