Category killer?

A matter of definition

“In their eyes we are still gullible sheep waiting to be killed.” So wrote Chinese blogger Hao Yu, also known as Dr Big Mouth, in a critical post about Crème de La Mer face cream last autumn.

Hao subsequently sued the Estee Lauder-owned company for false advertising on the grounds that its Chinese language website claimed the cream could heal burns while its English language sites did not.

His cutting verdict on Chinese consumers – and their susceptibility to bold advertising claims – is particularly relevant to the cosmetics industry where customers are searching for a youthful holy grail. Facials using sheep placenta, for example, are beloved of A-list stars. So too are ones using EGF (epidermal growth factor), cloned from baby foreskins, which are believed to rejuvenate and heal the epidermis. Last year British actress Kate Beckinsale popularised what are otherwise known as ‘penis facials’ when she jokingly tweeted that “after a long flight I do like to be covered in a mask of liquefied cloned foreskins – frankly who doesn’t?”

However, the Chinese government has decided to crack down on cosmetics companies which claim their products offer medicinal benefits – in case consumers wrongly assume they have passed the same kind of rigorous drug testing that a pharmaceutical product would have to go through.

Earlier this month, the country’s National Medical Products Administration announced that it would be upholding a law enacted in 1999, but erstwhile widely ignored, banning cosmetic firms from using phrases such as “medical cosmetics” or “medical skincare products” on packaging or in advertising. The ban included medicinal claims for the use of EGF.

In China, the so-called ‘cosmeceutical’ industry, known locally as yaozhuang, has become big business over the past decade. Back in 2010, it was just an Rmb11 billion ($1.6 billion) market. By 2017, it had grown to Rmb62.5 billion, roughly 20% of the entire cosmetics industry. It’s forecast to reach a scale of Rmb81.1 billion by 2023.

The term ‘cosmeceutical’ has long been in use in the Western world referring to products which are marketed as cosmetics but have various kinds of biologically active ingredients, which supposedly benefit the consumer. Classic examples are skin rejuvenation creams and hair restorers.

However, it is a term that has never been officially recognised by the US Food and Drug Administration (FDA). And after a century or so of letting the industry more or less police itself, the FDA is also examining whether it needs to up the regulatory ante too.

Critics say it is not before time. An official from the Environmental Watch Group recently told CNBC that it’s hard to “think of a category that is less regulated”.

China’s decision to improve consumer protection fits the same trend. It also follows a recent crackdown on false advertising within the direct marketing industry. This January, executives from Tianjin-based Quanjian Nature Medicine were arrested after an article in Dingxiangyuan (an online health service) that claimed that a four year-old child had died from cancer after her parents had been persuaded to remove her from hospital and take the company’s herbal supplement instead (see WiC436).

Caixin Weekly reports that online vendors have taken the regulator’s crackdown on cosmeceuticals seriously and that as of early February, both Taobao and Suning had removed products using cosmeceutical terms from their websites. However, it also notes that they were still available on Tmall (another Alibaba platform) and NetEase’s Kaola.

Jiemian.com argues that many companies will simply change the wording about the product to make sure they do not fall foul of the new regulations.

It cites the example of L’Oreal, which launched a skincare range the same day the more stringent regulations were announced. The moisturisers and cleansers in the French group’s CeraVe range are described as “active cosmetics” instead.

Consumers themselves don’t seem that bothered. One Beijing-based buyer told China Times that, “I like cosmeceuticals and it won’t affect my purchasing. If I like it, I’ll buy it.”

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