Chinese cosmetics rise in global market on budget appeal

With youth opting for C-beauty, South Korean industry keeps a watchful eye

Chinese cosmetics brands, known as “C-beauty,” are rapidly making inroads in the global beauty market, raising concerns among South Korean industry leaders. China was South Korea’s largest cosmetics market last year, with exports surpassing 3 trillion won ($2.3 billion). However, C-beauty brands are leveraging lower prices, stylish packaging, and outsourced manufacturing through K-beauty production bases. This approach is helping Chinese brands gain traction in South Korea, the United States, Japan, and Europe—regions once considered major growth areas for K-beauty. In 2023, Chinese cosmetics exports jumped nearly 33% year-over-year to $3.7 billion, highlighting their aggressive expansion abroad.

Chinese brands have found a foothold among South Korea’s younger consumers in their teens and twenties, who are increasingly adopting “frugal consumption” habits. With the expanding presence of Chinese e-commerce platforms like AliExpress and Temu, imports of Chinese cosmetics through cross-border shopping have been climbing by 60-70% each year.

Products from Flower Knows./Flower Knows Instagram

Touting “affordable prices and eye-catching design,” Chinese brands are establishing themselves in the global beauty scene. Flower Knows, a well-known C-beauty brand, is often likened to South Korea’s Etude House for its whimsical, princess-themed packaging adorned with floral embossing and gold trim. INTO YOU, another C-beauty brand specializing in lip products, has swiftly expanded into South Korea, Japan, and the U.S.

Chinese cosmetics, often priced below $6 on platforms like AliExpress and Temu, are gaining popularity as affordable alternatives to local brands, which can cost over $22 for similar products in South Korea. “It would cost more than three times the current expense to add the ornate designs seen on Chinese products to local brands,” said a South Korean industry insider, noting the challenge of competing on price while maintaining elaborate packaging.

Cross-border shopping for Chinese cosmetics in South Korea has increased by 60-70% annually. According to Statistics Korea, direct purchases of Chinese cosmetics reached about $122 million in the first three quarters of this year, up 60.7% from a year earlier. Though the volume is not yet significant enough to threaten K-beauty, observers note C-beauty’s rapid growth warrants close monitoring.

Chinese cosmetics are especially popular among consumers in their teens and twenties, influenced by the “frugal consumption” trend fueled by rising living costs. Cumulative cosmetics sales at South Korean budget retailer Daiso in the first three quarters of this year increased around 160% over the previous year. As demand for affordable cosmetics rises, consumers are turning to reasonably priced Chinese products.

This trend grew stronger during China’s Singles’ Day shopping season, with social media platforms like Instagram and TikTok fueling interest in C-beauty. The curiosity factor has also contributed to growing demand.

Notably, some Chinese brands rely on South Korean ODM (original design manufacturer) companies for production, boosting their credibility. COSMAX manufactures skincare, cushion, and sun care products in its factories in Shanghai and Guangzhou for Chinese clients. Kolmar Korea produces lipsticks at its Wuxi factory for INTO YOU, Perfect Diary, and Florasis, while C&C International, with two factories in Shanghai, posted a record $13 million in revenue last year from lip tint sales primarily on AliExpress, Temu, and Taobao.

South Korean ODM company COSMAX recently built a factory in Guangzhou with Yatsen Holding, operator of the Chinese cosmetics brand Perfect Diary./COSMAX

Chinese cosmetics are also expanding in developed markets like the U.S., Japan, and Europe. A recent Korea Trade-Investment Promotion Agency (KOTRA) report shows that Chinese brands have significantly increased research and development investments to aggressively target overseas markets. Last year, Chinese cosmetics exports to the U.S., the U.K., and other countries exceeded $3.7 billion, marking a decade high. Chinese color cosmetics brands continue expanding their presence abroad, with pop-up stores such as one held in Shinjuku, Japan, last year.

Despite their growth, Chinese brands have yet to achieve high repeat purchase rates, and industry experts currently do not see them as a major threat to K-beauty. “While Chinese cosmetics have yet to establish high repeat purchases, their packaging quality and powder formulations are impressive, and they could become a long-term challenge,” an industry source said.