Against a backdrop of profound shifts in the global geo-economic landscape and persistently weak economic recovery momentum, China's economy continues to demonstrate remarkable stability and leadership. Effective macroeconomic management, coupled with ongoing advancements in industrial upgrading, green transformation, and digital infrastructure, underpins this resilience. Furthermore, the pursuit of dual-carbon goals and the growing adoption of circular economy principles are moving from policy design to widespread implementation in production and consumption, fostering a new consensus on responsibility and enhancing developmental resilience.
In this context, we spoke with Fan Jiayu, President and CEO of Estee Lauder Companies China, to discuss key topics including the recent performance turnaround and strategy execution, insights into Chinese consumers, innovation in marketing scenarios and channel evolution, localized R&D and the "In China, for Global" initiative, social impact and sustainability, and the competitive landscape. The discussion explored how multinational corporations can seize structural opportunities, balance global technological strengths with local consumer insights, align with China's dual-carbon strategy, deepen their footprint in the market, and contribute to the upgrade of the beauty industry and the emergence of a new ecosystem for conscious consumption.
**Performance Turnaround and Strategy Execution** The recent Q2 FY2026 earnings report from Estee Lauder Companies showed impressive results, with 13% organic net sales growth in Mainland China, marking the second consecutive quarter of double-digit growth. As a key witness and driver of this performance, what are the most critical factors behind this "turnaround," and how is the company's strategic vision being concretely implemented in the Chinese market?
We are genuinely observing an acceleration in the pace of consumption recovery in China. Across both the 2025 calendar year and Q2 FY2026, the company has achieved steady market share gains in the Chinese high-end beauty sector, spanning all categories and channels. The key factors include the inherent stability and resilience of China's beauty market, the continuous influx of new consumers, and the deep penetration of diverse online and offline channels, which inject lasting momentum into the industry. Leveraging digital platforms, our brands now reach tens of millions of consumers in over 600 cities across China.
Simultaneously, we note that Chinese consumers are becoming increasingly sophisticated and rational, with growing discernment regarding beauty products. There is deeper demand for high efficacy and innovation, and beauty companies are actively expanding boundaries, with skincare, makeup, fragrance, and haircare all showing strong growth momentum. Estee Lauder's rich and diverse brand portfolio precisely meets these varied consumer needs and aligns with market trends.
The company's strategic vision is closely tied to consumers. We are committed to becoming a consumer-centric, leading global high-end beauty company, focusing on five core areas: expanding efficient consumer reach, creating breakthrough innovative products, increasing consumer-facing investments, steadfastly advancing sustainable growth, and comprehensively optimizing our operational model. After a year of implementation, this strategic transformation is yielding tangible results in operational efficiency, innovation capability, and market performance.
Looking ahead, the Chinese market still holds vast opportunities in category expansion, channel innovation, new customer acquisition, and price segment strategies. Our long-term commitment to China remains unwavering, and we are confident about future market prospects.
**Insights into Chinese Consumers** The company's global CEO has previously described Chinese consumers as "increasingly mature and knowledgeable," "more results-oriented than ever," and seeking high cost-effectiveness. What specific consumption characteristics are prevalent in the current Chinese market, and how has the company adapted?
Chinese consumers have always had discerning tastes and mature aesthetics, placing great importance on product quality, cutting-edge innovation, and brand narratives. While a trend towards valuing cost-effectiveness is evident, the high-end beauty segment in China still possesses long-term, solid growth potential.
Our brand matrix is primarily positioned in the high-end and luxury beauty sectors. Growth opportunities exist across various price points, but high-end products remain our core strength. Our diversified brand portfolio allows us to flexibly adapt to different consumer needs and market changes. Specifically, skincare remains the most stable and core category in China; makeup demonstrates strong resilience with continuous innovation potential; the fragrance category, especially luxury scents, shows particularly突出 growth; and haircare is releasing new growth momentum.
Innovation has always been our core competitive advantage. We have consistently invested in R&D and product innovation for years. From LA MER's Miracle Broth™ to Estee Lauder's advanced age-reversal technologies, and Clinique's solutions for sensitive skin post-cosmetic procedures, we continuously set industry benchmarks.
Strategically, we are deepening communication with consumers. Through exclusive consultations and customized services, we strengthen emotional bonds with core customers. Our VIP membership system rewards long-term loyalty with exclusive experiences. Consumer experience activities help deepen understanding of product value and technological内涵.
Over more than 30 years in China, continuous immersion has given us profound and unique insights into Chinese consumer preferences. We consistently collaborate with local scientists and research institutions to develop solutions suitable for Asian skin, and integrate Chinese cultural elements into brand storytelling to enhance local relevance. This localization ensures we resonate with Chinese consumers, allowing us to navigate market changes while upholding core brand values, leading the industry, and continuously enhancing the consumer experience.
**Marketing Scenario Innovation and Channel Evolution** Consumption scenarios are rapidly diversifying. Online e-commerce channels are expanding, and consumers are increasingly accustomed to online shopping, areas where Estee Lauder continues to invest heavily. Concurrently, we observe significant offline activities, such as the launch of Darphin Paris's first global Structural Reset Lifting Center in Shanghai's Xintiandi, and the opening of LA MER's first national Gold Workshop. How do you view the roles and synergy between online and offline channels in the overall brand marketing strategy, and how will you further promote omni-channel integration?
Achieving precise and efficient omni-channel integration is an ongoing focus. The advantage of online channels lies in efficiency and convenience, particularly via mobile, allowing consumers to learn about products, view content, and make purchases anytime, anywhere. They serve functions of efficient reach, conversion, and long-term relationship management.
Meanwhile, immersive offline experiences truly captivate hearts and build deep connections with consumers. For instance, Darphin Paris's recently unveiled flagship store integrates high-end devices, professional treatments, and premium skincare. LA MER's Gold Workshop offers masterclasses and inspiration salons. The Estee Lauder Age Reverse Center in Nanjing's Deji Plaza features AI skin analysis and high-tech personalized experiences. Aveda's flagship store provides professional hair care services, and the Le Labo shop offers a unique olfactory experience complemented by a café ambiance.
The warmth and atmosphere these physical stores provide are irreplaceable online; they are key to emotional brand-consumer connections. Establishing point-to-point, "zero-distance" contact with each customer for more personalized brand experiences remains a crucial strategy. We view offline stores as vital carriers for conveying brand value, fostering brand love, and solidifying consumer loyalty, and we continuously enrich in-store experiences.
**Localized R&D and "In China, for Global"** Since its establishment, products led by the Chinese team at the Estee Lauder China Innovation Center have not only been successful locally but are also beginning to contribute globally. How do you view China's role within the global innovation system, and what specific steps has the company taken to translate "China insights" into "global innovation"?
China is one of the world's fastest-growing beauty markets. For Estee Lauder Companies, it is not only a core growth engine but has also become a significant driver of our global innovation.
We have consistently strengthened the local innovation ecosystem, integrating deep consumer insights, local expert teams, and the global R&D network to enable innovation originating from China to reach the world.
The China Innovation Center, launched in late 2022, possesses end-to-end capabilities from consumer insight to product launch. Its advanced research has driven numerous successful product launches in China and globally. For example, the Estee Lauder Revitalizing Supreme+ Brightening Moisturizer addresses both anti-aging and brightening needs identified among Chinese consumers. LA MER's The Treatment Lotion Oil Control was developed specifically for oily skin based on local insights. Clinique's Repairwear UV SPF50, PA++++ sunscreen targets post-procedure sensitive skin.
A recent example is the Estee Lauder Re-Nutriv Ultimate Diamond Transformative Energy Oil, first showcased at last year's CIIE. Chinese consumers have comprehensive and refined anti-aging demands, seeking overall skin "plumpness, firmness, and radiance" with high expectations for texture. These insights drove the local team to突破 traditional oil limitations, integrating years of research into "skin longevity science" with global R&D to create this product, which perfectly meets expectations for efficacy and feel. The Chinese team's deep involvement ensured local wisdom was incorporated, enabling rapid market response—development and launch took just 15 months, demonstrating agile innovation advantages. The product's market reception exceeded expectations, validating the "In China, for China; In China, for World" strategy and reinforcing our confidence in China as a global innovation engine.
In March, the company was recognized as one of the first batch of Large Enterprise Open Innovation Centers in Shanghai's Minhang District, acknowledging our long-term investment in local R&D and ecosystem collaboration. This platform allows us to act as both an "innovation incubator" and a "resource connector," promoting sustained industry development.
Combining the speed, digital ecosystem, and mature consumers of the Chinese market with the group's global scientific prowess and brand heritage enables the creation of locally relevant innovations that also present new opportunities for global markets.
**Social Impact and Sustainability** China has recently emphasized sustainable development concepts like green development, the circular economy, and people-centric approaches. What practical implementations has Estee Lauder undertaken in areas like green packaging, clean formulas, low-carbon supply chains, circular consumption, and community care? How do you ensure corporate social responsibility extends beyond corporate goals to genuinely benefit consumers and society?
As a corporate citizen rooted in China, we view social responsibility and sustainability not just as strategic directions but translate them into tangible, perceivable, and beneficial actions for consumers and society.
Firstly, we prioritize green development: over 98% of wood-fiber paper cartons are FSC-certified, and we are increasing the proportion of packaging aligned with "5R" principles. Our operations use 100% renewable electricity, and we have met annual commitments for zero industrial waste to landfill.
Sustainability is deeply integrated into daily operations. Through our "Responsible Store Design" program, we incorporate "green enhancements" in new and renovated stores, having created over 50 "green stores" in China. The China Innovation Center holds dual LEED Platinum and WELL Platinum certifications, a first in China's beauty industry. The newly operational China Supply Chain Smart Operations Center has FM certification and LEED Gold certification, utilizing energy-saving materials, on-site solar power, and rainwater回收 systems to reduce emissions and water consumption, meeting internationally recognized standards for safety, efficiency, and environmental performance.
Our brands actively engage in specific social or environmental initiatives based on their identities. For instance, LA MER's "Blue Heart" ocean conservation project has promoted sustainability to Chinese consumers for over a decade. Origins has partnered with the China Green Foundation since 2010 on the "Million Forests" project, planting 470,000 trees to aid ecology and biodiversity. Multiple brands run empty bottle回收 programs supporting the circular economy; Aveda's "Water基金" focuses on clean water access; M·A·C's VIVA GLAM initiative champions inclusivity, with significant social impact.
As an international beauty company, we aim not only to be pioneers in creating beauty but also guardians of well-being. Our flagship CSR program, the Breast Cancer Campaign, has been active in China for 23 years, promoting awareness, screening, and support. The Estee Lauder brand's "She's the Founder" initiative empowers women entrepreneurs, embodying the founder's "Dream It, Do It" spirit and reflecting our commitment to women's advancement.
For us, sustainability is not a goal but a daily practice; not a slogan, but action. We strive to make beauty more enduring and meaningful through our deeds.
**Industry Competition and Future Outlook** The current Chinese beauty market features a new landscape characterized by a high-end recovery, the rise of local brands, and channel restructuring. How do you view the current competitive dynamics? As a leader of a multinational company deeply invested in China, what is your vision for Estee Lauder's development in China over the next five years?
We are entering a new phase for the beauty industry—more science-driven, focused on emotional connection, and centered on consumer needs—with China leading this transformation.
Looking ahead five years, I believe the industry will move towards greater precision and personalization, deeply integrating into consumers' daily lives, a trend China will undoubtedly lead.
Our core focus remains squarely on the consumer. The rise of local Chinese beauty brands is a sign of a mature, healthy market—it empowers consumers with choice between international and domestic brands, which is inevitable for industry development. For us, the key is not reacting to competition but steadfastly adhering to a consumer-centric approach.
The most profound change in the past two years stems from consumers themselves. They are more knowledgeable, discerning, and purposeful in their choices. Their understanding of ingredients and efficacy deepens, while they seek emotional resonance, making decisions more rationally. What truly matters to consumers is not just a brand's origin, but its genuine innovation, superior quality, relevance to local needs, and the depth of connection it fosters. The long-term growth potential of China's high-end beauty market remains strong, but future growth will increasingly favor brands with truly differentiated advantages.
Outstanding brands, significant innovation, and卓越 quality have been the foundation of our success in China for over 30 years. Moving forward in this increasingly competitive market, we will continue to uphold this初心, advancing steadily.
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