China is home to one of the largest cosmetics consumer markets in the world, but its influence and full potential have stagnated in the wake of the Covid-19 pandemic.
Weighed down by weakened consumer confidence and excessive discounting, the impact was felt most by beauty’s luxury giants and conglomerates, with the likes of Kao Corporation and Estée Lauder Companies (ELC) citing a reduced demand for prestige beauty.
But in 2026, there are signs that all of this may be about to change in China.
China's cosmetics retail market hit a record 465.3bn RMB in 2025, up 5.1% year-over- year, according to data released by China’s National Bureau of Statistics in January 2026.
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Backing this up further are more positive financial results and increased investment in the region from the luxury beauty giants.
This includes ELC reporting a second consecutive quarter of double-digit retail sales growth and continued share gains in mainland China in Q2 2026.
L’Oréal also noted a strong recovery in the second half of 2025 in China, while Coty recently opened a new fragrance concept store in Hong Kong’s Mong Kok district.
Elsewhere, the British Beauty Council is preparing to launch its inaugural British Beauty Festival in China in April, with the UK beauty authority spotting an opportunity to strengthen British brands seeking a foothold in the country.
So, what exactly is fuelling the recovery in one of beauty’s most challenging markets, and can this continue in 2026 and beyond?
Understanding the beauty situation in China
The challenges in China’s beauty market over the past two years came down to a combination of two key elements: macro pressures and structural changes.
“Consumer confidence was weak, discounting became excessive, and many brands trained shoppers to wait for promotions rather than buy at full price,” says Adam Knight, co-founder of Yaso, a social commerce technology platform supporting beauty brands in China.
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