The Cosmetics Market in China
China is the second-largest cosmetics market (US $13,566.8m)) after the US and is expected to grow annually by 11.2% (CAGR 2020-2023). This market is expected to be one of the fastest-growing and most promising markets in China in the coming years.
A bit less than three-quarters of its sales revenue comes from e-commerce, and more than a quarter of the beauty market comes from imported goods, with half coming from
South Korea and Japan and a high level of interest for brands from the US, the UK and France.
In China, the most important sector in the cosmetics market is the skincare market, reaching almost 190 billion yuan (23 billion euros) in 2018.
China regulates its cosmetics market through the National Medical Product Administration (NMPA), which serves as its main regulatory body. The NMPA is the Chinese agency in charge of regulating drugs and medical devices, formerly known as the China Food and Drug Administration (CFDA) under control of the State Administration for Market Regulation (SAMR), created in 2018.
The regulatory landscape for cosmetics in China is extremely complex compared to other regions of the world. Indeed, cosmetics are regulated by several laws, the majority stemming from the Regulation Concerning the Hygiene Supervision over Cosmetics (1989) which as been in force since 1990.
This will soon be substituted by a new regulation, known as the “Cosmetic Supervision and Administration Regulation” (CSAR), published at the end of June 2020 and set to be implemented on January 1, 2021.
The CSAR has 6 chapters and 80 articles whose aim is to reform cosmetics in China. However, it is important to remind everyone that it’s a basic regulation and that specific measures will be taken to address, for example, animal testing, risk assessment, efficacy and claims.
In addition to the main cosmetic regulation in China, there are various regulatory texts that must be followed and that cover, for example:
- Ingredients (Inventory of Existing Cosmetic Ingredients in China (IECIC 2015): This inventory contains a list of ingredients that can be used in China. At the moment, there are only 8,783 ingredients listed. If an ingredient is not listed here, it cannot be used; it’s regarded as a new cosmetic ingredient and must follow a specific registration process.
- Restricted substances: Addressed in the Safety and Technical Standard for Cosmetics (2015) in which various types of substances are regulated, including forbidden, restricted and positive ingredients lists (preservatives, UV filters, colorants and hair dyes). It also regulates microbiological limits, maximum levels of harmful substances and other safety requirements.
- GMP (Hygienic Standard for Production Enterprises of Cosmetics (2007): This specifies good manufacturing practices within the industry.
- Administrative Provisions on Cosmetic Labeling-
- Administrative Provisions on Cosmetic Labeling
– Standard GB 5296.3 – 2008 Instructions for Use of Consumer Products – General labeling for cosmetics.
The first is a law; the second is a mandatory standard. These two texts are superimposable with respect to mandatory information.
- Guide on the Naming of Cosmetics (2010)
- Rules for claims made on labels.
These are only a few of the regulatory requirements for cosmetics in China.
« Cosmetics » are defined as “chemical products that are applied on the surface of any part of the human body (such as skin, hair, nails and lips) by smearing, spraying and other similar ways to keep the body hygiene, to get rid of undesirable odors, to protect the skin, to enhance the beauty of the appearance.” (Article 2 – Regulation Concerning the Hygiene Supervision over Cosmetics.)
This definition does not include oral care products which are categorized as industrial products.
Under the future CSAR Regulation, cosmetic products will be defined as follows:
« Daily chemical products that are applied to skin, hair, nails, lips and other human surfaces by spreading, spraying or other similar ways for the purpose of cleansing, protecting, beautifying and modifying ».
From the new definition , « any » external part and « eliminate unpleasant odor » have been removed.
Under the Regulation in Force, Cosmetics are
Divided into Two Categories :
Special Use Cosmetics
Includes the following sub-categories :
- Hair growth
- Hair dyes
- Hair perming (curling) products
- Hair removal (depilatory) products
- Breast enhancement products
- Slimming products (includes anti-puffiness products as well)
- Anti-spot and whitening products
- Anti-aging and anti-wrinkle products are not considered as special use cosmetics.
Non-Special Use Cosmetics
This category includes all other products, including:
- Skin care products
- Hair care products
- Nail care products
With the new CSAR Regulation (2020),
The New Categories will be as Follows:
Only five categories (+1):
- Hair dyes
- Hair perming products
- Skin whitening products
- Anti-hair loss products
- Other cosmetics that claim additional functions/efficacy and are subject to registration
General cosmetics are defined as” all other cosmetics not considered special use cosmetic”.
A five-year grace period is granted for hair growth products, hair removal products, breast enhancement products, slimming products and deodorants registered as special use cosmetics before July 1, 2021.
Cosmetics can also be divided into
- Domestic: Produced in mainland China
- Imported: Foreign products
This distinction is important because domestic and imported products, depending on their status as special or non-special cosmetics, are subject to different regulatory procedures for registration.
Non-Special Use Cosmetics
- Imported non-special use cosmetics need a Chinese Responsible Person who must be the importer and who needs to have a cosmetic business license. He or she is responsible for the filing in addition to the quality and safety of the product.
- A dossier must be prepared, providing information on the formula composition and labels, for example. Additionally, each product must be tested in authorized Chinese laboratories.
- The dossier is submitted to the NMPA or to the provincial Medical Product Administration, depending on where the RP is located. If the RP is based in one of the 11 Free Trade Zones, filing takes place with the provincial MPA. If the RP is outside the 11 FTZs, filing takes place with the NMPA.
- At this point, the dossier is reviewed for the presence of all necessary documents and compliance with format requirements. If this first step is not approved, additional documents will be requested.
- If the format review is approved, the NMPA will grant an e-filing certificate (validity has not been yet determined). The product can be imported, and it can enter the market.
- The technical review of documents provided is completed within three months of the filing certificate being granted. If the product does not pass this review, importation and sales will be stopped or the product will be recalled.
- The Chinese Responsible Agent (RA) can be any legal entity registered in China and is responsible only for product registration.
- The compilation of the product’s dossier, requirements, testing of the product and checking of documents is more stringent for special cosmetics than for non-special cosmetics.
- The other major difference is that the product can be imported only after the administrative license (valid for four years) has been produced by NMPA and the technical review has been completed.
Future Registration Procedures
Article 19 of the CSAR states: “The following documents shall be submitted for registration of special cosmetics or filing of general cosmetics:
- The name, address and contact information of the registrant and filer;
- The name, address and contact information of the production enterprise;
- The product name;
- The formula or full ingredient list of the product;
- The standard that the product complies with;
- The sample manuscript of the product label;
- The product testing report;
- The product safety assessment documents.”
How Does It Work?
BIORIUS can conduct a formula review and a label review of the cosmetic products.
1. Formula Review
A regulatory assessment of ingredients, their presence within the IECIC list, and with the limits/uses reported in the Safety and Technical Standards.
Upon completion of the analysis, a formula review report is issued, which highlights the following elements:
- INCI list in descending order, with INCI name in English
- Percentages of each ingredient along with total amounts
- IECIC compliance
- S&T compliance
- Expert comments
- Corresponding Chinese INCI list
2. Label & Claims Review
Evaluation of the product label in English.
A table indicating the following elements is provided upon completion of the evaluation:
- Required elements
- Presence of required elements (primary packaging, secondary packaging & leaflet)
- Conclusions for each claim
- Expert comments – strategic recommendations are provided for updating the label
Testing RequirementsIn September 2019, the NMPA published mandatory guidelines for the testing of cosmetic products.
All imported products in China must undergo specific tests carried out by the NMPA, which is the designated laboratory, even if they have already been tested overseas.
There are 33 laboratories that can perform the testing (micro, physicochemical, tox, human safety, etc). Tests are different depending on whether the products are non-special use cosmetics or special use cosmetics. Non-special use cosmetics require fewer tests than special use cosmetics. Moreover, if a cosmetic contains substances that pose risks to human health, additional tests are required.
Requests and test results can be handled online through the platform set up by the NMPA.
Animal TestingIn China, as of May 1, 2021, animal testing is no longer mandatory for general cosmetics only.
Provided the following conditions are met:
- GMP certificate issued by national authorities (not by associations or third parties);
- Safety assessment confirming that the product is safe.
However, there are three situations for which animal testing cannot be avoided:
- Products for children and infants;
- Products with new ingredients that are in the 3-year monitoring period;
- The company, RP must have a good score on the NMPA and have had no negative control or safety issues.
CBEC: the Chinese E-CommerceAn alternative method for exporting cosmetics to China is through use of the Cross-border E-Commerce (CBEC) and third-party e-commerce platforms including Tmall, Vipshop, Koala and JD.
The CBEC and tax management regulations change very quickly and companies must remain up-to-date.
According to one of the latest updates, products imported via the CBEC can be exempt from mandatory requirements, registration, etc.
Moreover, as already stated, the advantage is that using the CBEC allows a company to avoid animal testing.
Not all products can be imported via e-commerce. Only those that fall under the “CBEC Positive List” as specified by the General Administration of Taxation, the General Administration of Customs and the Ministry of Finance can be imported.
From a regulatory point of view, there are no restrictions since products are exempt from registration/notification. The important points are to ensure the quality and safety of products as well labels that are translated for Chinese consumers (i.e., the online version of the label).
In the future, the CBEC could be regulated differently and in a more strict manner.
However, for the moment, nothing has been implemented by the Chinese authorities, and e-commerce remains a practical way to enter the Chinese market.