The Twists and Turns Behind 34.3 Billion in Revenue: China’s Beauty Industry Is Undergoing a Crucial Reorganization
Hello, everyone, and welcome to your financial news analysis. Today, we’re not talking about the gossip of a few star companies but about the profound changes that have taken place in China’s beauty industry in the first half of 2026.
If you’ve been following the beauty sector recently, you might have noticed a sense of division: on one hand, the overall market is still growing (retail sales increased by 6.3% in the first half of the year), while on the other hand, many established giants have seen a sharp drop in profits and stagnant growth.
Vogue Business analyzed the semi-annual reports of 13 major publicly traded beauty companies in China and discovered something astonishing: these 13 companies together earned 34.356 billion yuan, but among them, 9 saw profits increase, and 4 saw them decline. More importantly, three top-performing companies—Lin Qingxuan, Fuerjia, and Maogeping—contributed over 120% of the net profit growth.
What does this mean? It means that the era of “everyone benefiting from market growth” is over, and we are now in a phase of survival of the fittest. The old strategies of spending money on marketing, relying on influencers to promote products, and selling products with high gross margins no longer work.
Below, I’ll break down five key industry trends from these financial reports in plain language, to help you understand how your wallet and the fate of these companies are being reshaped.
---
1. High Gross Margins Are No Longer a Guarantee of Profit
In the past, the beauty industry was seen as a lucrative business with high gross margins—selling something for 100 yuan might only cost 20 yuan in production. But now, there’s a big gap between high margins and actual profits.
- The Dilemma of Yixian E-commerce (parent company of Perfect Diary):
The company’s revenue increased by 12.65% in the first half of the year, with a gross margin of 76.88%, which sounds good. However, it still lost 153 million yuan. Why? It’s because the company is shifting its focus from cosmetics (Perfect Diary) to skincare products (such as Galénic and DR.WU). While the new skincare business has high margins, it’s not yet profitable; the cosmetics business saw a 35.8% decline in revenue. It’s like a chef who stops making their signature dish and continues to pay for rent and staff while developing new recipes.
- The Struggles of Shangmei Co., Ltd. (parent company of Hanshu):
The gross margin increased from 75.5% to 76.7%, but revenue dropped by 8.6%, and profits plummeted by 77.4%. The main reason is that the core brand Hanshu is in a period of adjustment, with revenue down by 20.4%. Although new brands are performing well, they are not large enough to make up for the loss from Hanshu.
In simple terms: In the past, you just needed to sell products to make money. Now, you also have to consider the costs involved. Don’t just look at the profit margin; you need to see how much net profit actually remains.
---
2. Influencer Live Streams Are Losing Their Appeal, and Brands Are Starting to Generate Their Own Traffic
If you often use platforms like TikTok or Kuaishou, you’ll notice that beauty brands used to rely heavily on influencers to promote their products. But in the first half of 2026, almost all leading companies stopped using influencers and started their own live streaming channels.
- The Pain of Juzi Biology (Kefumei):
Kefumei’s revenue decreased by 7.7% because the company reduced its reliance on influencer live streams. Although sales expenses increased by 19.7%, this was because the money was reinvested in brand building, customer education, and direct sales channels.
- The Challenges of Marumei Biology:
The brand “Lianhuo,” which started with influencer marketing, saw a 24.78% decline in revenue. Although the company cut back on inefficient partnerships with influencers, the sales expense ratio still remained high at 58.65%. This shows that while getting rid of influencers is easy, building your own audience is difficult.
In simple terms: Using influencers was like renting a room; it was expensive but quick to see results. Now, it’s more cost-effective to build your own audience through direct channels.
---
3. A Multi-Brand Strategy Is No Longer Just for Show; Profitability Is Key
In recent years, many beauty groups have created multiple brands to target different consumer groups. But the market is questioning whether the secondary and tertiary brands can be profitable on their own.
- The Success of Betaine (Vinoora):
Vinoora’s main brand’s growth slowed down, but its new brands, such as Vinoora Baby and Aike Man, grew rapidly, contributing 2.6 times more to the company’s overall revenue. This indicates that the multi-brand strategy is starting to work.
- The Risks of Furenda’s New Brand:
The new brand “Kemi” saw a 621% increase in sales, but 85% of the revenue came from one popular product. This shows that while growth is fast, it’s also risky, as the success of this product could be short-lived.
- Shanghai Jahua’s Focus on Core Brands:
The company stopped spreading its efforts evenly and focused on three core brands: Liushen, Baicaoji, and Yuzhe, focusing on a few key products. As a result, both revenue and profits increased significantly.
In simple terms: Instead of trying to cover a wide range of brands, it’s better to focus on a few well-defined ones. An effective multi-brand strategy means having clear roles for each brand: the core brands stabilize the business, while new brands drive growth, or eliminate less profitable ones to concentrate resources on hit products.
---
4. The Skincare Market Is Slowing Down, and Growth Is Moving to More Niche Areas
A significant trend is that the mainstream facial skincare category (such as basic lotions and creams) is losing momentum. Consumers are shifting their money to more specific products.
- Peleiya:
Skincare revenue decreased by 6.87%, but revenue from hair care products (shampoos, conditioners, etc.) increased by 74.95%. The hair care brand Off&Relax became a new growth driver.
- Shangmei Co., Ltd.:
Although the core skincare brand Hanshu’s performance declined, the revenue from maternal and baby care products increased from 13.6% to 19.9%.
- Huaxi Biology:
Revenue from traditional functional skincare products halved, but the company’s raw materials and nutritional science businesses are growing rapidly.
In simple terms: Consumers are becoming more selective and specific in their purchases. For example, young people buy hair care products, mothers buy baby skincare, and those with sensitive skin look for specialized treatments. The competition will no longer be about the overall skincare market but about niche segments like youth skincare, men’s hair care, and post-surgery recovery products.
---
5. High-Endization Is No Longer About Simply Charging More; It’s About a Comprehensive Approach
Among all the changes, high-endization remains a clear trend. However, in 2026, high-endization means more than just raising prices; it’s about a comprehensive strategy.
- Maogeping:
Revenue increased by 26.2%, and net profit by 20.3%. Its success lies in its high-end department store outlets, professional makeup services, and a focus on “light and shadow aesthetics.” It provides an authentic and valuable experience for customers.
- Lin Qingxuan:
Revenue increased by 42.6% thanks to camellia oil, premium products, physical stores, and membership programs, resulting in a 32.5% repurchase rate.
In simple terms: True high-end products are those that consumers recognize, trust, and are willing to buy again. Maogeping and Lin Qingxuan succeed by creating a sense of professionalism and a strong brand connection with their customers.
---
Conclusion: A Watershed Moment for China’s Beauty Industry
Looking at these semi-annual reports, we can conclude that the beauty industry is still growing, but the rules of growth have changed:
1. High gross margins do not equate to high profits; net profit is what matters.
2. Relying on influencer live streams is no longer a free option; brands must build their own customer bases.
3. A multi-brand strategy is not a surefire guarantee of success; new brands must be profitable on their own.
4. Mainstream skincare is no longer the only path to growth; growth is coming from niche segments like hair care and specialized products.
5. High-endization is about more than just raising prices; it’s about a comprehensive brand strategy.
Companies that are still growing are those that use a combination of strong products, efficient channels, valuable brand assets, and meticulous operations.
This shift in growth rewards those who have made early investments and focused on improving their internal capabilities. For consumers, this means we’ll see more unique, high-quality, and well-service products in the future, rather than just another batch of trendy, generic products.
For investors and industry players, speed is no longer the key; stability and accuracy are essential.