May 18, 2023. Shanghai – The Chinese consumer market is not only a story of scale, but also one increasingly driven by a range of demographic and lifestyle changes, President of L’Oréal North Asia Zone and CEO of L’Oréal China, Fabrice MEGARBANE told a packed audience during a special CEIBS Executive Forum this evening.

During the event, Mr. MEGARBANE discussed how COVID has impacted Chinese consumers and key transformations in the beauty industry. He also shared L’Oréal’s vision for the beauty market in the post-pandemic era.

Mr. MEGARBANE was appointed President & CEO of L’Oréal China in 2019 before heading the North Asia Zone in 2021. Based in China for four years, he has witnessed a huge transformation in the Chinese consumer market and has been impressed by the scale and speed of it.

“China has become more diverse in terms of consumption behaviours, and every single generation is different,” he said, adding that new tribes of consumers are now growing from minorities to become major driving forces that have not only the power to purchase, but also to influence and to shape new trends.

As a consumer-centric international organization, the French cosmetics giant offers a diversified portfolio of 36 global brands covering a range of categories to meet the aspirations of consumers. North Asia is the group’s second largest global market after Europe.

However, to understand different consumer behaviours, he continued, companies should pivot their focuses from age groups to lifestyles. For example, the Chinese social platform Xiaohongshu (aka RED) exploded during the pandemic with millions of actively engaged users sharing their lifestyles, posting travel experiences and shopping tips in the community.

“It’s wildly popular because it can create a lot of tribes. It’s not about age, but about what your interest is,” Mr. MEGARBANE explained.

Added to this, he stressed that there is no one-size-fits-all solution when it comes to the Chinese market. What matters, he explained, is the connection with consumers.

“Ultimately, it’s not about where the product is made, but who it is made for.”

With rapidly changing consumer behaviours, L’Oréal is at the edge moving from “creativity” to “innovation” by responding to new consumer needs and preferences.

“One new consumer pattern that struck us the most is the rationality of consumers […]. People are much more rational these days. They still want quality, but they also want to know what is inside of a product and how to get the best price for it,” Mr. MEGARBANE said.

“Near half of consumers value functionality when making purchase decisions; while 24% focuses on emotional fulfilment and connection, and another 27% emphasise social and environmental factors,” he added.

Therefore, to navigate transformation and win more Chinese consumers, he went on, it is important for companies in the beauty industry to strengthen innovation, create new content to engage with consumers, advance digital and technological transformation, as well as have a strong sense of purpose.

“Chinese consumers are the most demanding ones in the beauty industry. They know everything in detail about the products because they have a deep understanding [....]. This is why we not only have to innovate in China for China, but also innovate in China for the rest of the world, because China is one of the most competitive markets. If we don’t win here in China, we might not win anywhere else in the world in the future,” Mr. MEGARBANE said.

In wrapping up the event, he noted that the past few years of crisis and constant change will mark the dawn of a new era for beauty.

“We are living in a world which is interconnected, but is becoming increasingly multipolar. Technology and artificial intelligence will be able to disrupt the innovation of tomorrow, and there will be higher expectations in terms of sustainability, diversity and inclusion, and purpose,” he concluded.