For greater than a decade, China’s aspirational customers, spurred by a fast-growing economic system and rising wages, snapped up merchandise from cosmetics giants like L’Oreal, Estee Lauder, and Shiseido. Earlier than the COVID pandemic hit, China appeared set to overhaul the U.S. because the world’s largest make-up market.
These increase instances are over, as extra Chinese language shoppers now flip to up-and-coming native manufacturers, like Mao Geping and Florasis.
L’Oreal’s gross sales in Mainland China dropped final 12 months, shrinking its general North Asia gross sales by round 3%. The Chinese language market, the majority of the agency’s North Asia income, now accounts for 17% of group gross sales, down from 23% in 2022. The French agency continues to name China an vital market, however has reportedly began reducing its retail workforce on account of slower Chinese language demand.
As China stagnates, L’Oreal is now seeking to areas, just like the Center East and Southeast Asia, as a supply of progress.
SAPMENA—L’Oreal’s time period for “South Asia Pacific, Middle East, and North Africa”—will quickly “play a much bigger role” in the case of magnificence, says Vismay Sharma, who oversees the area for the French cosmetics agency.
L’Oreal, No. 91 on Fortune’s Europe 500, reported gross sales of 1.1 billion euros ($1.19 billion) for the primary quarter of 2025, up 12.2% year-on-year, throughout SAPMENA and Sub-Saharan Africa (SSA).
That’s nonetheless small in comparison with different areas, sitting far behind Europe, North America and North Asia. However whereas SAPMENA-SSA solely contributed 9.2% of L’Oreal’s quarterly income, it was the one area to log double-digit progress.
SAPMENA covers an enormous swathe of the globe, stretching from Morocco all the best way right down to New Zealand just below 19,000 kilometers away. The area’s 35 markets cowl 3 billion individuals, or about 40% of the world’s inhabitants, but solely accounts for 10% of world magnificence gross sales. “It has to come together, and eventually demographics have to win,” Sharma says.
SAPMENA’s fast progress doesn’t shock Sharma. “The consumers in this part of the world are about 5 years younger than the rest of the world, live in aspirational societies and in economies that are growing fast,” he says.
China has proved to be a tough marketplace for international cosmetics corporations post-pandemic. Sluggish China gross sales have dragged down the monetary outcomes of U.S. agency Estee Lauder and Japan’s Shiseido.
A sluggish economic system and stagnant consumption are partly responsible. However there’s additionally new competitors. “C-Beauty” manufacturers are beginning to choose up steam amongst Chinese language customers, with new manufacturers going viral on Douyin, the Chinese language model of TikTok, and different social media platforms. (L’Oreal is paying consideration, investing in native Chinese language manufacturers like To Summer time)
Nonetheless, Sharma thinks China provides classes for SAPMENA.
Southeast Asia, like China, has extremely related shoppers who’re used to e-commerce and livestreaming. For instance, Sharma notes that over 50% of L’Oreal’s enterprise in Vietnam comes from e-commerce.
That is much less true of the Center East and North Africa.
“When you look at the ecosystem of beauty over there, you still don’t have TikTok Shop. They’re still a few years behind platforms like Shopee, like Lazada,” he says.
But shoppers within the Center East share comparable preferences to these in Southeast Asia. “Expectations for beauty are very similar. We can see aspirations in terms of kind of hair, skin, lips, and eyes,” Sharma says, pointing to a choice for longer black hair for instance.
That provides L’Oreal an opportunity to develop within the area. “Our ability to create content at scale in the GCC becomes a huge advantage,” Sharma says.
This story was initially featured on Fortune.com
