China’s Perfect Diary has quickly emerged as a major player in the cosmetics industry by tapping into the preferences of tech-savvy consumers. Utilizing chat groups, video streams, and affordable prices, Perfect Diary has managed to capture 4% of the Chinese market for color cosmetics in just four years, trailing behind only L’Oreal and LVMH. With an upcoming Hong Kong IPO on the horizon, the brand is now setting its sights on expanding into Southeast Asia, targeting millennial social media users.

Consumers like Wen Shan, a 21-year-old student from Guangdong province, have been drawn to Perfect Diary’s affordable products. Wen has switched from Western brands to Perfect Diary, allocating her cosmetic budget to the brand’s items, most of which cost less than 100 yuan. These products are manufactured by the same contract manufacturers as Western brands, making them a cost-effective alternative. Wen’s decision to switch was influenced by a recommendation from her roommate and the brand’s understanding of local consumer preferences.

Despite its relative newness, Perfect Diary has managed to capture a significant share of the Chinese market, putting it in joint third place with Estee Lauder’s MAC. It falls behind LVMH’s Christian Dior and three L’Oreal brands, which collectively hold over 20% of the market. The Chinese cosmetics market has experienced rapid growth, more than doubling from 2015 to nearly $8 billion in 2019. Projections estimate it to reach almost $15 billion by 2024, driven by the expanding middle class in China.

Perfect Diary’s success can be attributed to its strategy of blending low prices with leveraging popular social media platforms, such as Douyin and WeChat. By collecting customer data through these platforms, the brand can quickly design and release new products. Additionally, Perfect Diary collaborates with influential online personalities like ‘Lipstick King’ Li Jiaqi, who give rave reviews for the brand’s products during live streams on Alibaba’s Taobao platform.

Analysts credit Perfect Diary’s rise to the younger Generation Z consumers who are more open to embracing domestic brands and no longer hold the belief that Western products are superior. L’Oreal, one of the leading international beauty brands, welcomes the healthy competition from homegrown brands, recognizing the shifting preferences of Chinese consumers.

Perfect Diary’s parent company, Yatsen E-Commerce, founded the brand in 2017 with the goal of creating a domestic beauty brand with international influence. Its founder, Huang Jinfeng, focuses on promptly conducting research on desired products to cater to consumers’ needs. The company has already expanded into physical retail, with over 150 stores in China and plans to reach 200 by the end of the year. It has also launched an online store specifically for Southeast Asian countries and operates an official store on Lazada, Alibaba’s arm in the region.

While specific financial information is not disclosed, Perfect Diary has secured investments from prominent firms such as Hillhouse Capital, Sequoia Capital, Tiger Global Management, Boyu Capital, and Chinese Culture Group. The company is currently raising funds in a pre-IPO round, valuing it at around $4 billion. The upcoming Hong Kong IPO, with Goldman Sachs and Morgan Stanley as lead underwriters, aims to raise up to $500 million and potentially value the company at $5 billion. However, this valuation is still dwarfed by L’Oreal’s market value, which exceeds $180 billion.

As Perfect Diary expands, consumers like Wen remain loyal to the brand. Their satisfaction stems from the affordability and the sense of supporting a domestic brand. The brand’s ability to capture the attention and loyalty of consumers reflects its transformative impact on the cosmetics industry in China.

Useful links:
– [Perfect Diary Official Website](
– [L’Oreal Official Website](