"Overseas consumers interested in Chinese culture feel an instant connection with Herborist cosmetics, but we must also battle the stigma of low-quality, safety concerns and forgery often associated with Chinese products," Li said.
At home, the same strategy is helping many domestic firms gain an edge over international brands.
"China's cosmetics have long sought to challenge foreign brands' dominance and their strategies have evolved from trying to undercut the market to using traditional Chinese culture for its own value," Bain's Yu said.
Leading Chinese cosmetic companies are outperforming the sector's average growth, which reported 9.2 percent growth and posting revenue of 98 billion yuan during the first half this year, compared with its previous double digit growth.
Pehchaolin, a skin cream from Shanghai's concession days in the 1930s, reported more than 30 percent in revenue growth in the past three years. Revenue growth at Jahwa, though moderated to 14 percent in the first half this year, is still above the industry average.
Meanwhile, foreign brands are seeing decreasing revenue growth in China. Among the many reasons that these once-coveted brands have lost their appeal is that foreign brands are not tailoring their products to the needs of Chinese consumers.
"International cosmetics brands are not developing products specifically for China or looking to its culture for inspiration. Even if they do, their products are often not as good as domestic offerings," Yu said.
Meanwhile, China's ongoing modernization is also unleashing new demands, among them a desire for beauty products, which have been largely overlooked by international brands.
"It's our own companies that are responding these new market demands," said Melody Kong, business analyst at China Market Research.
Consumers are also becoming more practical, Kong said. Customer's preference for foreign brands is loosing out as consumers are more concerned with quality and value.
Despite the bottom-up challenge posed by home-grown cosmetics, foreign brands still dominate the premium market, a niche that brands like Herborist craves.
"There are also Chinese companies looking to buy boutique brands in developed markets, but rather than expanding their business there, they want to sell such brands back to China," Yu said.
