Shenwan Hongyuan Group Co., Ltd. released a research report stating that the personal care industry, as the second largest segment in the cosmetics sector, is entering a golden period for domestic substitution. With consumers' increasing pursuit of quality lifestyle, segmentation and personalized demands are creating new opportunities. Domestic brands have advantages due to their better understanding of local consumer needs. Against the backdrop of international brand dominance and fragmented domestic market share, differentiated positioning to capture niche market segments presents significant opportunities. The firm recommends attention to: Lafang Home Chemical (603630.SH), Shanghai Jawine (02145), Shanghai Jahwa (600315.SH), and Proya (603605.SH).

Shenwan Hongyuan's key viewpoints are as follows:

**Personal Care Industry Ranks Second Only to Skincare in Cosmetics Sector, With Significant Domestic Substitution Potential**

Personal care products refer to items that clean and maintain skin, body, and hair, mainly categorized into bathing, hair care, and facial cleansing products. As the second largest subcategory in the cosmetics industry, they occupy an important position in people's daily lives. With consumers' increasing pursuit of quality lifestyle, demand for personal care products continues to upgrade, with the market showing characteristics of segmentation and personalization. Domestic brands have advantages due to their better understanding of local consumer needs. Against the backdrop of international brand dominance and fragmented domestic market share, differentiated positioning to capture niche market segments presents opportunities.

**Entering the Era of Comprehensive Scalp Care, Segmented Efficacy, Concepts, and Ingredients Create Oriental Care Solutions**

According to industry data, China's hair care product annual sales have continued growing since 2022, reaching 55.9 billion yuan in 2023, up 13.4% year-over-year, showing a stable upward trend. The hair care market is expected to exceed 70 billion yuan by 2026. In fast-paced living environments, hair quality and hair loss issues receive attention, driving demand for efficacy products and emphasizing product gentleness.

**Facial Care Emphasizes Both Cleansing and Skincare, "Cleansing + X" Multi-Effect Products Favored for Convenience**

Facial cleansing categories mainly include cleansing milk, cleansing mousse, cleansing cream, and cleansing liquid. According to reports, China's facial cleansing product market reached 49.8 billion yuan in 2023, with the market expected to reach 52.5 billion yuan by 2026. Beyond basic cleansing functions, moisturizing, oil control, and other effects are receiving increasing attention. Multi-functional products combining cleansing with makeup removal and foam generation are emerging in the market. "Cleansing + X" products not only simplify daily skincare routines but also save consumers' time and money, gaining increased attention.

**Body Care Focuses on Efficacy and Fragrance as Main Selling Points**

According to Euromonitor, China's body care market reached 23.4 billion yuan in 2024. According to research, efficacy and fragrance are key focuses for Chinese consumers, with 65.80% and 56.3% of consumers paying attention respectively, with floral fragrances being most popular.

**Body Care Market Shows Moderate Recovery, Seasonal Segmentation and Emotional Care Gain Attention**

In the post-pandemic era, with consumers' increased health awareness and broader demand for comprehensive personal care, attention to body care products is steadily rising. According to market research, consumers highly recognize the emotional value provided by body care products and have differentiated efficacy demands across seasons: summer preferences lean toward whitening and brightening, pore refinement, while winter preferences focus on hydration, soothing, and stabilizing effects.

**Risk Warnings:** Consumer recovery below expectations, new product sales below expectations, supply chain and product quality control below expectations, stricter industry regulations, intense industry competition.