nged 64.8 per cent to HK$77 million. The company attributed the downturn to sustained outbound travel from Hong Kong and Macau residents to Mainland China and overseas destinations, compounded by macroeconomic headwinds including a strong US dollar and weakening consumption among Mainland visitors. China dream deferred  Sa Sa International, founded in 1978 and listed on the Hong Kong Stock Exchange in 1997, initially pursued aggressive expansion in Mainland China starting in 2005. The company once aimed to establish a network of 500 stores across this rapidly growing market. However, facing increasingly fierce competition, Sa Sa began scaling back its Mainland operations in 2021. The company cited persistently weak foot traffic, high operating costs and its failure to achieve economies of scale as key reasons for the retreat. “Short, high-frequency and fast-paced online content has become the predominant sales approach in Mainland China,” Sasa said in its annual report. “The market increasingly favours value-for-money products, particularly those with functionality (including synthetic biology, recombinant collagen and medical aesthetics), rather than established big name brands. This trend is creating opportunities for domestic and niche brands.” While online sales edged up 0.6 per cent year-on-year to HK$417.9 million, total sales in China still fell 10.5 per cent to HK$520.5 million, dragged down by a 38.2 per cent plunge in offline revenue. Sa Sa is not alone in restructuring around digital commerce. Even entrenched Mainland players have undergone significant online transformations in response to China’s evolving retail landscape. Hangzhou-based Proya Cosmetics has fully embraced a digital-first approach with online sales making up 93 per cent of its revenue in 2022 and rising further to 95 per cent in 2023. Meanwhile, more than 90 per cent of sales at Chicmax – the company behind Kans, One Leaf and Baby Elephant – now come from digital channels.  Statista estimates that the beauty and personal care market is projected to generate US$41.78 billion in China this year.  Home markets under pressure  In its traditional strongholds of Hong Kong and Macau, Sa Sa faced equally sobering results. Combined turnover in the two markets declined 12.3 per cent to HK$2.99 billion, accounting for roughly 76 per cent of the group’s revenue. Profit fell 45 per cent to HK$128.6 million. While there was a modest recovery in Mainland Chinese tourist arrivals, the rebound was offset by what Sa Sa described as the “norm” of outbound travel from Hong Kong residents to southern China. Additionally, the strong Hong Kong dollar and continued global uncertainty have dampened inbound spending. Offline sales in the region fell 12.9 per cent overall, though the second half of the year showed some improvement, narrowing the year-on-year decline from 19.4 per cent in the first half to 6.3 per cent in the second. The company credited efforts to refresh its product mix and boost loyalty among VIP members for the partial recovery. Online sales in Hong Kong and Macau were flat at HK$199.6 million, making up about 6.7 per cent of regional revenue. Still, digital initiatives such as live commerce and BOPIS (buy online, pick up in store) gained traction, particularly during peak shopping seasons. Southeast Asia: Growth offset by expansion costs Amid the turbulence in Greater China, Sa Sa found a rare bright spot in Southeast Asia. The retailer re-entered the Singapore market with five stores during the year, after closing all of its 22 stores in the country in 2019.  As of March 31, the retailer operated 72 stores in Southeast Asia.  Turnover rose 14.7 per cent to HK$419.6 million, with offline sales increasing 15.4 per cent to HK$331.5 million.  While the Southeast Asian division posted a HK$5 million loss, largely due to expansion costs and climate disruptions in Malaysia, Sa Sa is betting on the region’s digital savviness and strong beauty consumption trends.  “The group will continue to review the situation in the Singapore and Malaysia markets to adjust the store portfolio accordingly when appropriate,” the company said in a statement. “The group will also closely monitor the impact of tariffs on the Southeast Asian retail market and adopt a prudent approach to expanding offline operations.” Online sales in Southeast Asia climbed 12.4 per cent to HK$88.1 million, supported by third-party platforms such as Shopee, Lazada and Zalora. During the year, the group’s flagship stores consistently maintained top-tier rankings in the “Beauty & Health” category on Shopee and Lazada in Singapore and Malaysia. The Group has embraced experiential marketing across the region, including in-mall activations, beauty bashes and even festive-season music video campaigns. Despite these challenging conditions, Sa Sa continues to pursue a multi-pronged recovery strategy with a focus on aligning with new consumer preferences through an omnichannel strategy and product curation.   Further reading: Google bets on Gentle Monster: Why smart glasses need style to succeed.