Deep Dive into the Chinese Hair Care Market: Key Trends in 2023

The last several years have seen a significant boom in the Chinese hair care market. As the education levels of Chinese consumers grow, the country’s disposable income per capita is increasing rapidly, having doubled over the last decade. With the growing consumption capacity of the population, people are pursuing a higher quality of life, resulting in the accelerated development of luxury industries, particularly within the beauty economy.

With this context in mind, we can understand why China’s hair care market is expected to grow in both size and sophistication over the next few years. With a 5% compound annual growth rate (CAGR) and an expected value of 70 billion RMB by 2025, this market is no small pond. In addition, increased awareness of the process and benefits of a well-considered hair care routine has seen a shift in the function of hair care products away from just cleansing. Now, a consumer can expect their hair care routine to have any number of diverse effects, such as softening, hair growth, and scalp care.

However, these new expectations from consumers have not appeared out of thin air. They stem from pain points in consumer experience that have been realized with consumer’s increased desires for a higher quality of life. Key pain points for the Chinese consumer include hair loss or thinning, flat hair with a lack of volume, overly artificial or synthetic products, and scalp issues. The market has responded accordingly, with accelerated growth in relevant subcategories.

Hair Growth and Anti-Hair Loss Products Show Promising Growth

Hair loss and thinning is a growing concern for consumers, with 46% reporting that they suffer from thinning hair and 61% from hair loss in a survey conducted by Aveda of almost a thousand participants. In 2022, keywords such as “grow hair” and “prevent hair loss” had a penetration rate of around 18% in relation to shampoo. The size of China’s anti-hair-loss shampoo market increased from 870 million RMB in 2016 to 1.61 billion RMB in 2021. It is expected that this will be closer to 2.5 billion RMB by 2026.

Another point to note is the market for specialized pregnancy hair products. More and more women are suffering from hair loss after childbirth, and the number of products available specifically for pregnant women is increasing by 40% year-on-year. As the population’s disposable income increases, pregnant women are becoming more willing to spend (and even pay a premium) on specialized pregnancy products.

Scalp Care is an Up-and-Coming Subcategory with Potential for Growth

Over 50% of consumers report having scalp problems, with more than 60% willing to make consumption decisions around their scalp health. Issues such as oiliness, hair loss, and dandruff have been key pain points this year. The scalp care industry in China is now worth upwards of 50 million RMB, with a year-on-year increase of 125% in 2022. Most (93%) of these sales came from scalp oils, followed by scalp pre-washes (4.12%) and scalp scrubs (2.64%). The scalp care subcategory of hair care is still relatively new and, while brands are finding ways to harness consumer demand, there is still room in the market for new initiatives and product lines.

The Hair Coloring Category Takes a Focus on Safety

The hair coloring category has also seen material growth over the last few years, with market revenue having increased significantly year-on-year since 2016. Younger generations use hair dye as a form of expressionism and will often prefer DIY products over visiting a salon. According to sales data from Taobao and Tmall, hair coloring products made up 15% of their hair care product sales in 2022. Survey data showed that the main factor of consideration for consumers purchasing hair care products was product safety.

An emerging segment of the hair coloring category is non-oxidizing hair dyes, which are less irritable for the scalp and cause less damage to the user’s hair. Currently, non-oxidizing products only make up a small share of the market, but with this quickly becoming many consumers’ preference due to its milder nature, we can expect to see significant growth here in the next few years.

Consumers are Willing to Pay a Premium for Natural and Environmentally-Friendly Hair Care Products

Four of the top 10 searched keywords on Taobao and T-mall relating to hair coloring in September last year mentioned the word "organic." There is an increasing demand for products that are seen as natural and eco-friendly, both due to the perceived benefits it has on a consumer’s personal hair health and the desire to care for the environment. The same Aveda survey reported that 89% of consumers are more likely to purchase a product with environmental claims, with 49% specifically buying eco-friendly products. Of those who specifically purchase eco-friendly products, most were willing to pay a premium of up to 20%.

High-end shampoo products claiming to contain natural plant extracts had a 40% penetration rate in 2022, with the subcategory seeing over 600 million RMB in sales (a 165% increase from 2021). Key ingredients that interested consumers were ginger, sea salt, caviar, and nut oils, along with products that did not contain silicone oils.

Hair Care Brands Should Consider the Role of Professional Hair Salons

While e-commerce is an incredibly crucial tool for hair care brands in the Chinese market, it is important not to overlook the role the hair salon industry can have in the market. Big players such as L’Oreal include Professional Products as one of their four major business divisions, highlighting their understanding of the huge opportunity that lies with business-to-business sales in the hair care industry.

Not only is this an efficient channel for distribution, but also serves the overall brand recognition and reputation of the product. With the population’s increased willingness to spend on a higher quality of living, hair salons are getting more consumers through the door each year. It is estimated that the beauty salon industry was worth over 550 billion RMB in 2022, which is almost a 6% increase year-on-year.

Looking Ahead

In 2024, it is likely that we will see the continued growth trends that emerged over the last few years, as well as the inevitable emergence of new trends altogether. The increased complexity and sophistication of the Chinese consumer’s hair care routine could see a number of breakthroughs in the industry, and, with the industry moving at such a rapid pace, it is hard to predict what may come of the new year. What we do know, however, is that the waves of subcategories that entered the market recently are not yet fully explored and leave room for brands to grab market share with creative new ideas and technologies.