Estée Lauder and L’Oréal are facing challenges in the Chinese market as local beauty brands gain popularity. Rising competition, shifting consumer preferences, and economic factors have impacted sales, forcing global cosmetics giants to adapt their strategies.
Once dominant in China’s booming beauty market, global cosmetic giants Estée Lauder and L’Oréal are now grappling with declining sales as domestic brands rise and consumer preferences shift. The slowdown highlights a broader trend of global luxury brands losing their luster in China, a market that was once their key growth engine.
Estée Lauder recently cut its revenue forecast for China, citing sluggish demand and increased competition from local brands. The company’s sales in the Asia - Pacific region dropped by 12% in the last quarter, with China being the main drag. L’Oréal, while still maintaining a strong presence, has also seen growth slow down, particularly in its high-end skincare and makeup lines.
Analysts point out several reasons behind the decline. Chinese consumers, particularly younger generations, are increasingly favoring homegrown brands like Perfect Diary, Florasis, and Proya, which offer high quality products tailored to local beauty preferences at more competitive prices. Domestic brands have also mastered digital marketing, leveraging platforms like Douyin (TikTok), Xiaohongshu (Red Note), and WeChat more effectively than their foreign counterparts.
Another major factor impacting sales is China’s slowing economy and rising consumer caution. With economic growth cooling and youth unemployment at record highs, spending on high-end beauty products has softened. Many consumers are now seeking value over prestige, opting for affordable alternatives rather than splurging on imported luxury brands.
Furthermore, the "Guochao" (national trend) movement, which emphasizes Chinese cultural pride and locally made products, has gained momentum. More consumers are now choosing Chinese brands not just for affordability but to support national identity.
Despite the slowdown, China remains a critical market for both Estée Lauder and L’Oréal. In response, both companies are revising their strategies, increasing investments in localized products, influencer collaborations, and digital marketing to reconnect with Chinese consumers. L’Oréal has already announced plans to expand its research and development presence in China, aiming to create products specifically tailored to Chinese skin types and preferences.
However, as domestic brands continue to innovate and capture more market share, foreign beauty giants must adapt quickly or risk fading further in what was once their most lucrative market.
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