China cosmetics industry Report Interpretation

Overview

This monthly tracker reviews China cosmetics demand through online GMV, brand and channel performance, product activity, retail and trade indicators, and sector valuations. Goldman Sachs sees a modest August demand rebound, with domestic brands regaining relative momentum, and highlights Proya’s improving core-brand trend.

Core views

China beauty online GMV grew 8% year on year in August 2026, accelerating from 5% in July. Douyin was the principal driver, rising 14%, while JD grew 5% and Tmall/Taobao declined 2%. For July-August, online beauty GMV rose 7%, below the 14% growth in 2Q26: Douyin grew 16%, whereas Tmall/Taobao and JD declined 5% and 7%, respectively. On Tmall/Taobao in August, cosmetics GMV fell 2.1% and volume declined 11.1%, partly cushioned by 10.2% average-selling-price growth. The report also finds that Douyin gained 6 percentage points of GMV share versus Tmall/Taobao relative to 2Q26 among tracked companies, alongside a higher KOL livestreaming mix, likely supported by Qixi Festival promotions. The report sees continued concentration among leading brands. On Douyin, the top 50 cosmetics brands grew by the high-20s percentage range in August, ahead of high-teens growth for the top 500, while the top 20 grew in the mid-20s. Luxury brands turned negative on the platform, while mass-market brands proved more resilient. Domestic premium brands continued to outperform multinational peers, although multinational brands regained some Douyin share versus July. Domestic brand performance was notably stronger than that of many multinational peers. In August, Shanghai Jahwa, Forest Cabin, Mao Geping, Botanee and Giant Biogene recorded GMV growth of 38%, 37%, 28%, 27% and 22%, respectively, and Proya Group grew 14%. Shanghai Jahwa benefited from Dr. Yu and Herborist growth of 53% and 71%; Forest Cabin was supported by 57% Douyin growth; and Mao Geping was driven by 21%, 80% and 26% growth on Tmall/Taobao, JD and Douyin. Giant Biogene's Collgene and Comfy brands grew 52% and 16%. In contrast, Bloomage, Shanghai Chicmax and Yatsen declined 17%, 16% and 21%. Among multinational groups, Kose grew 15% in August as Decorte grew 15%; L'Oreal grew 14%, supported by YSL, HR, Skinceuticals and Lancome growth of 28%, 25%, 23% and 19%. Estee Lauder grew 4%, while Shiseido grew 3%; Amore and LG H&H declined 13% and 34%. The report therefore characterizes local leaders as August outperformers during a non-peak season, while multinational growth generally slowed. Goldman Sachs upgraded Proya from Neutral to Buy. It expects second-half 2026 acceleration as the core Proya brand recovers following upgrades; the core brand returned to 2% year-on-year growth in August. It also sees 2027 upside from the multi-brand portfolio, including non-core brands and newly acquired Flower Knows. For July-August, Proya Group grew 16%, helped by Flower Knows, Insbaha and Off & Relax, while the core Proya brand and TIMAGE declined 4% and 12%; August group growth was 14%, with Flower Knows and Insbaha up 70% and 82%. The institution also identifies Mao Geping as a preferred cosmetics pick, citing sustained 3Q-to-date momentum after an encouraging 618 performance and a share-price pullback that it believes reset expectations for slower first-half net-profit growth in the 20% range. It reiterates Buy on Giant Biogene, citing a 17% 3Q-to-date recovery and the early-August offline launch of its Medical Aesthetics business, and reiterates Buy on Forest Cabin for strong growth and balanced channel expansion. Broader indicators were mixed. China cosmetics retail sales rose 6.8% year on year in July, above 0.6% growth for overall retail sales, but cosmetics sales CAGR versus 2021 slowed to 0.6% from 1.9% in June. Mainland China makeup and skincare import value fell 1% year on year in July after rising 6% in June, while import volume declined 5%. Imports from Korea rose 5%, whereas imports from the US, France and Japan declined 55%, 23% and 7%. Korea duty-free turnover was US$712 million in July, up 6% year on year. August historically represented about 6% of annual Tmall/Taobao cosmetics GMV in 2025, indicating the month is outside the major peak-sales periods. Sector valuation data show China cosmetics players trading at 18x 12-month forward P/E, compared with 26x for global cosmetics players. For covered stocks, the report uses 2027E P/E-based target prices discounted using cost of equity assumptions, including Proya's RMB70 target based on 19x 2027E P/E and an 8.9% cost of equity; Giant Biogene's HK$33 target based on 17x and a 9.6% cost of equity; Mao Geping's HK$73 target based on 21x and an 8.9% cost of equity; and Forest Cabin's HK$78 target based on 16x and a 9.6% cost of equity.

Analysis framework

Goldman Sachs combines monthly GMV tracking from Tmall/Taobao, Douyin and JD with brand-level and channel-level comparisons. It supplements this with product launches, China retail sales and import data, Korea duty-free sales, and peer valuation tables, then links operating trends to individual covered-company ratings and P/E-based target-price frameworks.

Methodology notes

• Industry AnalysisSupply-demand framework

  High-frequency online GMV, retail sales, imports and duty-free data tracking

  The report uses demand indicators across online platforms and retail channels to assess the pace and composition of China cosmetics consumption.

• Industry AnalysisVolume-price decomposition

  GMV decomposed into volume and average selling price on Tmall/Taobao

  The tracker shows that August GMV weakness on Tmall/Taobao was partly offset by ASP growth despite lower volume.

• Valuation methodsP/E and PEG Valuation

  Forward P/E target multiples discounted using cost of equity

  Covered-company target prices are based on 2027E P/E exit multiples, adjusted for stated premiums or A-H discounts and discounted back using cost of equity.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Proya Cosmetics (603605.SH)

  Upgraded to Buy on expected second-half core-brand recovery and 2027 multi-brand upside.

  Strengths

  Core brand returned to 2% year-on-year growth in August; Flower Knows, Insbaha and Off & Relax supported group growth.

  Weaknesses

  Core Proya and TIMAGE were down 4% and 12% year on year in July-August.

  Comparison

  Target price is RMB70, based on 19x 2027E P/E versus a 20x industry base multiple.

  Risks

  Slower core-brand product development, stronger competition, slower new-brand ramp-up, weaker overseas performance and management-transition uncertainty.

• Mao Geping Cosmetics Co. (01318.HK)

  Preferred Buy-rated cosmetics pick with ongoing 3Q-to-date momentum.

  Strengths

  August GMV rose 28%; growth was supported across Tmall/Taobao, JD and Douyin.

  Comparison

  HK$73 target price is based on 21x 2027E P/E, including a premium to the industry base multiple for its high-growth profile.

  Risks

  Slower penetration of mid-to-high-priced beauty products, higher marketing costs and tougher overseas-premium-brand competition.

• Giant Biogene Holding

  Buy-rated company with recovering tracked sales and a new offline medical-aesthetics business.

  Strengths

  3Q-to-date GMV grew 17%; August GMV rose 22%, with Collgene up 52%.

  Comparison

  HK$33 target price is based on a 17x 2027E P/E using a blended cosmetics and medical-devices valuation framework.

  Risks

  Slower professional skin-treatment growth, product-development failure and regulatory risk.

• Shanghai Forest Cabin Cosmetics (02657.HK)

  Buy-rated domestic growth company.

  Strengths

  August GMV grew 37%, supported by 57% growth on Douyin and balanced channel growth.

  Comparison

  HK$78 target price is based on 16x 2027E P/E.

  Risks

  Slower anti-aging or oil-essence penetration, online-margin dilution, greater competition or promotional intensity, and concentration in essence oil.

Key data

• China beauty online GMV, August 2026+8% yoyAccelerated from +5% in July.
• Douyin beauty GMV, August 2026+14% yoyMain driver of overall online growth.
• Tmall/Taobao cosmetics GMV, August 2026-2.1% yoyVolume fell 11.1%, partly offset by 10.2% ASP growth.
• Proya core brand, August 2026+2% yoyReturned to growth following upgrades, according to the report.
• China cosmetics retail sales, July 2026+6.8% yoyAbove 0.6% growth for average retail sales.
• China cosmetics sector valuation18x 12-month forward P/ECompared with 26x for global cosmetics players.

Impact & implications

The report interprets the August rebound as evidence that domestic leaders are regaining momentum, particularly through Douyin and product or channel execution. It sees Proya's core-brand recovery as supporting a second-half acceleration, while Mao Geping, Giant Biogene and Forest Cabin remain favored for their respective momentum and growth profiles.

Risks

• For Proya: slower core-brand product development, intensified competition, slower new-brand sales ramp-up, weaker overseas performance and management-change uncertainty.
• For Giant Biogene: slower professional skin-treatment market growth, failure to develop successful products and regulatory risk.
• For Mao Geping: slower penetration of mid-to-high-priced beauty products, higher selling and marketing costs, and stronger overseas-premium-brand competition.
• For Forest Cabin: slower product-category penetration, online margin dilution, more competition or promotions, and essence-oil concentration.

What to watch

• Whether Proya's core brand sustains its return to growth and supports second-half 2026 acceleration.
• Douyin growth, KOL promotion activity and the platform's share gains relative to Tmall/Taobao.
• Relative online GMV performance of domestic brands versus multinational cosmetics groups.
• Sales momentum for Mao Geping, Giant Biogene's medical-aesthetics rollout and Forest Cabin's channel expansion.
• China cosmetics retail sales, imports and Korea duty-free demand indicators.