Face value: In China men's skincare boom, startups, global investors seek rich glow
10/12/2020 23:00
* $1.9 bln men's facial skincare trade to grow 50% by 2025
-Mintel
* At least 10 new China male skincare brands set up in 2020
-media
* Bertelsmann among investors; stake in Shanghai startup
* Others like SIG, Redpoint also place bets on new firms
-media
* 200 mln millennial men, more open to skincare -startup
founder
By Sophie Yu and Brenda Goh
BEIJING/SHANGHAI, Dec 11 (Reuters) - China's radiant male
skincare market has a fresh shine: A raft of domestic startups
is tapping global investors for funds, with ambitions to rival
giants like L'Oreal in a billion-dollar business serving
image-conscious millennial men like Hou Junru.
The 24-year-old Shanghai education worker got into skincare
as a student and splurged more than $1,000 on creams and lotions
in e-commerce firm Alibaba's 9988.HK giant Nov. 11 Singles Day
promotion. "My need is to keep the skin moist and look pale,"
said Hou.
It's a priority shared by many of his peers, influenced by
the spread of social media and South Korean pop culture that
embraces a softer version of masculinity. Already the biggest in
the world, the Chinese men's facial skincare market is forecast
to hit 12.5 billion yuan ($1.90 billion) this year - and expand
50% to 18.5 billion yuan in 2025, research firm Mintel
estimates.
Market research provider Euromonitor International estimates
the men's skincare business in China, excluding post-shave
products, was last year already more than three times the size
of the U.S. market in dollar terms and more than twice the size
of South Korea - with value growth through 2024 seen easily
outstripping both.
Drawing on the huge reach of online retailers like Alibaba
and JD.com 9618.HK , at least 10 new Chinese male skincare
brands have been set up this year, according to media reports.
"A great number of small brands are emerging through online
channels," Mintel said in a recent report. The "online shopping
experience enables men to choose what they want quickly ...
online retailers can make it easier for men to seek out
information and tips than in offline stores."
Six of the new players between them raised more than 300
million yuan between them, the founder of one brand told
Reuters. Bertelsmann Asia Investments said it has invested in a
new Shanghai brand, without saying how much, while others like
SIG Asia and Redpoint Ventures have also placed sector bets,
according to domestic media reports and startup research
database CB Insights.
To be sure, with a combined share of 60%, according to
Mintel, the China market remains dominated by three big foreign
players - France's L'Oreal OREP.PA , Nivea maker Beiersdorf
BEIG.DE of Germany, and Japan's Rohto 4527.T , home of the
OXY brand. L'Oreal declined to comment for this article, while
Beiersdorf and Rohto didn't immediately respond to requests for
comment.
Still, beyond that dominance lies a hefty, fragmented chunk
to be targeted by new local startups, hoping to emulate the
success of Perfect Diary, a red-hot Chinese women's cosmetics
brand whose parent raised $617 million in a Nasdaq listing last
month. urn:newsml:reuters.com:*:nL4N2I53U4 urn:newsml:reuters.com:*:nL2N2EY0AF
'DRAGON BLOOD'
Among the new breed of male skincare firms is Coen, founded
in September by Huang Kai, a Xiamen-based entrepreneur who has
shuttered his previous business selling men's apparel to focus
on the beauty beat, with goods manufactured by firms in
Guangzhou.
Huang, 31, said sales at Coen - a name that translates to
"scientific and grateful" - topped 1 million yuan in two months
via stores on e-commerce marketplaces. A 120 millilitre bottle
of its flagship cleanser, 'Dragon Blood', retails for 64.90 yuan
($9.90) on Alibaba's Tmall platform.
With products like a beard depilatory cream in the pipeline
Huang said he was in talks to raise funds from investors for
what he described as a huge opportunity to tap new generations
more open to skincare. "There are more than 200 million men born
(in China) after 1995," said Huang.
A half-dozen of this year's bevy of startups have together
already raised more than 300 million yuan, Huang said, declining
to say which potential investors he's talking to.
Bertelmann Asia Investments Vice President Cindy Zhu told
Reuters her firm has invested in Shanghai-based men's skincare
company Just a Cool Brand (JACB), set up this year. Zhu said the
fund believed the growth momentum in China's cosmetics market
would continue.
"JACB will provide more professional products that may
appropriately meet the skin care requirements of Chinese men
consumers," said Zhu. JACB was not reachable for comment.
According to the CB Insights database, meantime, Redpoint
Ventures and SIG Asia have invested in Make Essense, based in
Shenzhen. Make Essense, SIG and Redpoint did not respond to
Reuters' inquiries.
COLOUR COSMETICS?
One major hurdle for the new breed of Chinese suppliers will
be persuading customers who have used well-known foreign brands
for years to switch over to them.
Education worker Hou, for instance, said he doesn't use new
domestic goods, opting for brands like France's Guerlain and La
Mer instead. "These products are used on your face so I don't
want to try brands I haven't heard of," he said.
But others remain open to the possibility. University
student Liu Yuxuan, 22, typically uses Clinique and Estee Lauder
but would consider domestic brands that offer value for money.
"Chinese brands are more down-to-earth," said Liu.
One avenue of possibility for domestic brands could be to
expand into colour cosmetics like eye shadow - still a niche but
growing segment, according to JD.com and Alibaba numbers.
"Most men's products are boring," said Hou.
"Why won't brands give us men more innovative products? Like
women I also need skincare to maintain moisture and look white.
I will buy if they are good!"
($1 = 6.5575 Chinese yuan renminbi)
(Reporting by Sophie Yu in Beijing and Brenda Goh in Shanghai;
Editing by Kenneth Maxwell)
((Sophie.Yu@thomsonreuters.com; 861056692136;))