China’s Biggest Beauty Firm Lays Out Strategy to Rival L’Oréal

Proya Cosmetics Co.’s gleaming headquarters in Hangzhou, in Zhejiang province, is just steps downhill from the offices of Alibaba’s wildly successful fintech arm. “We bought facilities on the same site, and theirs are just slightly higher in elevation,” says Juncheng Hou, Proya’s billionaire co-founder and chairman. “In China, we say that when water flows from higher ground, it carries prosperity. So all of Alibaba’s ‘prosperous water’ flows down to Proya.”

That proximity isn’t merely physical: Proya’s meteoric rise to become China’s biggest beauty company has been closely intertwined with the vast e-commerce ecosystem of Alibaba Group Holding Ltd. About 95 percent of Proya’s sales come from Alibaba-owned online platforms such as Tmall and Taobao, where it’s mastered the digital strategies that many foreign rivals still struggle to replicate in China’s 1 trillion yuan ($140 billion) beauty market. Proya’s next challenge will be to expand beyond its huge online presence and the Chinese pharmacies and duty-free shops where it mostly operates into high-end department stores. It also seeks to take on the Western conglomerates that have long ruled the world of high-end beauty. “We don’t want to be just the Chinese Proya,” Hou, 60, says via a translator during a recent business trip to Paris. “We want to be the world’s Proya.”

For much of the past century, Paris and New York have been regarded as the world’s undisputed beauty capitals, thanks in large part to L’Oréal, Estée Lauder and their enviable portfolios of luxury products and popular over-the-counter brands. More recently, Asian companies such as Japan’s Shiseido Co., which owns labels including Nars Cosmetics and Drunk Elephant, and Korea’s Amorepacific Corp., known for Laneige and Cosrx, have begun to supply a significant slice of the global cosmetics market too.

China has had a harder time breaking in. “Made in China” has for decades been synonymous with low-cost, low-quality products in the mind of consumers. Along with other so-called C-beauty leaders, Hou envisions himself as a force in changing that stereotype, intent on making Chinese innovation and self-care traditions equal on the global stage. “The beauty market needs everyone to take part,” he says. “It shouldn’t depend on just one company, one family or one group trying to dominate the entire world.”

Going Global

At Proya, the first Chinese beauty company to report annual sales above the symbolic 10 billion Chinese yuan mark—a threshold it hit last year—ambitious if nebulous plans to go global are underway. First up: Proya aims to acquire existing European brands it can both sell in Europe and introduce in China and other Asian markets. “A brand making €30 million in Europe could reach €100 million with our support in China,” Hou says. Local consumers spend around €50 ($58) a year on beauty products, compared with about €400 in Europe—a gap that, in his view, points to vast untapped potential in his home market. Proya is especially interested in European beauty brands in categories where it has no presence, including fragrance, men’s grooming and children’s care. Helping fund the strategy: a planned public offering in Hong Kong, in addition to its current Shanghai listing. The company, in a quiet period for the listing, declined to comment.

In the longer term, Proya also hopes to sell its own products in Western markets, though Hou acknowledges that will take more time. Last fall the company opened its first overseas innovation centre, in Paris, to support its expansion goals, adding to its research facilities in Hangzhou and Shanghai. Its French lab focuses on anti-aging, sensitive-skin care and skin-whitening research, a lucrative category in China, Japan, Korea and parts of Southeast Asia, where lighter skin is often associated with youth, purity and refinement. (In 2020, amid global pushback on colourism and racial prejudice in the beauty industry, some companies rebranded these creams as offering skin “brightening,” not whitening.) Proya’s R&D outlays have almost tripled over the past few years, and it’s made some big hires with international experience, including Lieve Declercq, who spent a large share of her career at Estée Lauder, as head of innovation of the Paris lab.

Declercq says she’d never heard of Proya until the company reached out about a job. “Then I learned what they do and thought, ‘Oh, OK. This is really something else,’” she says. One of the biggest differences she’s noticed is how quickly Proya is able to hop on trends, versus the sometimes plodding pace of the legacy companies. “The speed of innovation is much faster in a Chinese company than in an American company,” Declercq says.

Keeping Up The Pace

Still, not everything has been rosy at Proya. After years of rapid expansion, with revenue rising by more than a third in both 2022 and 2023, the company’s momentum has decelerated, highlighting how difficult it is for even the strongest Chinese beauty brands to sustain high growth after reaching scale. Although the cosmetics maker’s shares have risen fourfold from their Shanghai debut price in 2017, they’re down in 2025, thanks in part to a weaker Chinese economy and a high youth unemployment rate. At the same time, long-term aspirations to sell into the US market have been stymied by President Donald Trump’s trade tensions with China. “If relations between China and the US are strained, investing and developing business activities become unfavourable,” Hou says, choosing his words carefully. “That’s all I can say on that.”

Luckily, China’s long retail recession may be reversing course. Several North American and European consumer-goods companies have reported improving results in China this fall, and the country is on track to hit the government’s 5 percent full-year growth target. Once China’s shoppers resume spending at higher levels, Hou is optimistic they’ll be buying more domestic brands than ever. Local players have aggressively taken market share from international competitors in recent years and now command roughly half of the beauty market in China.

Chinese social media teems with videos of shoppers swapping their expensive European anti-aging serums for homegrown products such as Proya’s Ruby facial cream. Hou attributes these wins to a Chinese effort to keep prices low by prioritising volume and quality over short-term profitability, similar to the model deployed by the country’s electric-vehicle makers. Proya has nine brands, including makeup line Timage, hair-care brand Off&Relax and its namesake skin-care label, priced within reach for a large swath of Chinese consumers.

“Proya is definitely good value for money. What you’d spend on one foreign brand product is enough for me to buy several Proya products. I can get toner, lotion, cream and serum all together,” says Lu Lu, a 28-year-old model and Proya fan from Hangzhou. “Back in 2021 most of my friends and I were still using big international brands, but many of us have switched to Chinese brands. After using those big names for a while, we realised they’re not that special. I’m willing to put domestic brands as first choices. After all, money doesn’t grow on trees.”

Meanwhile, Hou continues to plot the future of his family-controlled company, of which he owns a roughly 35 percent stake. In September 2024, he appointed his son Yameng Hou, a Proya executive who is now 36, as general manager, replacing co-founder Yuyou Fang, who stepped down from the role for personal reasons but continues to advise the board and retains a 15 percent interest. “My son runs the operational side of the business, and I’m still in charge of the company’s strategy,” Hou says.

That’s a far cry from where he was in 1982, when Hou, then 18, was forced to take a job repairing auto parts to help provide for his mother after his father abruptly died. A decade later, his four older sisters, who’d started a beauty distribution business in the Zhejiang manufacturing hub of Yiwu, asked him to manage external relations and liaise with manufacturers. After years distributing other companies’ products, Hou grew restless. “I realized you can never truly control your destiny when you’re just selling what others make,” he says. He moved to Hangzhou, determined to start his own beauty brand, beginning with an anti-aging “Ocean Activation” line. Now his conglomerate is valued at about $4 billion. “I had to take control of my own destiny,” he says.

By Sabela Ojea

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