With its elaborately carved eyeshadow palettes, intricate lipstick designs and ornate packaging, Florasis has established itself as one of China’s most successful beauty brands. The Hangzhou-based company, founded by Wu Chenglong and Fei Man in 2017 and known locally as Huaxizi, scaled quickly in its home market. Reaching annual revenues of 5.4 billion yuan ($850 million) as early as 2021, it soon became a favourite among makeup buyers on Tmall and Douyin.

In comparison to Perfect Diary or Marie Dalgar, other Chinese cosmetics brands that have become major domestic players, Florasis’ products skew high-end with lipsticks costing around $50 and eyeshadow palettes $60. Loud branding incorporating traditional Chinese motifs like the lotus and phoenix sets it apart from most C-beauty competitors eyeing cross-border opportunities.

Though the brand is already available in over 46 countries through its online store, this year is a milestone for overseas expansion. In the second half of the year, it plans to enter luxury department stores in Japan, while also launching an offline retail presence in the US where the company’s “biggest overseas sales drive” will be, said Florasis’ head of international expansion Gabby Chen.

Chen expects that Florasis can go head-to-head with upmarket brands like Shiseido, Dior, Lancôme and those owned by South Korean conglomerate Amorepacific. For its Amazon Japan store launch, for instance, one of Florasis’ lipsticks was priced higher than a Chanel-branded product but nonetheless made the top three list of hourly lipstick sales on Amazon Japan during the brand’s debut, its founder Fei Man shared earlier.

“For a lot of C-beauty brands… their first target market is actually Southeast Asia because of their low-price range. For us, you can see our price range is much higher,” she said, referring to the rationale behind the decision to prioritise more mature markets, namely Japan and the US.

In China, the brand’s distinct image and links to Chinese cultural heritage are elements that have propelled it to success because they have been leveraged for rich storytelling, said Elisa Harca, co-founder of Shanghai and Hong Kong-based marketing agency Red Ant Asia.

“The engravings [on the makeup] are actually historical tales we grew up with as kids but if Florasis didn’t display it on our products, it would just remain in books. It wouldn’t be elaborated globally and touch other cultures,” said Florasis’ Chen. “We are very proud of our culture and heritage.”

Florasis has almost entirely relied on online sales to grow its business, only last year opening its first physical store, a flagship in Hangzhou. Partnerships with influencers like Li Jiaqi, the livestreaming sensation known as the “lipstick king” have helped it break through to a mass audience. Nearly all major brands work with Li but Florasis went a step further in its collaboration, getting him to co-create products like the “Impression of Miao” line, while also tapping top models like Du Juan to be the current face of its campaign.

As Florasis moves overseas, the brand’s heavy lean into oriental aesthetics could help it appeal to certain customer groups but it might alienate others looking for more subtle, understated and modern looking brands from around the world, including those from China.

“Florasis’ branding serves as a statement piece, designed to be eye-catching, but it can provoke mixed reactions, akin to the ‘love it or hate it’ nature of Marmite,” said Harca.

“For some Western consumers, an overt and vivid nod to cultural elements, particularly in storytelling, creates a profound sense of awe and wonder. It stands out remarkably, capturing their intrigue and excitement amid a sea of similar offerings. On the other hand, some consumers may prefer a softer branding approach, characterised by cleaner packaging,” she added.

Several Chinese companies are mulling overseas expansion as growth slows in the increasingly crowded local beauty market but only a few seem prepared to make the leap. According to BoF’s latest State of Fashion: Beauty report, retail sales in China’s beauty market are forecasted to reach $96 billion by 2027, around one-sixth of global sales at that time, but the market’s compound annual growth rate is expected to slide to around 8 percent of the market between 2022 and 2027, from 12 percent between 2015 and 2019.

Competitors like Yatsen Holding, the Chinese parent of brands including Perfect Diary, Little Ondine, and Galenic, is currently fighting off a slump. Covid-19 lockdowns last year depressed sales heavily, even as its nascent skin care business grew by double digits. Although the group acquired high-end British skin care label Eve Lom in 2021, for the most part its operations remain focused on the China market.

A few South Korean beauty brands that became popular in the West during K-beauty’s ‘golden era’ could be seen as competitors to new entrants like Florasis though most trade on very different aesthetics and branding. The paradox that K-beauty brands often find themselves grappling with abroad might also prove to be informative.

Elise Hu, author of “Flawless: Lessons in Looks and Culture From the K-Beauty Capital” said “the Korean beauty companies have all been aware of [the rise of] C-beauty, studying what Chinese companies were up to for years. They understood that this was a competitive threat.”

Although Florasis has seen some early wins abroad — for instance, a review from well-known American beauty influencer Jeffree Star raving about its products being the “world’s most beautiful makeup” went viral last year — the brand will also have to account for many differences in culture, makeup styles and consumer habits.

“Asians tend to have a more subtle kind of look, while the European market and also US are more expressive [and like strong colour],” said Florasis’ Chen. She acknowledges that they will need to add more SKUs to be more inclusive for skin tones overseas and adds that the company is putting in place teams “not just doing retail [but] also looking into a global supply chain as well.”

The cosmetics industry shares some but not all the same supply chain concerns as fashion. Misconceptions over animal testing requirements in China, for example, may cast a shadow.

The country has long required animal testing for the importation of foreign brands but, as a Chinese brand, Florasis has not been required to test on animals and the company says it is cruelty-free although its products are not labelled as such. Even for foreign brands, regulations have changed in recent years but the close association of China and animal testing in consumers’ minds may take some effort to shift.

Chinese-owned companies looking to expand overseas will also encounter geopolitical headwinds as tensions continue to flare between some western countries and China over everything from recent allegations of espionage to long-running disputes over issues like Taiwan.

In the US, for example, Bytedance-owned TikTok has been subject to congressional scrutiny and Shein has been targeted over forced Uighur labour allegations. Unfavourable sentiment toward China could impact business for beauty brands too, especially if their stance on issues don’t align with prevailing views in the American market.

“This unfortunate situation presents a potential obstacle for the brand,” said Harca. “Therefore, it becomes crucial for Florasis to develop a brand story that goes beyond its Chinese origins and emphasises its product quality and efficacy.”

“[Besides], in today’s consumer landscape, merely being a brand from a specific country is no longer sufficient [as a point of difference] to capture consumers’ attention,” she added, “whether it’s Western brands entering China or Chinese brands expanding to the West, consumers now expect brands to offer more.”

On that, the brand has been investing heavily in product formulas and ingredients such as Chinese floral extracts, herbs and medicinal elements. In 2021, Florasis built a comprehensive R&D centre, and in March of last year announced it would spend over 1 billion yuan ($141 million) on R&D in the following five years.

“We are the brand delivering premium quality product… infused with Eastern culture,” said Chen, pointing out that early indicators suggest its appeal is much broader than the overseas Chinese diaspora since most of the brand’s current overseas customers are not in that group.

“We have the confidence that whoever uses our product will come back again and again, not just because of the colours we offer, but because of the quality… we’re ready for the [international] market.”

THE LATEST NEWS FROM CHINA

时尚与美容

FASHION & BEAUTY

H&M to Close Beijing Flagship

The Swedish fast fashion brand will not renew the lease for its Beijing Sanlitun store once it ends mid-June. H&M was one of the brands boycotted over Xinjiang cotton, and over the past two years, the company has closed 85 stores in China. At the end of 2022, it had 360 stores in China. (Ladymax)

VF Corp Beats Estimates on China Recovery, North Face Demand

Greater China for the parent of Vans, Dickies and North Face, grew 3 percent in the most recent quarter, even as total group revenue was $2.7 billion, down 3 percent. The quarter was led by “strength in The North Face and our international business, with accelerating momentum in Greater China,” said Benno Dorer, VF Corp interim president and chief executive. (VF, Yahoo)

Chanel to Show Cruise 2024 Show in Shenzhen

The French luxury house announced that it will present its Cruise 2024 collection in China’s tech hub Shenzhen. It follows the opening of the brand’s first boutique in the city in December 2021. Separately, Chanel said sales to Chinese buyers in France recovered to just 14 percent below pre-pandemic levels in value terms even though shopper traffic had only rebounded to half of 2019 levels. (Fashion Network, FT)

Ozempic Frenzy Hits China

Pharmacies in China have sold out of the weight-loss drug Ozempic due to false prescriptions and scalpers who resell the medication, originally intended for diabetics, for sometimes twice as much. Domestic firms Huadong Medicine and Innovent Biologics are also working on their own versions of semaglutide medications to meet demand. (Bloomberg)

消费与零售

CONSUMER & RETAIL

Chinese Consumer Spending Unlikely to Rebound Before 2025

Morgan Stanley is forecasting Chinese consumer spending to rebound by 9 percent this year, followed by an increase of 4.8 percent the following year. However, that still puts spending 0.5 percentage points lower than before the pandemic. The slow recovery stems from a lack of stimulus payments, a soft housing market and uneven job market recovery, the bank’s analysts said. (CNBC)

Baozun Narrows Loss in Q1

The leading TP company (third-party ‘Tmall partner’ firms that brands use to outsource their relationship with Alibaba’s main platform) narrowed its loss in the first quarter to 83.5 million yuan ($12.2 million), compared with 122.4 million yuan ($17.2 million) a year ago. “While consumption will likely take time to fully recover, brand partners’ willingness to invest in China remains unaffected,” said Arthur Yu, president of Baozun e-commerce. (Baozun)

Chinese Youth Begin to Feel Locked Out of Luxury

With one in five youth unemployed in China and even those with jobs seeing stagnant wages, the rising prices of luxury goods like Chanel purses, some of which have nearly doubled, are increasingly out of reach for younger Chinese shoppers. (Sixth Tone)

科技与供应链

SUPPLY CHAIN & TECH

China Manufacturing Data Improves in May

China Beige Book said its survey of 1,000 Chinese firms conducted between May 18 and 25 show manufacturing output increased “notably” from the month before. “Manufacturing activity defied rumours of demise, though soft demand from Western economies remains a major headwind,” the data provider said. (Bloomberg)

14 Nations Sign IPEF To Reduce China Reliance

A total of 14 countries including the US, India, Australia, Japan and South Korea signed the Indo-Pacific Economic Framework, a trade pact representing $38 trillion in economic output, in a bid to reduce their supply chain reliance on China. (New York Times, Economic Times)

Shein Exploring Mexico Factory

The online fast fashion giant is planning to build a factory in Mexico as it expands its manufacturing hubs outside China, and follows a move to move part of its supply chain to Brazil. The new bases would help the company shorten shipping time and cut distribution costs for Shein customers in Latin America. (BoF)

Chinese Companies Still Top US App Rankings

Despite political pressure, Chinese apps remain some of the most popular in the US. Shopping platform Temu held the number two spot on the Apple app store among free apps as of late May, while ByteDance-owned apps CapCut and TikTok held the fourth and fifth spots. (CNBC)

政治,经济与社会

POLITICS, ECONOMY & SOCIETY

China Seals Economic Pact With Russia

Russia’s prime minister signed a series of trade agreements with China, an indication of China’s refusal to back away from its neighbour despite criticism of Russia’s ongoing war in Ukraine. Mikhail Mishustin described relations between the two nations being at an “unprecedented high level”. (Reuters)

Microsoft Says Chinese Hackers Attacked “Critical” US Infrastructure

A Chinese hacking group known as Volt Typhoon compromised “critical” US cyber infrastructure to gather intelligence, Microsoft warned. The hackers targeted communications, transport and maritime industries as well as government organisations, the company said. (CNBC)

Chinese Sends Three Astronauts to Space Station

China sent three astronauts, including a civilian for the first time, to its Tiangong space station as part of a crew rotation. The mission is a part of the country’s growing space ambitions including placing astronauts on the moon’s surface before 2030. (AP, DW)

Authorities Clash With Hui Muslims Over Mosque

Hui minority Muslims in southwestern China faced off with police as they tried to stop the demolition of a domed roof from the Najiaying mosque. The religious site dates back to the 13th century and has been expanded many times over the years but a court ruled in 2020 that some of the mosque’s most recent renovations were illegal. (Washington Post)

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