Amid profound adjustments in the global geo-economic landscape and persistently weak economic recovery momentum, China's economy continues to demonstrate remarkable stability and leadership. Effective management of the macroeconomic framework, coupled with ongoing advancements in industrial upgrading, green transformation, and digital infrastructure, underpins this resilience. Furthermore, the pursuit of carbon neutrality goals and the growing adoption of circular economy principles are translating from policy design into widespread production and consumption practices, fostering a new consensus on responsibility and enhancing developmental durability.
Against this backdrop, an exclusive discussion was held with Fan Jiayu, President and CEO of Estee Lauder Companies China. The conversation explored core topics including the company's performance rebound and strategic execution, insights into Chinese consumers, innovations in marketing scenarios and channel evolution, localized R&D and the "In China, for the World" initiative, social impact and sustainability, and the competitive landscape. The dialogue focused on how multinational corporations can navigate China's rapidly evolving consumer demands, policy directions, and industrial changes to seize structural opportunities and balance global technological strengths with local consumer insights, all while aligning with national sustainability strategies to deepen their footprint and contribute to the upgrade of the beauty industry.
**Performance Rebound and Strategy Execution** When asked about the standout performance in the company's recent Q2 FY2026 earnings, particularly the 13% organic net sales growth in Mainland China—marking the second consecutive quarter of double-digit growth—the executive highlighted accelerating consumption recovery as a key factor. The company has seen steady market share gains across all categories and channels within China's premium beauty sector. The executive attributed this success primarily to the inherent stability and resilience of China's beauty market, driven by a continuous influx of new consumers and deep penetration through diverse online and offline channels. Leveraging digital platforms, the company's brands now reach tens of millions of consumers in over 600 cities across China.
Chinese consumers are becoming increasingly sophisticated and discerning, demanding higher efficacy and innovation, which in turn pushes beauty companies to expand boundaries. The company's diverse brand portfolio effectively meets these varied needs. The overarching "Reimagining Beauty" strategy is consumer-centric, focusing on five core areas: enhancing consumer reach, developing breakthrough innovations, increasing consumer-facing investments, committing to sustainable growth, and optimizing operational models. After a year of implementation, this strategic shift is yielding tangible results in operational efficiency, innovation capability, and market performance. Significant future opportunities are seen in category expansion, channel innovation, new customer acquisition, and pricing strategies, reinforcing the company's long-term commitment and confidence in the Chinese market.
**Insights into Chinese Consumers** Reflecting on the CEO's previous comments about Chinese consumers being "increasingly mature, well-informed, and more results-oriented than ever," while also seeking value, the executive acknowledged a trend towards value-consciousness but emphasized the enduring, solid growth potential of the premium beauty segment in China. The company's core strength lies in high-end and luxury beauty. Its diversified brand mix allows for flexibility in catering to different consumer segments. Skincare remains the most stable and core category, makeup shows strong resilience with ongoing innovation potential, the fragrance category—especially luxury scents—is experiencing notable growth, and haircare is emerging as a new growth driver.
Innovation is a key competitive advantage, demonstrated through continuous R&D investments and landmark products from brands like La Mer, Estee Lauder, and Clinique. Strategically, the company is deepening consumer engagement through personalized consultations, VIP membership benefits, and experiential activities to enhance understanding of product value and technology. Over three decades in China, deep localization efforts, including collaborations with local scientists and incorporating cultural elements, ensure the brand remains closely attuned to Chinese consumer preferences, upholding core values while enhancing the consumer experience.
**Marketing Innovation and Channel Evolution** Regarding the rapid diversification of consumer scenarios, the executive discussed the balanced approach to online and offline channels. Online channels offer efficiency and convenience, crucial for reach, conversion, and long-term customer relationship management. The recent launch of the China Supply Chain Smart Operations Center, one of the group's most automated omnichannel fulfillment hubs, enables a higher proportion of next-day deliveries, streamlining the consumer experience.
However, offline environments provide irreplaceable immersive experiences that foster deep emotional connections. Examples include the Darphin Paris flagship in Shanghai featuring its global first Structural Reset Center, La Mer's inaugural Gold Workshop offering masterclasses and inspiration salons, the Estee Lauder Skin Reversal Center in Nanjing with AI skin analysis and high-tech treatments, Aveda's professional hair care services, and Le Labo's intimate café-like space. These physical locations are vital for conveying brand value, cultivating loyalty, and offering personalized, "zero-distance" interactions. They are continuously enhanced to strengthen the brand-consumer bond.
**Localized R&D and "In China, for the World"** The role of China within the global innovation framework was highlighted as not just a core growth engine but also a crucial driver of worldwide innovation. The China Innovation Center, established in late 2022, possesses end-to-end capabilities from consumer insight to product launch. Research from this center has led to successful product launches globally, such as the Estee Lauder Revitalizing Supreme+ Brightening Moisturizer addressing local anti-aging and brightening needs, La Mer's Balancing Lotion for oily skin, and Clinique's Repairwear UV Defense SPF 50 for post-procedure sensitive skin.
A recent example is the Estee Lauder Re-Nutriv Ultimate Diamond Transformative Brilliance Oil, launched after 15 months of development. It was created in response to Chinese consumers' comprehensive anti-aging demands for "plumpness, firmness, and radiance" coupled with high sensory expectations. This product, developed collaboratively by Chinese and global R&D teams, exemplifies the success of the "In China, for China; In China, for the World" strategy. The recent recognition of the Estee Lauder Companies as one of the first Open Innovation Centers in Shanghai's Minhang district further underscores its role as an innovation incubator and resource connector within the local ecosystem. The synergy between China's market speed, digital ecosystem, mature consumers, and the group's global R&D power creates innovations for the local market and new opportunities worldwide.
**Social Impact and Sustainability** On sustainability, the executive outlined concrete actions integrating green development, circular economy, and people-centric principles into operations. Over 98% of wood-fiber cartons are FSC-certified, with increasing use of "5R" packaging. Operations utilize 100% renewable electricity, and the company meets annual zero industrial waste-to-landfill commitments. The "Responsible Store Design" program promotes "green stores," with over 50 locations in China. The China Innovation Center holds dual LEED Platinum and WELL Platinum certifications, a first in the domestic beauty industry. The new Supply Chain Center is FM-certified and LEED Gold-certified, featuring energy-saving materials, on-site solar power, and rainwater recycling.
Brand-specific initiatives include La Mer's "Blue Heart" ocean conservation, Origins' "Million Forests" project planting 470,000 trees with the China Green Foundation, numerous empty-recycling programs, Aveda's water conservation efforts, and M·A·C's "VIVA GLAM" initiative. The flagship corporate social responsibility program, the "Pink Ribbon" breast cancer awareness campaign, has been active in China for 23 years. The Estee Lauder brand's "She Dreams, She Dares" program supports female entrepreneurs. Sustainability is framed not as a goal but as daily practice, integral to making beauty more enduring and meaningful.
**Industry Competition and Future Outlook** Addressing the current competitive landscape characterized by premium segment recovery, the rise of local brands, and channel restructuring, the executive views China as leading a new phase in the beauty industry—more science-driven, emotionally connected, and consumer-focused. The emergence of strong local brands is seen as a sign of a mature, healthy market, empowering consumer choice. The key focus remains steadfastly on the consumer, whose increasing sophistication, knowledge, and purposeful decision-making will favor brands with genuine differentiation, innovation, quality, and deep connections. The long-term growth potential of China's premium beauty market remains strong. The company's future success will continue to hinge on exceptional brands, significant innovation, and superior quality, principles that have guided its over 30-year presence in China.
Comments