image credit: Bamboo Works
Key Takeaways:
Chando has filed to list, boasting high gross margins but also high marketing costs that have led to profit volatility
R&D spending accounts for just 2% of the 25-year-old cosmetics brand's revenue, even as Chinese consumers demand more from its products than just an Oriental sensibility
A fresh Hong Kong IPO application from Chando Global Holding Ltd. is showing the big potential of China's huge cosmetics market, as domestic consumers increasingly delegate their beauty spending to such domestic brands. The company is rising quickly in a Chinese market traditionally dominated by foreign players. Its latest listing document, filed last week, shows all top five players are international heavyweights, including, L'Oréal (OTC:LRLCY) (OTC:LRLCF), P&G (NYSE:PG), Estée Lauder (NYSE:EL), Shiseido (OTC:SSDOY) (OTC:SSDOF) and LVMH (OTC:LVMHF) (OTC:LVMUY)
But that seems to be changing fast, as domestic cosmetics brands rapidly upend the foreign dominance of China's 1.1 trillion yuan ($159 billion) cosmetics market. The domestic names have soared ahead to take more than half of that market, accounting for 57.4% of sales last year, according to the China Association of Fragrance Flavor and Cosmetic Industries.
Among the top five brands by gross merchandise value last year on Douyin, China's equivalent of TikTok, three were domestic, led by Chicmax (2145.HK) and Proya (603605.SH). Chando was fifth, moving up from eighth place in 2024, according to research by Caixin.
Chando was China's third largest domestic cosmetics company in 2024, after Proya and Chicmax, even though it was only about half their size in terms of revenue. Chando posted 5.3 billion yuan in revenue last year, up 15.2% year-on-year, compared with more than 10 billion yuan for Proya in 2024 and 9.1 billion yuan for Chicmax.
If Chando is more petite than its competitors, its IPO marks a milestone for domestic cosmetics brands nonetheless, due to the company's backing by a major global brand. That brand is L'Oréal, which invested ...
