The Latest Compliance Analysis and Development Trend of Cosmetic Ingredients Market in China

Editor’s Note: David Chang, managing director and senior consultant of Beijing-based legal regulatory services provider Odyssey Compliance Incorporation, spoke on ‘The Latest Compliance Analysis and Development Trend of Cosmetic Ingredients Market in China’ at NYSCC Suppliers’ Day in May 2024. David has summarized his speech for us again. It should help international raw material companies with excellent R&D technologies to better understand the Chinese market and explore new opportunities.

Introduction

As the world’s second-largest cosmetics market, China’s cosmetics new regulations and market development trends have been the focus of cosmetics and raw material companies. This speech will include: 1) Interpretation of new cosmetic ingredients (NCI) regulation in China; 2) Analysis of the demand of the current cosmetics consumer market in China; 3) Future trends of the industry according to the notified NCI.

For Chinese consumers, most of them pay extra attention to product efficacy and product ingredients when purchasing cosmetics. Meanwhile, by analyzing Chinese social media platforms, Chinese consumers pay more attention on cleansing, Moisturizing, repairing, and other efficacies listed here.

China’s first cosmetic regulation “Regulations on Hygiene Supervision of Cosmetics” enacted in 1989, which has been implemented for more than 30 years. During this period, China has been implementing administrative permit application system for all new cosmetic ingredients, an enterprise often need to supplement the application dossier several times to apply for an ingredient, and the application process takes years, which also led to only a few new cosmetic ingredients have been approved.
Until 2020, the State Council promulgated the CSAR, which brought great changes in the regulatory system. As mentioned in the CSAR: For other low-risk new cosmetic ingredients, the enterprise will complete the notification after submitting the application dossiers through the NMPA declaration platform, then it can be manufactured and imported. This regulation reform has greatly shortened the application time and speed up the progress of launching products to the Chinese market.
As we know, tremendous regulations have been reinforcing the market supervision and brings revolutionary charges to the China cosmetic industries, one of the key important matter, the policy door and market door are fully opened for all new ingredients and existing ingredients, globally, to establish unprecedented opportunity to MFRs, suppliers, and distributors and end-users.
Further in 2024, The State Council and the NMPA have issued a number of new regulations related to cosmetic ingredient to promote the innovative development of ingredient through policy support. In addition, local governments have also introduced incentive policies for the declaration of new cosmetic ingredient. in the past two years,
Moreover, the China National Institutes for Food and Drug Control (NIFDC) are gradually studying and will be accepting more animal alternative methods, to better in line with international standards.
With the strong support of regulatory policies, the number of new cosmetic ingredient in China has been continuously increasing.

1. As of April. 7th, 2024, NMPA has published 140 notified NCIs, there are a total of 122 NCIs after removing duplicates. Our OCI has successfully assisted to obtain the first batch of notified NCI, as a milestone, later we continue obtain the notifications bulletins, covers almost all application scenarios, leading the regulatory affairs services providing, shared the number of 15% total NCI notification numbers in China.
2. Also, the number of NCI notifications is showing significant growth potential. The numbers of NCIs notified solely in Q1 of 2024 has accounted for ½ of the NCIs notified in 2022 and accounted for 1/3 of the NCIs notified in 2023.
3. The hot trend of China’s NCIs notification is also attracting more foreign enterprises to pay attention and expand their business in the Chinese market. We find the number of foreign notifier in Q1 of 2024 has already accounted for nearly half of the numbers in 2022 and 2023.

From the analysis of Sources of notified NCIs

1. Chemical ingredient is still dominating the industry with a share of 60%, followed by biotechnological ingredient and botanical ingredient, with a share of 22% and 12%, respectively.
2. Also, influenced by the popularity of biological fermentation technology in the market and the supporting policies for botanical ingredient, these two categories have a significant trend of increase, and we predict that they will become the popular application sources in the near future.
3. As for now, there are only mineral ingredients have not been notified and are yet to be developed.

From the analysis of Functions of notified NCIs

1. For notified NCIs, Skin protectant is being chosen the most for ingredient function, followed by Humectant and Antioxidant.
2. There are still 39 functions that can be selected in the NMPA system. We recommend that enterprises can select functions based on the characteristic of your ingredients, enrich and develop NCI with different efficacies, and provide fresh usage experience for consumers.

From the analysis of Countries or regions of notifiers

1. Chinese domestic enterprises account for more than 70%, taking a dominant role in the industry.
2. Overseas enterprises are mainly located in the U.S., Japan/Switzerland, Germany.
3. U.S. enterprises accounted for more than 10%, is the country with the most notified NCI outside of China.

Winkey, Botanee and Bloomage are the three outstanding enterprises that have risen rapidly since the implementation of the new regulation and have now become the industry leaders.
Among the enterprises showed on this page, OCI has assisted in the notification of several NCIs. OCI is also acting as the domestic responsible person under the NMPA system for some enterprises.
We would like to call for more international ingredient companies to register or notify their ingredients in China, to introduce their mature ingredients to the Chinese market. Also, the application process will go smoother if the ingredient has adequate safety usage history outside of China.
Among the notified NCIs, these three ingredients are the most popular ones, and have been notified for many times.

1. The top 1 is NMN, which has gathered attention internationally, and continues to gain popularity due to its name of “Elixir of aging”.
2. The top 2 is Bakuchiol, which is popular in Europe and the U.S. for its anti-aging efficacy and being called as rival and substitute for retinol.
3. The top 3 ingredient is the main efficacy ingredient of Edible Bird’s Nest, which mainly has skin protection, anti-wrinkle, antioxidant and moisturizing efficacies.

For tomorrow trends, we may see:

1. Over the past three years, there has been a huge increase in notifications for biotechnological ingredients because of its strong efficacy, innovation, and sustainable characteristics. Biological fermentation technology is still the mainstream.
2. Currently, a major feature of anti-aging ingredients is using food ingredients in cosmetics, such as NMN and PQQ. For NMN, it is allowed to be added in cosmetics, but this is only an initial step since it has not received approval for use in health foods or foods in China yet. Its safety to use in cosmetics has yet to be proven.
3. Most consumers believes cosmetics with botanical ingredients are healthier and more effective, but its safety, efficacy and stability are the main problems. The research on the application of natural plants as cosmetic ingredients still needs to be strengthened.
4. In recent years, the popularity of Green growth and sustainable development has been increasing. Cosmetics and personal care markets are having higher demands on sustainable products, also consumers are shifting their spending towards products with ESG-related claims.

In general, with the support of government policies and market demand, the notification of NCIs is accelerating. We recommend enterprises to value technological innovation and strive for multidimensional development, while focusing on the latest regulatory changes to better overcome future challenges.

Contact: David CHANG, Odyssey Compliance Incorporation
E-mail: david.chang@chinaoci.com
Phone: +86 139 1086 3852