The Next Consumer Battleground for Chinese Beauty Companies Starts with Hair Care

For years, local beauty companies have been perfecting their skincare game with proprietary formulations and patents. This past May, they've opened a new front: hair and scalp care.

It seems like a well-orchestrated move as several big players unveiled their new hair care initiatives:

• On May 20th, CHICMAX Group launched the One Leaf Hair Care Collection, focused on sensitive scalp care, at a special conference. Drawing from ten years of botanical research, over 80% of the ingredients in these products are naturally sourced.
• Just a few days later, on May 24th, SHANDONG FREDA unveiled its new brand "SOON MU," dedicated to scalp microbiome care, marking over two years of preparation.
• Before even launching their products, PROYA’s "AwakenSeeds" was stirring up buzz on social media. Focusing on scalp health, "AwakenSeeds" is the first hair care brand from PROYA's Shanghai R&D Center and their second after off&relax.
• Even JINBO, still climbing its way to the top, has been proactive. It’s rolled out new hair care products with type XVII collagen for its ProtYouth brand and has developed a scalp micro-essence for a new brand.

With substantial resources, PROYA Group has been heating things up on Weibo and Xiaohongshu for the debut of AwakenSeeds' "Oil Control and Volumizing Collection," aimed at young people with oily scalp. The brand's introduction suggests potent rejuvenation, hinting at future expansions into anti-hair loss and scalp treatments.

The concerted rise of local beauty groups is likely because they have clearly seen a reality: financial data and brand matrices from international beauty groups like L'Oréal Group, Shiseido Group, Procter & Gamble, and Beiersdorf have proven that to become a true all-around beauty giant, products related to hair, a natural human accessory, are an indispensable category, whether through original creation or acquisition.

Amid an enthusiastic market and shifting consumer trends, China’s hair care market is booming, touted as a burgeoning "gold mine" of opportunity.

According to Euromonitor, the market was worth 63.6 billion yuan in 2023 and is expected to grow annually by 3.45% over the next five years.

Mintel projects even stronger growth, with the market expanding by 4.5% annually by 2027.

According to "NETVOICES" data monitoring, the online market size for hair care in 2023 has approached 30 billion yuan, an 11% increase year-over-year. Among these, the Taobao Tmall market size reached 17.57 billion yuan, and the Douyin hair care market size exceeded 12 billion yuan.

These compelling figures underline the vast potential of China's hair care market. Long-established international beauty titans have been keenly aware of this sector's vibrancy:

• In 2018, Hair Rituel by Sisley made its China debut with a pop-up store in Shanghai's New World Daimaru, officially stepping into the Chinese market. Last year, the brand expanded into Sephora and just this May, opened its first Beijing store.
• In 2022, Estée Lauder's Aveda launched its inaugural mainland store in Shanghai’s Qiantan Taikoo Li.
• In 2023, the luxury American hair care brand Vegamour set its sights on the Chinese market.
• Also in 2023, Rene Furterer collaborated with JOY Group in a strategic move to speed up expansion in China.
• This past May, the German functional personal care brand Sebamed celebrated its first Brand Day in China.
• L’Oréal Group’s Kérastase and L'Oréal Pro have recently broadened their reach by partnering with Sephora.

Current sales figures show foreign brands dominating the core market, but local hair care brands are steadily gaining ground. According to Euromonitor, in 2023, American, French, and Chinese brands were the top three players in China's hair care market, with market shares of 33.3%, 17.4%, and 15.0% respectively. While Chinese brands still have some catching up to do with American brands, they’re only 2.5 percentage points behind French brands. In China’s dynamic market, known for rapid shifts, this gap could easily close, perhaps even in a single shopping festival.

Moreover, Chinese consumers are more than ready to support local brands.

From fleeting social media buzz around traditional brand Bee Flower to the surge in popularity of decade-old brands like Adolph and see young during recent shopping festivals, to the buzz around newer names like Kimtrue and Blommage Biotech’s Sense Woods, it’s evident there’s a strong domestic interest in homegrown hair care. The pace at which new local brands are launching shows that local beauty companies are gradually breaking out of the skincare comfort zone, making hair care one of the focal points for business expansion and signaling a more comprehensive upgrade of domestic goods.

While some might see upgrading brands or industries as risky in an era of consumption downgrading, one has to wonder if this concept really applies to hair care. With the ongoing changes in consumer behavior driven by more time spent at home, people are increasingly inclined to invest more in products related to their personal space and well-being, making hair care an integral part of this trend.

While providing a touch of luxury, hair care products are also closely linked with broader health themes due to their focus on hair and scalp health. This unique combination of "beauty & health" helps them stand out from traditional skincare products that only focus on improving appearance, like anti-aging and whitening. As a result, consumers are shifting from using the same generic supermarket brand to choosing specialized products tailored to their specific needs.

Even though there's a wide price range among different brands, the recent trend shows that Chinese consumers are willing to spend more on hair care. This is evident from how Kérastase has overtaken long-standing brands like Head & Shoulders, Pantene, and L'Oréal Paris during major shopping festivals, even topping last year's sales across all hair care products online.

To meet these growing demands, high-end retailers like Sephora are not only expanding their exclusive partnerships with up-and-coming hair care brands but are also enhancing their in-store hair care sections to make them distinct areas.

It’s important to note that while high-end beauty brands might develop youthful lines to engage young consumers with more affordable products, in the hair care sector, "youthful" doesn't mean cheap. It's all about targeted efficacy. This straightforward approach to pricing means that as long as a product works well and feels great, local brands have a real shot at breaking through.

The evolution from basic cleansing to specialized products like dandruff treatment, volumizing, and silicone-free shampoos to today's skincare-like approach to hair care highlights how innovations are not only upgrading consumers' understanding of what hair care can be but also expanding the market for specialized products.

For example, the demand for conditioners driven by silicone-free shampoos, and the emergence of pre-wash scalp treatments and various functional oils as the concepts of scalp health and skincare-level hair care become more widespread.

Introduced to the Chinese market by Sephora, SYSTEM PROFESSIONAL's Balance Energy Serum is one of the brand's standout products

Meanwhile, local beauty groups are focusing on highly effective, specialized hair care products tailored for specific demographics or needs. This includes products aimed at sensitive scalps or built around advanced technologies like collagen or microbiomes. This strategic focus on specialized care is perfectly timed with a shift in the primary consumer base, making it a golden opportunity for local brands.

For the older generation of consumers who tend to be more cautious, a new brand might need time to earn trust. However, for the younger generations like Millennials and Gen Z—known for their eagerness to try new brands and products—a compelling narrative, solid technology, engaging marketing, or even a catchy moment in a short video can quickly lead to a purchase.

This flexible consumer environment is giving local hair care brands the chance to break away from the shadows of established international names. For instance, the emerging hair care brand Spes, founded in 2019 and officially launched in January 2020, achieved TOP3 sales across all categories on Xiaohongshu within just six months. During the 2023 Singles' Day event, Spes became the top brand in its category on platforms like Tmall, JD.com, and Douyin.

While local brands once lagged behind international players, today they're at the forefront with advanced R&D and patented technologies, ready to lead a transformative "hair care revolution." The results might need some time to fully materialize, but the shift is already underway.