A gradual recovery in China's premium beauty and luxury goods market is providing fresh momentum for the world's leading beauty companies. Foreign players including The Estee Lauder Companies, L'Oreal and LVMH reported stronger performance as Chinese consumers return to higher-end beauty products and brands accelerate localization strategies.
After a period of slower growth marked by cautious consumer spending and intense competition from domestic brands, the beauty segment in the country has shown signs of recovery this year, benefiting companies with strong brand portfolios, innovation capabilities and deeper digital engagement with consumers.
For New York-based Estee Lauder, the Chinese market delivered one of the strongest turnarounds in its global business. The company said organic net sales from the Chinese mainland market increased 9 percent for fiscal-year 2026, including 7 percent growth in the fourth quarter, marking six consecutive quarters of market share gains.
"China is not only one of our most important global markets, but also an increasingly vital source of talent, insights and inspiration for the company," said Stephane de La Faverie, president and CEO of ELC.
De La Faverie will visit China for the first time as CEO during the ninth China International Import Expo in Shanghai in November.
Estee Lauder said its fiscal 2026 performance marked the successful execution of its "Beauty Reimagined" strategy, with organic sales rising 3 percent globally and reported sales increasing 5 percent to $15 billion.
The company's growth was supported by a recovery across regions and categories, with fragrance remaining a major growth engine.
On the Chinese mainland, skincare, makeup and fragrance all posted growth, with fragrance achieving double-digit expansion globally. Within China, ELC brands including La Mer, Le Labo and Tom Ford were among the strongest contributors.
Luxury fragrance brand Le Labo grew more than 50 percent for the full fiscal year, while La Mer continued to gain momentum.
The company said 11 brands achieved retail sales growth on the Chinese mainland during the fourth quarter, with six recording double-digit growth.
Online channels have become increasingly important in China, accounting for more than half of the group's business in China. The company said Chinese mainland e-commerce sales delivered double-digit growth, supported by major shopping events such as 618 and Singles' Day.
During these festivals, brands including Estee Lauder, La Mer and Jo Malone London ranked among the leading players in prestige beauty and fragrance categories across major platforms.
L'Oreal, the world's largest beauty company, has also benefited from improving market conditions in China.
The French beauty giant reported 6.5 percent adjusted like-for-like growth globally in the first half of fiscal 2026, with North Asia delivering 4.6 percent growth.
China was the key driver within the region, with the market gradually improving, particularly in the selective beauty segment.
L'Oreal said it outperformed the Chinese market by nearly three times, led by its Luxe division, which benefited from strong brand performance, product innovation and successful 618 shopping festival campaigns.
Brands including Helena Rubinstein, Aesop and Yue Sai contributed to growth, while Dermatological Beauty and Professional Products delivered mid-teen growth in China.
"L'Oreal delivered a strong first half," said Nicolas Hieronimus, CEO of L'Oreal. "Growth was fueled by the seamless execution of our innovation strategy and our market-beating growth in e-commerce," Hieronimus said.
E-commerce now accounts for more than 50 percent of L'Oreal's sales in North Asia. Beyond sales recovery, global beauty companies increasingly see China as a source of innovation, technology and consumer insights.
L'Oreal has established its North Asia headquarters, research and innovation center, and key marketing teams in Shanghai, which the company considers a strategic hub for developing products and services.
Vincent Boinay, president of L'Oreal North Asia and CEO of L'Oreal China, said Chinese consumers were increasingly influencing not only product development, but also how brands communicate and deliver services.
Boinay pointed to the popularity of short-form content and the adoption of Chinese artificial intelligence platforms such as Qwen and DeepSeek for product searches as examples of rapidly changing consumer habits.
AI is also becoming part of beauty services. L'Oreal has applied AI to areas including consumer recommendations, ingredient simulation and formulation development.
The company said AI could help researchers accelerate innovation while improving consumer experiences.
The recovery comes as competition in the beauty sector in China continues to intensify.
Chinese beauty brands have strengthened their capabilities in product innovation, branding and digital marketing, reshaping the competitive landscape. Foreign beauty firms are responding by increasing localization efforts and investing in products developed specifically for Chinese consumers.
At ELC, around 30 percent of innovations are now developed in China for Chinese consumers through its China innovation and research center.
The strategy reflects a broader industry shift from "selling global products in China" toward "creating products in China for global consumers".
Other luxury and beauty players are also benefiting from improving consumer sentiment.
LVMH, the world's largest luxury group, reported global revenue of 57.1 billion euros ($63.9 billion) in the first nine months of 2026. Its selective retailing business, which includes Sephora, achieved 6 percent organic growth, supported by market share gains and strong brand performance.
Sephora continued expanding its global leadership position, driven by its brand portfolio, exclusive launches and growing partnerships with emerging Chinese beauty brands, said the company.
Editor：Zhou Jinmiao
