ZMUni Compliance Centre

In 2023, Chinese cosmetic ingredient enterprises exhibited a strong and steady growth trajectory, while international ingredient suppliers encountered challenges with declining overall performance. Within the realm of ingredient competition, bioactive and efficacy ingredients emerged as the central focus of the industry. Concurrently, synthetic biology technology gained increasing prominence, emerging as a new trend in industry development. In response to these market changes, major brand enterprises have intensified their investment in ingredient research and development (R&D), aiming to secure a competitive edge.

As of now, multiple cosmetic ingredients and cosmetics enterprises have released their annual reports for 2023, unveiling a diverse range of performance trends and varying levels of achievement.

Chinese Cosmetic Ingredients Enterprises Revenue and R&D Investment in 2023

In the international ingredients market, the situation appears to be more severe. Six major players in the chemical ingredients industry, namely Croda, Clariant, Ashland, BASF, Dow, and DSM-Firmenich, have all been grappling with declining performance. However, amidst this challenging backdrop, some companies have demonstrated remarkable resilience. 

The fragrance care division of Symrise achieved sales of 1.75 billion euros (approximately $1.9 billion ), with organic sales experiencing a year-on-year increase of 5.6%. Givaudan's perfume and beauty division recorded sales of CHF 3.31 billion (approximately $3.68 billion), marking a notable year-on-year growth of 7.6%. IFF's chemical fragrance and flavor division accomplished sales of $2.39 billion, representing an 8% growth on a comparable basis.

Chinese Cosmetic Enterprises Revenue and R&D Investment in 2023

In comparison, international companies such as L'Oréal Group witnessed a 5.4% growth in the mainland China market in 2023. Last year, L'Oréal Group's global R&D investment amounted to 1.289 billion euros (approximately $1.4 billion), with an R&D expense ratio of 3.1%, marking a 10-percentage-point increase compared to 2022.

ZMUni Compliance Centre recently made a summary of the annual reports of several Chinese ingredients and cosmetics enterprises, highlighting key information concerning the R&D and production infrastructure development of these enterprises in 2023.  

Chinese Cosmetic Ingredients Enterprises

Bloomage Biotech (“华熙生物”in Chinese)

During the reporting period, leveraging six major R&D platforms, the company successfully introduced a total of 9 new bioactive products and ingredients, and made good progress in the R&D testing of several other products and ingredients.

As of May 11, 2024, a total of six new cosmetic ingredients (NCIs) of Bloomage Biotech have been filed by the China National Medical Products Administration (NMPA), of which 4 have entered the monitoring period.

CN BIO (“川宁生物”in Chinese)

During the reporting period, the company's main focus in R&D has been on the production of ingredients as follows:

Freda (“福瑞达”in Chinese)

During the reporting period, the company launched a total of 152 cosmetics products on the market. Freda actively expanded the application scenarios of ingredients, accelerating the promotion of Hyaluronic Acid in fast-moving consumer products such as beverages, pet food, and family planning supplies, as well as the promotion of Ectoin and Polyglutamic Acid in agriculture. Freda’s sales volume of oral beauty products tripled year-on-year.

COSMOS (“科斯股份”in Chinese)

In terms of project construction, during the reporting period, the company continued to advance the expansion project of new sunscreen products, completing the construction and trial production of part of the production line for the expansion project in Ma'anshan COSMOS, with an annual output of 5000 tons of sunscreen products. The production capacity of Avobenzone, Ehylhexyl Methoxycinnamate, and Ethylhexyl Triazone will be further increased.

Meanwhile, the construction of the high-end personal care products and synthetic fragrance project (Phase I) and the annual production of 3200 tons of high-end personal care products project in Anqing COSMOS are progressing rapidly. The first batch of projects, including 12800 tons/year of Amino Acid surfactants and 3000 tons/year of new dandruff agent Piroctone Olamine, have been completed and put into production successively. The project with an annual output of 2600 tons of high-end personal care products has also been completed.

AHB (“华恒生物”in Chinese)

As of 2023, AHB's revenue from amino acid products accounted for as much as 75.59% of its total revenue, while vitamins and other businesses contributed 11.23% and 12.08% respectively. Among these, the revenue from vitamins saw a year-on-year increase of 574.96%.

In 2023, the company commenced or completed the construction of production capacity for products such as Succinic Acid, Propylene Glycol, Malic Acid, Arginine, L-leucine, and Inositol. It is projected that the total production capacity will reach 271,000 tons per year in 2024, representing a growth of 324%.

SHANXI JINBO BIO-PHARMACEUTICAL CO., LTD. (“锦波生物”in Chinese)

The company excels in researching and industrializing original functional protein ingredients, particularly Recombinant Humanized Type A Collagen. During the reporting period, the company established a strategic partnership with L'Oréal, marking its first entry into L'Oréal's supply chain system and successfully selling recombinant collagen protein ingredients to L'Oréal, marking a milestone for the company's ingredients entering the supply chain of internationally renowned brands.

Chinese Cosmetics Enterprises

PROYA (“珀莱雅”in Chinese)

During the reporting period, the company successfully established and operationalized its Hangzhou Longwu Research Center and Shanghai Research Center. These centers play a crucial role in refining the company's research capabilities across all stages of product development, from ingredients to finished products. Areas of focus include basic research, formula development, physicochemical analysis, and evaluation of ingredient and product efficacy. The company maintains a sustained emphasis on research related to skin texture, active ingredient design, and efficacy validation, as well as the development of new skincare, makeup, and hair care products.

In the latter half of 2023, the company achieved a significant milestone by introducing China's first patented cyclopeptide ingredient, Cyclopeptide-161, which successfully passed the filing process for NCIs. This ingredient was applied in the star product Cream 3.0, further solidifying the company's reputation for professionalism and technological leadership in the peptide field. This accomplishment marks a new frontier in the exploration of industry-developed ingredients.

BTN (“贝泰妮”in Chinese)

During the reporting period, the company achieved significant milestones in the approval and filing of three NCIs, namely Ludwigia Adscenedens Extract, Bee-produced Pseudozyma Yeast/Glucose/Perilla Seed Oil Fermentation Product, and Bee-produced Pseudozyma Yeast/Glucose/Coconut Oil/Perilla Seed Oil Fermentation Product. The approved quantity of these ingredients ranks among the top in the industry nationwide.

In addition, BTN was successfully selected as the 37th National Standard Sample Laboratory for Natural Products, and four standard samples developed by the company, including Compound K and 6-O-Caffeoylarbutin, entered the National Standard Sample Development Plan through expert demonstration, and the company will gradually build a standard sample system of Yunnan characteristic plant ingredients applied to functional cosmetics.

As of May 11, 2024, a total of seven NCIs of BTN have been filed by China NMPA, of which one have entered the monitoring period.

SYG (“水羊股份”in Chinese)

Regarding the research system for NCIs, significant efforts have been dedicated to the innovation and development of traditional Chinese natural plant ingredients. This includes hei cha, black ginseng, ginseng, and other traditional sources. Furthermore, modern biotechnologies like plant extraction, biological fermentation, and synthetic biology are employed for innovative development. Examples of these developments include medicinal and edible fungi, hei cha polysaccharides, phytoceramide, and high-purity snow lotus mud extract minerals.

During the reporting period, the company filed 47 patent applications and was granted 67 patents, including 12 invention patents. Ten papers were published, out of which 8 were indexed in Science Citation Index (SCI). The company also completed the filing process for two NCIs: Black Ginseng Extract and Pyrroloquinoline Quinone (PQQ). Additionally, it participated in the formulation of 14 national, local, and group standards, resulting in the issuance of 2 new local standards and 1 group standard.

As of May 11, 2024, a total of there NCIs of SYG have been filed by China NMPA, of which two have entered the monitoring period.

Fuerjia Technology (“敷尔佳”in Chinese)

During the reporting period, the company completed the filing process for β-nicotinamide mononucleotide (NMN) as an NCI, and it is currently in the monitoring period. NMN is intended for use as an "anti-wrinkle agent, skin protectant, moisturizer, antioxidant" and can be incorporated into various skincare cosmetics, except for spray products. The development of NCIs, including Acetyl Zingerone and Matrine Salicylate, is also in progress.

As of May 11, 2024, Fuerjia has filed one NCI, which has entered the monitoring period.

Some trends in China's cosmetics industry

• According to data released by the China National Bureau of Statistics, in 2023, China's imports of cosmetics totaled $17.94 billion, representing a year-on-year decrease of 19.4%. On the other hand, exports reached $6.51 billion, indicating a year-on-year increase of 16.7%. Many cosmetics and ingredients companies have experienced a rise in revenue from overseas markets. However, the expansion into international markets is influenced by various factors such as the global economic downturn, exchange rate instability, and escalating international trade frictions.

   

• Based on public data, Chinese cosmetics brands surpassed international brands for the first time in 2023, capturing 50.4% of the Chinese cosmetics market share. Proya emerged as the top beauty brand in China for the first time.

• The future of the cosmetics ingredients industry in China will be shaped by several key aspects, including a focus on green environmental protection, technological innovation, personalized customization, professional manufacturers, and global expansion.

• In China, the NMPA and other relevant authorities continuously introduce new regulations and innovative regulatory measures to enhance and standardize the supervision of cosmetic ingredients. These efforts provide robust support for the high-quality development of the cosmetics industry. Similarly, overseas countries implement strict licensing, certification, and supervision management systems for various products.

Note: The reporting period in this passage refers to January - December 2023.

Source: 2023 Annual reports of the relevant enterprises.