Core Insights - The skincare industry in China is experiencing high growth driven by ingredient transparency and scientifically validated efficacy, with domestic brands leveraging synthetic biology and targeted ingredient development to gain competitive advantages [1][2][3] Group 1: Market Trends - The Chinese skincare market is transitioning to an era of ingredient transparency and scientifically verifiable efficacy, with consumers shifting from brand reliance to rational analysis of ingredient lists [1] - The overall market size for cosmetics in China is projected to reach 774.6 billion yuan in 2024, reflecting a year-on-year decline of 2.83%, while the efficacy skincare segment is expected to grow significantly, surpassing 100 billion yuan [1] - The compound annual growth rate (CAGR) for efficacy skincare products from 2019 to 2024 is estimated at 24.9%, with this segment expected to account for 22.9% of the total skincare market by 2024 [1] Group 2: Product Development and Innovation - The targeted ingredient development has led to a multi-channel synergy for three core functions: anti-wrinkle and firming through peptides and other compounds, soothing and repairing through ingredients like centella asiatica and ceramides, and hydration through amino acids and hyaluronic acid [2] - Domestic brands such as Proya and Winona have entered the top 10 in the high-end anti-aging and soothing markets, traditionally dominated by international brands [2] - The evolution of ingredient formulations has progressed from basic hydration to synthetic biology, with Chinese companies achieving technological advancements, such as Huaxi Biological's breakthrough in hyaluronic acid and the establishment of international standards for recombinant collagen [3] Group 3: Emerging Opportunities - The rise of domestic brands is characterized by cost-effective ingredient innovations and technological differentiation, particularly in the peptide segment, where brands like Proya and Han Shu are reshaping the anti-aging landscape [3] - Traditional Chinese medicine ingredients are becoming core competitive advantages, with significant online sales growth projected for ginseng, astragalus, and artemisia, indicating a strong market for local herbal formulations [3]

Investment Rating - The report does not explicitly provide an investment rating for the functional food industry Core Insights - The introduction of new food safety standards aims to enhance transparency and consumer trust in functional foods, particularly by prohibiting misleading terms like "no additives" and "zero additives" [3][6][30] - The industry is expected to shift towards a more scientific approach in product development, focusing on verifiable health benefits and precise nutritional formulations [30][31] Summary by Sections Regulatory Changes - New food safety standards require clear labeling of ingredient quantities and prohibit vague marketing claims, enhancing consumer understanding of product contents [2][3][6] - The standards mandate the inclusion of common allergens on labels, addressing the growing concern for food allergies among consumers [12] Industry Impact - The new regulations will compel functional food companies to ensure compliance with ingredient transparency, which is crucial for maintaining consumer trust [8][18] - Companies are encouraged to innovate in product development, focusing on high-quality ingredients and clear health benefits to meet the new standards [19][30] Consumer Behavior - A significant percentage of consumers express skepticism about the efficacy of functional foods, with 74.8% believing that actual benefits do not meet promotional claims [26] - The primary purchasing channels for functional foods include online shopping and pharmacies, indicating a need for improved consumer education and trust-building strategies [25][26] Future Trends - The industry is anticipated to evolve towards "scientific validation of efficacy," with a focus on developing high-end, customized products tailored to specific consumer needs [30][31] - Regulatory changes are expected to reshape the competitive landscape, favoring companies that can demonstrate scientific backing for their products [31][32]