Summary of Key Points
This article discusses the channel changes in China's cosmetics industry over the past 20 years, with the central argument being that local brands have risen rapidly by seizing the benefits of each new channel (television shopping, e-commerce, content platforms, live streaming, AI), but over-reliance on these channels can lead to decline when the benefits fade. International brands, although slower to respond, have been able to catch up due to their established brand recognition. For local brands to achieve long-term success, they need to diversify their channels, break away from being associated with specific channels, strengthen their product and brand strength, and address their shortcomings in the offline market.
1. Channel Benefits: The “Fast Track” for Local Brands
When new channels emerge, the traffic is cheap and competition is low, similar to a newly opened highway where the first brands to use it can gain a significant advantage:
- Television Shopping Era: Around 2000, Hanbu gained popularity through aggressive marketing tactics on television shopping platforms.
- Shelf E-commerce Era: In 2010, with the rise of Tmall, local brands like Yinnifang and Afu broke through the barriers of international brands in department stores, using platform traffic and the long-tail effect to increase sales.
- Content E-commerce Era: In 2018, with the popularity of platforms like REDnote and Douyin, Perfect Diary used a strategy of promoting products on REDnote and converting sales on Tmall to quickly gain traction in the mature cosmetics market.
- Live Streaming E-commerce Era: During the pandemic in 2020, Hanbu used short videos with popular Douyin influencers to achieve massive exposure; Vinona invested heavily in real-product content on REDnote and then sold products through e-commerce.
- AI Era: In 2026, AI became a new source of traffic, and platforms like Taobao and Douyin introduced AI tools. Those who mastered AI could gain a competitive edge.
Each new channel presents an opportunity for local brands to disrupt the industry, but the window of opportunity is short, and failure to seize it can result in falling behind.
2. International Brands’ “Latecomer Advantage”: Brand Strength is the Real Asset
International brands may not have quickly adopted new channels, but they have a key advantage: consumer trust and brand assets:
- Example from this year’s 618 shopping festival: The top three on the Douyin rankings were all international brands (Estée Lauder, Helene Keller, La Mer), while the top spot on Tmall was occupied by L’Oréal’s SkinCeuticals.
- Why can they catch up? International brands have built up long-term customer trust (e.g., consumers associate La Mer with high-end skincare). They also have well-established loyalty programs. Once they become familiar with new channel strategies (such as advertising and content creation), they can quickly catch up.
- Counterexample: Huaxizi initially relied on popular influencers, but faced significant revenue declines when the traffic boom faded. Perfect Diary gained popularity through traffic but neglected research and development, resulting in declining returns on investment.
3. Local Brands’ “Fatal Weakness”: Over-reliance on Single Channels
Many local brands have made channel benefits their core strength, only to suffer when the channels change:
- Huaxizi: Relying on a single influencer, its traffic plummeted after the influencer’s controversy.
- Yinnifang: Its revenue from Taobao e-commerce decreased by 26.7% in 2023; it only recovered by shifting to Douyin.
- Handu Yishuo: As a Taobao-exclusive brand, it failed to adapt to content-based e-commerce on platforms like REDnote and Douyin, gradually becoming marginalized.
Single channels are like “single-plank bridges” that can collapse, leaving brands with no alternative.
4. Paths to Sustainable Growth
To break the cycle of short-lived success, local brands need to take the following steps:
1. Diversify Channels: Don’t Put All Your Eggs in One Basket
- Examples: Shuiyang Group (parent company of Yinnifang) shifted from Taobao to Douyin, with Douyin revenue exceeding Tmall’s in 2024. Perlaya diversified its channels from relying solely on Tmall to combining Tmall and Douyin to reduce risk.
- Why? New channels will eventually become mainstream, and traffic will become more expensive. Diversifying channels helps spread risks and stabilize revenue.
2. Break Away from Channel Labels: Stop Being Known as “Taobao Brands” or “Douyin Brands”
- Counterexamples: Afu’s essential oils were associated with Taobao, but it failed to expand to other channels, and now younger consumers are less aware of it. Handu Yishuo hasn’t broken away from its Taobao label, failing to keep up with changing consumer trends.
- How to do it? Plan for other channels while channel benefits are still high, so consumers remember the brand itself, not just the channel it’s associated with.
3. Strengthen Product and Brand Strength: Traffic can be Bought, but Trust is Earned
- Product Strength: Vinona uses unique ingredients from Yunnan to establish itself as a brand for sensitive skin. Hanbu uses exclusive anti-aging ingredients to enhance its product’s technological appeal.
- Brand Strength: International brands have built trust over time, allowing them to grow quickly in new channels. Local brands should invest in research and development to build their own brand loyalty.
4. Address Offline Weaknesses: The Offline Market is for Building Brand Loyalty, Not Just Selling Products
- Examples: Maogeping uses physical stores to provide trial services and customized makeup, establishing itself as a professional cosmetics brand, with 24.5% offline revenue growth in 2025. L’Oréal balances online and offline sales (55%/45%).
- How to do it? Open physical stores in key areas to offer experiences, not just for sales, but to build emotional connections with consumers and enhance the brand’s image.
Conclusion
Channels are a lever that can amplify brand potential, but the brand itself is the foundation. Channel benefits will eventually fade, and only those local brands that diversify their channels, strengthen their products and brands, and focus on offline experiences will be able to sustain long-term success. After all, consumers remember brands that are effective, not those associated with specific channels.