Growing demand for health and beauty boost market for cosmetics made with Traditional Chinese Medicine
In China, there’s currently an increase in pharmaceutical companies venturing into the development and selling of cosmetics that utilize Traditional Chinese Medicine (TCM). With pandemic-wary consumers becoming more focused on safety and good health, the presence of TCM-based cosmetics is expected to grow.
Pharmaceutical companies in China that handle TCM products have been increasingly entering the cosmetics-making business. This is because the continually rising costs of raw herbal medicinal ingredients are making it difficult to keep TCM product prices down, forcing these pharmaceutical companies to find a new source of revenue. The leading solution to this is cosmetics that can incorporate these raw herbal medicinal ingredients.
A pioneer in this initiative is Pien Tze Huang. The company, which traditionally makes medicines for treating diseases of the liver and bile duct as well as antipyretics for fevers, began selling skincare products in 1980. Their cosmetics business’s sales grew from 56 million yuan (US$7.9 million) in 2002, to 430 million yuan (US$60.6 million) in 2019. With a healthy 57.1% increase from the previous year, their 2019 sales account for 7.5% of their consolidated net sales of 5.72 billion yuan (US$806 million).
Pien Tze Huang’s current favorable condition is down to their clear stance on emphasizing young people as their target. In December 2018, they released a PR video titled “Don’t call me a Jie (Lady), call me a XiaoJieJie (Young Lady)”, featuring a group of three women singing and dancing about their skin-related troubles. Views of the video on Weibo surpassed 230,000, and the company even opened an account on Douyin (the Chinese version of TikTok) and ran a hashtag challenge during the same period, views of which surpassed 2.9 billion.
On Pien Tze Huang’s flagship Tmall store, the company actively live streams through the Taobao app. They also opened an account on the social e-commerce shopping app RED, an app mainly used by the post-95 generation (those born after 1995), and started selling their wares through it. User reviews on there have not only praised the pricing but also the effectiveness of their TCM-based cosmetics that have reportedly made previous problems with allergic skin go away.
Some TCM cosmetics even see more consumer support than that of popular overseas brands
The sudden increase in companies entering the TCM cosmetics field began in the 2000s, and it’s reported that close to 300 pharmaceutical companies are in the cosmetics business at present.
According to market research firm Measure China, what differentiates cosmetics made by pharmaceutical companies is skincare that emphasizes safety. There’s even been a phrase coined for it: yaozhuang-tongyuan (drugs and cosmetics from the same source), a riff from the phrase yishi-tongyuan (medicine and food from the same source). There are also more than a fair share of TCM cosmetics brands receiving high praise from users on the same level as brands by cosmetics-only businesses. The spreading of the image among consumers that products made by drug-making companies are particularly effective is proving successful.
In a sales ranking by Chinese cosmetics info site “Pinguan” of lotions and face creams sold on Tmall between March 2019 and February 2020, while famous brands from both inside and outside China were among those listed, two pharmaceutical companies ranked within the top 20. These were Yaodurenhe at number 10 and Xiuzheng at number 12, and they were ranked even higher than Shiseido and Estée Lauder.
Renhe Pharmacy, under the Renhe Group, runs the two beauty brands of Yaodurenhe and Renhejiangxin. Yaodurenhe’s flagship Tmall store has around 320,000 followers. Their face cream, which boasts a skin-whitening effect and is their strongest selling product, sold over 230,000 units in the last month.
On the other hand, Xiuzheng has a lineup of around 70 different products that focus on skincare, including face masks and eye creams. They have over 160,000 followers on their flagship Tmall store, and their top-seller, a freckle-removing cream, has seen a cumulative total of over 1.05 million units shifted.
The products of both brands mainly fall within the price range of 100 to 200 yuan (US$14 to $28), and such low prices have proved popular among the younger generations. For marketing as well, both brands have relied on tools used by their younger demographic, actively streaming live videos through the Taobao app.
Yunnan Baiyao, which makes TCM products for bruises and curtailing bleeding, launched the face mask brand “Choorigin” in 2011. Their most popular face mask that contains snow fungus and oats comes in a pack of 5 for 158 yuan (US$22.60) and has sold over 200,000 units. Users’ trust in Yunnan Baiyao is also high, with posts on RED exclaiming “because they’re products by a drug company, they’re going to be safe and trustworthy”.
Traditional Chinese medicine company Huqingyutang, named as one of the “Four Big Chemists” during the Qing dynasty, also entered the cosmetics market in 2016. In February 2019, they opened their flagship Tmall store, selling skincare products including eye cream and face masks. Their eye cream for dealing with freckles has sold around 10,000 units and is priced at 328 yuan (US$46) — pricier than other companies’ offerings, however, it’s been highly praised in reviews on RED. Through collaborating with KOLs (Key Opinion Leaders) and live streaming even at the height of the COVID-19 crisis in China, their sales for January and February this year achieved a five-fold increase from the same period last year.
In the post-coronavirus world, there are no doubt consumers will become much more health-conscious in how they treat their bodies and skin. There’s also the possibility that China will export more raw materials for TCM, encouraging the overseas expansion of TCM-style cosmetics and, along with that, international partnerships between beauty brands and Chinese drug makers.
Text: Ching Li Tor
Original text (Japanese): Team Roboteer
