Opinion: China’s Beauty Giant Proya Has Its US Strategy Backwards

With sales stalling due to relentless competition, Proya Cosmetics Co. is right to look overseas for the next growth engine. But China’s biggest beauty company is getting ahead of itself by announcing distribution at Ulta Beauty Inc. without first building meaningful name recognition among American shoppers.

The Hangzhou-based firm is a household name at home. In the world’s biggest skincare and cosmetics market, though, that brand awareness counts for little. Proya will be starting from scratch. I struggled to find English-language online reviews of its flagship Advanced and Original Repair lines, which respectively target aging and sensitive skin. They will be sold at hundreds of Ulta stores as well as online starting in November.

The popular US beauty chain can give the products shelf space and promotion, but it won’t be able to manufacture interest. Skincare is unusually dependent on reviews, word of mouth and trust — especially for an unfamiliar foreign brand. With the launch fast approaching, Proya has little time to get its goods into the hands of beauty editors and influencers capable of generating the buzz needed to drive sales.

The Chinese label faces another handicap: Its offerings may be too mainstream to truly stand out. When formulas from South Korea began captivating American consumers a decade ago, novelty was a huge part of the appeal. Sheet masks, snail mucin and elaborate multi-step routines offered shoppers something they’d never encountered before, Jude Chao, a skincare expert best known for her blog and Instagram account Fifty Shades of Snail, told me. 

Proya, by contrast, is arriving in a much more crowded market with calming creams and anti-aging serums touting peptides — familiar categories already overflowing with choice. Being effective may not be enough for consumers to look twice. Still, it’s important to capitalize on the opportunity. Like other industries in China including electric vehicles, domestic growth is sputtering, so gaining traction abroad is key to the future. 

Co-founded in 2003 by Hou Juncheng, who serves as chairman, the company spent years riding an extraordinary growth cycle. In the early days, it took a page from Mao Zedong’s military strategy called “surrounding the cities from the countryside.” Proya built its following in lower-tier areas, which foreign beauty giants ignored, before pushing into wealthier urban centers.

The approach worked. Sales rose every year after the company listed in Shanghai in 2017 — until last year, when growth at its namesake brand ground to a halt. Newer lines are expanding rapidly but remain too small to pick up the slack. Expansion in Southeast Asia, a region that is close geographically and culturally, will help. The US, however, is the much bigger prize.

Success there is becoming more urgent. First-half sales at the Proya brand, which accounts for about 70 percent of group revenue, fell about 7 percent, the company revealed last week. Smaller rival Shanghai Chicmax Cosmetic Co. isn’t faring better. Ironically, Western competitors L’Oréal SA and Estée Lauder Companies, which had been struggling, are now seeing their fortunes improve in China, helped by their premium offerings. Luxury-loving shoppers are treating themselves to fancy skincare when they can no longer afford to drop thousands of dollars on designer handbags.

That same positioning could become an advantage in the US. Proya may not be able to compete on uniqueness or prestige, but it has something increasingly relevant to offer American shoppers: value. Its products promise many of the same sought-after ingredients and benefits as pricier Western brands. For example, Drunk Elephant, owned by Shiseido Co., sells a peptide serum for $82, while Peter Thomas Roth has one for $65. The Chinese challenger may be able to find a niche by pricing its products below the luxe lines and above bargain options like The Ordinary. 

That gives Proya a plausible way in. The weeks ahead of its Ulta debut offer a chance to get products in front of reviewers like Chao. Rather than trying to be another high-end label, it should make value its calling card: effective skincare without the luxury markup. That proposition is especially compelling at a time when US consumers are becoming more selective about what they purchase. Before Proya worries about where Americans can buy its products, it needs to give them a reason to want them.

By Juliana Liu