BEIJING/HONG KONG – With chat groups, video streams and low prices for foundation, China’s Perfect Diary has emerged from nowhere four years ago to become a cosmetics giant for the digital age, trailing only L’Oreal and LVMH in the world’s no. 2 market for make-up.
The Guangzhou-based beauty unicorn is now setting its sights on a Hong Kong initial public offering (IPO). Before that, it’s driving into Southeast Asia, targeting more millennial social media users like Wen Shan, a 21-year-old student from Guangdong.
Wen has ditched Western brands like NARS and Revlon and devotes her annual budget of 3,000 yuan ($434) to Perfect Diary cosmetics like eyeshadow palettes. Most cost less than 100 yuan and are made by the same contract manufacturers that supply Western brands.
She converted to Perfect Diary after a room-mate’s tip. “The foreign brands have a large variety of foundations that often confuses me and I can’t tell which one is best on me … The Chinese brand knows what is good for local consumers.”
Though still a global minnow compared with powerhouse L’Oreal, Perfect Diary now has 4% of the Chinese market for colour cosmetics, according to Euromonitor 2019 data. That ranks it joint third with Estee Lauder’s MAC, beaten only by luxury giant LVMH’s Christian Dior and three L’Oreal brands that stack up to more than 20%.
The research firm estimates the overall market more than doubled from 2015 to nearly $8 billion in 2019 – and will mushroom to almost $15 billion in 2024 as China’s middle class expands.
Perfect Diary’s rise has been fuelled by blending low prices and social media platforms like Douyin – TikTok for China – and WeChat, collecting customer data it can use to design and roll out new products rapidly, helped by charismatic influencers with huge online followings like ‘Lipstick King’ Li Jiaqi here
Yelling his catchphrase “All girls, buy it!”, Li has given Perfect Diary products rave reviews in popular live streams on giant e-commerce retailer Alibaba’s Taobao platform.
Analysts said Perfect Diary’s rise has been boosted by younger, ‘Generation Z’ consumers’ willingness to embrace homegrown products.
“Gen Z is growing up in a prosperous China,” said Mei Xin, analyst at Huatai Securities. “Unlike the older generation, they don’t believe the moon in the West is rounder than in China.”
A spokesperson for L’Oreal in China didn’t immediately respond to a request for comment on the growth of homegrown brands, but said L’Oreal typically welcomes healthy competition.