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The Asian beauty industry has witnessed a remarkable evolution over the years. With a rich cultural heritage and a deep-rooted emphasis on skincare and grooming, thinking of Japan’s Geishas for example, the region, especially North Asia, has become a global powerhouse in the beauty realm.
In 2022, the Asia Pacific region accounted for over 50% of the global beauty industry. In addition, according to L’Oréal, 35% of the world’s beauty market is in North Asia. Furthermore, Asia-Pacific nations have become industry leaders in the skincare sector, which is the largest segment of the global beauty market.
Looking forward, the Asia Pacific health and beauty market will grow at a CAGR of 4.7% between 2022 and 2027, predicts GlobalData.
“In Asia-Pacific, consumers have increased spending on personal hygiene, which has led to the escalated sales of shower gel, sanitizers, hand washes, etc. On the other hand, the e-commerce trend is boosting the sales of beauty and personal care products through online channels,” said Mordor Intelligence.
China, South Korea and Japan dominating Asian beauty industry
China is leading the way in the rapidly expanding Asian beauty market. After the US, it is the second-largest cosmetics and skincare market in the world. The nation has the largest beauty and personal care market revenue of any Asian nation in 2023, coming in at $60.17 bn. The Chinese beauty market is projected to expand at a CAGR of 5.03% between 2023 and 2028.
“Powered by consumers, supply chain and e-commerce/social media marketing platforms, emerging local brands stand out. Leading Chinese brands have grown exponentially in recent years, with dominant shares in the rapidly consolidating local brand segment,” said Deloitte.
While Chinese beauty brands are particularly strong in the local market, K-Beauty (from South Korea) and J-Beauty (originating in Japan) skincare trends have been attracting attention on a global scale. These two trends promote contrasting philosophies. While K-Beauty emphasises nurturing the skin with a multi-step, detailed, and balanced routine, J-Beauty accentuates simplicity and functionality.
Among the two, especially K-Beauty products gained global popularity over the years. South Korea is one of the leading export markets in the cosmetics industry, with its beauty and personal care industry valued at $12.1 bn in 2022.
Of this, at $7.3 bn, the skin care industry accounted for more than half of the country’s beauty industry. Furthermore, Market Data Forecast projects that the K-Beauty products market will increase at a CAGR of 11.3% to $16.2 bn by 2028.
Meanwhile, Japan’s J-Beauty with brands like Shiseido also have a significant global presence. Japan’s cosmetics and personal care product industry was valued at $35 bn in 2019, placing it third behind only the United States and China, and much ahead of South Korea, which ranks eighth in the world.
GlobalData predicts that the J-Beauty-based cosmetics market is expected to grow from 521.9 bn yen ($3.61 bn) in 2020 to 554.6 bn yen ($3.84 bn) in 2025, at a CAGR of 1.2%. All in all, Asia’s cosmetic industry is projected to grow at a CAGR of 5.84% to $227 bn between 2021 and 2035, as per Chameleon Pharma Consulting Group.
“China, Korea and Japan – a trio we refer to as the Beauty Triangle – are key markets for beauty not just within the confines of their own shores but also in Asia and beyond. Together, they are expected to drive much of the beauty category growth over the next few years, their innovation and trends influencing attitudes and behaviours throughout the world,” said market researcher Ipsos.
How to invest in Asia’s beauty industry?
The following companies are amongst the biggest in Asia.
Shiseido
Japanese cosmetics manufacturer Shiseido was established in Tokyo, Japan, in 1872. The company manufactures and sells products pertaining to various personal care categories ranging from skin care, cosmetics to body care, hair care, among others.
The company’s net sales rose by 57.4% year on year to 1067.4 bn yen ($7.38 bn) in 2022. Operating profit fell by 54% to 46.6 bn yen ($322.4 mn), and its EBITDA grew by 45.3% year on year during the same period.
Listed on the Tokyo Stock Exchange (TYO: 4911), Shiseido has a market capitalization of $18.07 bn. The company’s stock has risen by 19.69% in the past year. It has a PE ratio of 94.61 and a forward PE ratio of 62.50. The stock has a price-to-book ratio of 4.47. Besides Tokyo, American Depository Receipts (ADR) are listed on NASDAQ (OTCMKTS: SSDOY) in the US and are accessible through over-the-counter transactions.
“Even though the company’s 2023 guidance looks discouraging, its medium-term plan looks quite attractive with expectations of 8% revenue CAGR through 2022-25 and 6% CAGR thereafter until 2027…The operating margin is guided to reach 12% and 15% in 2025 and 2027 respectively…,” said Equity Analyst Oshadhi Kumarasiri, who published on Smartkarma.
Amorepacific Corporation
Amorepacific Corporation is a South Korean beauty and cosmetics corporation that owns and runs over 30 K-Beauty, personal care, and health brands including major companies like Laneige, Mamonde, and Etude House. Their luxury beauty brand Sulwhasoo has just appointed actress Tilda Swinton as their new global brand ambassador.
The company registered a 15.6% year-on-year fall in revenue, amounting to 45 tn won ($34.62 bn) in 2022. During the same period, its net profit shrunk by 48.9% year on year to 149.2 bn won ($114.80 mn).
Amorepacific Corporation has a market cap of $4.63 bn and is traded on the Korea Stock Exchange (KRX: 090430). The company’s shares have fallen by 25.21% since last year. It has a PE ratio of 52.28, and a price-to-book ratio of 1.39.
Shanghai Chicmax Cosmetic
Shanghai Chicmax Cosmetic is a Chinese multi-brand cosmetics company. Some of its subsidiaries include companies like KANS, One Leaf, and Baby Elephant.
The company’s net profit was down by 26% year on year to 2.68 bn yuan ($342.2 mn) in 2022. During the same period, the company’s revenue decreased by 57% year on year to 147.1 bn yuan ($18.78 bn).
Shanghai Chicmax Cosmetic’s stocks are listed on the Stock Exchange of Hong Kong (HKG:2145). Shanghai Chicmax Cosmetic has a market cap of $1.28 bn. Since last year, the company’s shares have gained 0.2%. Along with that, the shares have a PE ratio of 53.48 and a price-to-book ratio of 5.51.
Editor’s note: All stock movement figures as of July 4, 2023.
