Summary of Key Points
The pilot program for “personalized cosmetics customization” has expanded again! Starting from August, 8 additional provinces have joined in, bringing the total to 23 provinces nationwide. Regulatory authorities are supportive of this model, and market demand is strong (72% of consumers desire safe and exclusive customized products; the global market is expected to exceed 500 billion yuan by 2028). However, there are still challenges such as inaccurate testing, high costs, cumbersome registration procedures, and an immature business model. Nevertheless, both companies and policymakers are working on solutions. Additionally, there is untapped potential in addressing subjective preferences for fragrances and colors.
I. Expansion of the Pilot Program: Why Is It Growing?
This expansion is not sudden—it began with 5 provinces and cities in 2022, grew to 15 by 2025, and now covers 23 provinces. There are two main reasons behind this growth:
- Regulatory Approval: No major issues have arisen with the pilot program, and experts suggest it will likely continue or even expand.
- Surging Market Demand: 72% of consumers prioritize safety and exclusivity when purchasing customized cosmetics, and the global market is expected to reach over 500 billion yuan by 2028, indicating a large potential market.
Pilot companies have seen positive results; for example, the sales volume at Kose’s stores in Beijing has increased significantly, with a high repurchase rate of 90%. All 37 pilot companies have achieved both profitability and served as role models.
II. Personalization Is a Trend, but Profits Will Take Time
The technical director of Shanghai Jahua stated: “In the past, cosmetics were one-size-fits-all; now consumers want tailored skincare solutions. This is a promising area, but profits won’t come immediately.” Why?
- Industry Infrastructure: Technologies for skin analysis are still developing—while AI is being used, data and standards have not yet been unified. Shanghai Jahua collaborated with Megvii Technology to develop AI-based skin analysis tools using data from tens of millions of Chinese consumers, establishing 8 dimensions of skin quality (wrinkles, acne, complexion, etc.).
- Consumer Awareness: Not everyone is willing to pay more for customized products, so habits need to be gradually established.
III. Three Major Barriers: Testing, Costs, and Registration
To enter the customized cosmetics market, three hurdles must be overcome:
1. Inaccurate Testing: There are various skin testing methods (photography, radiation, electromagnetic fields), but no unified standards. The same person may get different results from different companies, similar to varying blood pressure readings at different hospitals—how can consumers trust such customized products?
2. High Costs: Customized products require tailored ingredients based on individual skin types and cannot be mass-produced (known as “flexible production”), making them much more expensive than regular cosmetics. Experts suggest starting with high-value scenarios like beauty salons where customers are willing to pay higher prices.
3. Registration Challenges: Current regulations require registration for each formula, but customized products often have new formulas daily, making the registration process time-consuming and costly. Good news is that policies may be relaxed; for example, changes to pH regulators or thickeners might not require re-registration, which could significantly benefit companies.
IV. Business Models Are Still Being Tested: The Pudong Pilot Provides a Path Forward
There is no established business model for customized cosmetics in China yet. Success requires three key elements: accurate testing, a stable supply chain, and suitable application scenarios.
Pudong, Shanghai, has taken the lead by introducing policies that support “on-site personalized services.” Brands like L’Oréal, Estée Lauder, and Shanghai Jahua are investing there—providing on-site skin analysis and customizing lotions, serums, and even perfumes. More than 40 products have been successfully launched, showing promising results. This serves as a model for other regions to follow: start with “on-site services and small-scale customization” and gradually develop a mature business model.
V. Untapped Opportunities in Subjective Preferences
Everyone focuses on “precision skincare” (e.g., for sensitive or acne-prone skin), but expert Tong Wenxin points out that subjective preferences offer greater differentiation opportunities. For example, few companies specialize in creating perfumes with specific fragrances or pink lotions. Why? Because these preferences are more individualized and difficult to mass-produce, they can lead to high customer loyalty. Customizing a perfume with your unique scent, for instance, is more memorable than a serum tailored to your skin type—this could be the next big market opportunity.
In Conclusion
Customized cosmetics are a trending direction, but don’t rush into the market. First, address the core issues of accurate skin testing, cost reduction, and simplified registration procedures. Then, explore opportunities in addressing subjective consumer preferences to truly reap the benefits. For beginners, start with reputable brands in pilot areas, always prioritizing safety.