China Daily Global Edition (USA)
Domestic brands make steady march overseas
Florasis, Heytea among leading names gaining offshore foothold
Domestic brands with unique features and high-quality attributes have been accelerating their pace of going global, and the trend has shifted from low-priced competition to branding development, and increasing applications of digital technologies, industry experts said.
Hangzhou, Zhejiang provincebased Huaxizi — or Florasis in English — a Chinese beauty brand with cultural attributes and aesthetic qualities, launched a series of products at a Cosme store, a Japanese cosmetics information and community portal, in Osaka earlier this year.
In August last year, it opened a store at high-end Japanese department store Isetan in Shinjuku, Tokyo, as its first seasonal limited offline store overseas.
“The Japanese cosmetics market is quite mature and shows strong demand. The high standard of the Japanese market will help Florasis to raise brand strength, and seek new breakthroughs in the international market,” said Gabby Chen, president of global expansion at Florasis.
“China and Japan are geographically close and have frequent cultural communications. Florasis chose Japan as the first stop for overseas operations, as the company aims to leverage cultural resonance between the two countries,” Chen said.
The brand launched its store on Amazon in Japan in 2021, and its bestselling lipstick product topped the real-time lipstick sales charts on its first day of launch, fueled by an increasing pursuit of beauty and youth among consumers.
Since last year, domestic beauty products have become increasingly popular overseas and Chinese companies have gradually established a foothold in the markets of Japan, South Korea and Southeast Asia, said industry observers.
In 2023, the total export value of Chinese cosmetics reached 26.37 billion yuan ($3.64 billion), growing 39.3 percent year-on-year, according to data from the General Administration of Customs.
“Japan and South Korea stand as two mature beauty markets with high-income consumer groups. They are suitable destinations for the export of distinctive Chinese beauty products,” said a research report by Guotai Junan Securities.
Shared beauty standards among East Asian countries enable Chinese cosmetics brands to take advantage of export opportunities. Domestic cosmetics retailers should further raise their research and development capabilities and brand impact, and grab business opportunities presented by the Regional Comprehensive Economic Partnership agreement, said the Ministry of Commerce.
The RCEP agreement, which took effect on Jan 1, 2022, includes 15 Asia-Pacific countries. The trade pact is expected to reduce tariffs by up to 90 percent on goods traded among member economies over the next two decades.
Meanwhile, Florasis attended the fourth China International Consumer Products Expo in mid-April in Haikou, capital of the southern island province of Hainan, and it was the company’s first participation at the expo.
“Displaying a series of products with different ethnic themes, we hope to convey the unique Chinese culture and showcase the craftsmanship spirit of Chinese quality to domestic and foreign consumers,” said Zeng Min, general manager of public affairs at EastGarden Group, parent of Florasis.
Domestically, the company has been focusing on online sales through e-commerce platforms.
Late last year, Florasis launched its duty-free store in Sanya, Hainan, and it became the sole Chinese cosmetics brand to operate an independent store at the duty-free shopping mall in Sanya.
In addition, Shanghai Chicmax Cosmetic Co Ltd, a Shanghai-based makeup retailer that owns brands such as Kans and Baby Elephant, debuted on the Hong Kong bourse in December, becoming the first listed Chinese mainland cosmetics company to sell shares in Hong Kong.
Last year, Chicmax achieved sales revenue of 4.19 billion yuan, up 56.6 percent year-on-year, with its gross profit margin at 70 percent, according to its earnings report.
The rosy business performance is mainly due to its comprehensive efforts in building a multi-brand matrix and continuous investment in scientific research, and the company’s profitability prospects are stable and improving, industry analysts said.
In the past few years, significant achievements have been made in China’s economic transformation and upgrading, and China’s manufacturing and supply chains boast strengths, fueling growth in the number and quality of Chinese companies venturing overseas, said Denis Cheng, consumer sector leader at Ernst & Young China.
“The going-global trend of China’s consumer goods sector is consistent with the overall trend of Chinese enterprises. More Chinese brands and technologies are going global, which is of great significance for stabilizing the competitiveness of Chinese enterprises in emerging fields and promoting the development of the nation’s dual circulation development pattern,” Cheng said.
At the same time, China’s popular milk tea chain Heytea, a brand originating in Shenzhen, Guangdong province, has been accelerating its pace of opening more stores overseas and use of intelligent machines to make beverages.
During the just-concluded consumer expo in Haikou, Heytea, as a representative enterprise of Shenzhen, showcased the latest version of its intelligent beverage making device, which can make a single-serving beverage in as fast as three seconds.
Heytea said it has applied the self developed highly efficient device in China and overseas to make multiple kinds of popular milk tea products. Currently, the company operates more than 3,000 stores globally, including in South Korea, Australia, Canada, the United States and the United Kingdom.
Standardization and uniformity of product quality are crucial, and the application of intelligent devices for tea drinks will help promote the sector to accelerate its development of overseas business with higher standardization and better quality, the company said.
In December, Heytea launched its first store in the US in New York, and became the first Chinese mainland milk tea chain to operate in that country. The company said it plans to continuously expand its operations in North America.
Earlier last year, Heytea opened its first stores in core business areas of the UK, Australia and Canada. Back in 2018, it launched its first overseas store in Singapore, with daily sales exceeding 3,000 serving.
The economic and trade relations between China and emerging economies such as the Association of Southeast Asian Nations, the Middle East and Latin America are becoming increasingly close, Cheng of Ernst & Young said.
“These countries boast significant economic growth potential and a young population structure, and they are expected to show a strong demand for consumer goods and become popular destinations for Chinese consumer goods enterprises to go abroad in the future,” Cheng said.