I. Industry Risk Analysis

(1) Policy Risk

Currently, the policy risks in the facial cleanser industry are mainly concentrated in the following aspects: stricter supervision of product ingredients (such as the expansion of the list of prohibited substances like microplastics and hormonal substances), enhanced compliance review of advertising (efficacy claims require clinical evidence), upgraded mandatory standards for environmental – friendly packaging (requirements for plastic reduction and degradability), and conflicts among different regulations in cross – border trade (such as the different requirements for raw material approval between the EU’s REACH regulation on cosmetics and China’s “Regulations on the Supervision and Administration of Cosmetics”). The dynamic changes in these policies during the legislative and implementation phases directly increase the compliance costs for enterprises and raise the market access threshold.

(2) Economic Risk

Currently, the facial cleanser industry faces multiple risks during economic cycle fluctuations: During an economic downturn, consumers’ discretionary spending contracts, resulting in weak demand for mid – to high – end products and exacerbating channel inventory backlogs; raw material prices continue to fluctuate due to inflation cycles, and small and medium – sized enterprises with weak bargaining power experience a lag in cost – pressure transmission; the industry competition has entered a stage of stock competition. The customer acquisition cost for new brands has climbed to over 30% of their revenue. After the disappearance of the traffic dividend, they are likely to get trapped in a price war quagmire; cross – border trade is affected by the differentiation of global monetary policies. Severe exchange – rate fluctuations have a two – way impact on the procurement of imported raw materials and export business, significantly increasing the risk to the stability of the capital chain.

(3) Social Risk

Inter – generational consumption differences increase the uncertainty in the industry. Generation Z pursues natural ingredients, specific efficacy, and environmental protection concepts, forcing traditional brands to upgrade their R & D systems and supply chains. However, there is a consumption gap between high – premium products and price – sensitive middle – aged and elderly users; social media magnifies ingredient – related controversial events. The zero – tolerance attitude of the young generation towards “chemical additives” can easily trigger a brand trust crisis, and excessive marketing leads to user decision – making fatigue; cross – border brands are seizing the market by relying on inter – generational aesthetic dividends. Local enterprises face the dual pressures of product homogenization and mismatch with inter – generational demands. The iteration speed of the new consumer group far exceeds the product iteration cycle, creating a market vacancy risk.

(4) Legal Risk

Entrepreneurs need to be vigilant about three types of legal risks in the facial cleanser industry: At the ingredient level, adding prohibited substances (such as hormonal ingredients) and falsely promoting efficacy (such as medical claims like “anti – inflammation and anti – aging”) will violate the “Regulations on the Supervision and Administration of Cosmetics”, with a maximum fine of 300,000 yuan or license revocation; At the production level, starting production without a cosmetic production license or with an unqualified contract manufacturer poses a risk of being convicted of illegal business operations; At the distribution level, selling products without completing efficacy evaluation and filing (such as special – efficacy products) and having non – standard label markings (such as not marking the full ingredient list and expiration date) will trigger product recalls and administrative penalties. In addition, cross – border sales without registering international trademarks can easily lead to intellectual property disputes.

II. Entrepreneurship Guide

(1) Suggestions on Entrepreneurial Opportunities

In the facial cleanser industry, current entrepreneurial opportunities are mainly focused on meeting precise and segmented demands: Develop amino acid/prebiotic – formulated products suitable for specific skin types such as oily and acne – prone skin and sensitive skin, to meet the pursuit of scientific formulations by ingredient – conscious consumers; Enter the men’s facial cleansing market by launching portable oil – controlling mousses, targeting the rapidly growing but undersupplied men’s skincare segment; Promote three – in – one functional products that combine cleansing, makeup removal, and skin nourishment through TikTok and Xiaohongshu. Match them with replaceable and environmentally friendly packaging to reduce repurchase costs, and use the DTC model to directly reach the Generation Z consumer group; Simultaneously, enter the dermatology department channels of hospitals to customize medical – grade post – operative repair facial cleansers, expanding into the high – premium segmented market with professional medical endorsements.

(2) Suggestions on Entrepreneurial Resources

Entrepreneurs in the facial cleanser industry should prioritize integrating flexible supply – chain resources. Cooperate deeply with OEM/ODM manufacturers with cosmetic production licenses to reduce initial heavy – asset investment. Focus on upstream manufacturers with the ability to supply new raw materials such as amino acid surfactants and plant extracts; Build a comprehensive channel resource pool at the same time. Use beauty – focused MCN agencies to accurately connect with KOC resources on platforms like Douyin and Xiaohongshu, and establish a commission – based joint – operation model with new offline beauty collection stores; Collaborate with third – party testing institutions to establish a product quality endorsement system, and quickly open up the filing channels for emerging markets in Southeast Asia with the help of cross – border e – commerce service providers; Bind an e – commerce operation team with experience in creating popular products through equity exchange, and use a flexible profit – sharing mechanism to activate the inventory turnover efficiency of channel distributors.

(3) Suggestions on Entrepreneurial Teams

Entrepreneurs in the facial cleanser industry should form a complementary team, which should at least include a cosmetic R & D expert (responsible for formula and ingredient compliance), an e – commerce operation talent (skilled in creating popular products on new channels like Douyin and Xiaohongshu), and a supply – chain management specialist (controlling the quality and cost of ODM manufacturers). The founder should have the ability to integrate resources in the beauty industry; Adopt a flat decision – making mechanism. Analyze skin demand trends through big data of consumer reviews every week. Core members should hold equity and sign non – competition agreements. Reserve a 15% equity pool to attract talents with a background in raw material suppliers. Maintain high – level coordination between new product development and marketing plans through daily online stand – up meetings.

(4) Suggestions on Entrepreneurial Risks

Entrepreneurs in the facial cleanser industry should first ensure product compliance, strictly control the raw material procurement and production processes, complete cosmetic filing, and meet the requirements of the “Regulations on the Supervision and Administration of Cosmetics”; Develop differentiated products for segmented markets such as sensitive skin and functional products to avoid homogeneous competition; Establish a rapid response mechanism for user feedback, and reduce the risk of allergic reactions through third – party testing; Optimize the ROI calculation of online channel investments, control the traffic cost on platforms like Douyin and Xiaohongshu to no more than 30% of sales. When expanding into the CS channel, select well – reputed chain terminals, and clarify the payment terms and return and exchange clauses; Monitor the price fluctuations of raw materials (such as amino acid surfactants) closely, and sign framework agreements with 2 – 3 suppliers to avoid the risk of supply disruptions.