More efforts are needed to revitalize China's small and micro-sized cosmetics brands to bring more innovation and entrepreneurship in the country's beauty industry, according to an industry insider.

"With the vigorous development of e-commerce, the entry barrier for new cosmetics brands has been lowered, which lead to the continuous emergence of new brands in China," said Zhang Zheng, co-founder of TNMO, a one-stop beauty and makeup industry service provider.

Meanwhile, the country's cosmetics market is dominated by leading foreign brands. For agents, they are moving forward with a heavy burden and have limited discourse power, he said.

"Small and micro-sized beauty companies lack the experience and ability in developing their own brands, including brand positioning, accurate customer portraits, and research and development capabilities," Zhang said.

To tackle the bottleneck, the company is scrambling to serve as a one-stop incubator for beauty brands. The company, based in Hangzhou, East China's Zhejiang province, raised several tens of million yuan in its series A round of fundraising led by BlueEagle Capital recently.

Through the integration of its global supply chain, it offers help from product research and development, planning and designing, manufacturing, international customs filing, international freight warehousing and channel distribution, as well as promotion.

Since its establishment in 2019, the startup has incubated 16 brands and more than 50 SKUs, covering personal cleansing, skincare, healthy food and other vertical fields, Zhang said, without disclosing detailed brand information due to confidentiality agreements.

"In addition, we also leveraged our technological prowess in Japan to participate in product development and supply chain," Zhang said. "Japan boasts some world-leading cosmetics' technologies and their products are more suitable for Asian skin."

"Next year, we will beef up investment to optimize our technology and relationship with OEMs, or original equipment manufacturer, to consolidate our overseas presence in Japan," he added.

Last year, China's per capita consumption in cosmetics was $49.6, which accounted for only 20 percent of that of Japan, South Korea, and the United States.

"Compared with developed countries, China's cosmetics market is far from being saturated and remains with huge potential to be tapped," Zhang said.