Beauty is in the eye of spectators ready to invest in domestic industry


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Shanghai pharmaceutical worker Sunny Jia was struggling with skin allergy. She found a recommended allergy cream on WeChat, and friends told her it really worked. She therefore bought the product, marketed under the Winona brand.

In a sense, Jia exemplifies the big trend in the Chinese beauty market. Consumers seeking beauty are increasingly bypassing the big multinational brands that once held such a cachet and buying domestic skin care products and cosmetics.

Domestic industry grew 9.5% last year, while overall sales of consumer goods fell about 3.9% due to the coronavirus outbreak. Investors are taking note of the trend.

The Winona skincare line is produced by Yunnan Botanee Bio-Technology Group, which grew 2.5 times when it went public in Shenzhen in March. The stock is still trading near all-time highs.

The chairman of the company, Guo Zhenyu, came to the beauty industry from academia. He was an assistant professor at the University of Montreal and taught at George Washington University before the founding of Botanee in 2010.

The company manufactures and sells face masks, toners, hand creams and other cosmetic products. It is also developing new biology technologies.

In a year when many companies suffered from a sales slowdown, Botanee said its sales in 2020 increased 35% to 2.7 billion yuan ($ 415 million), for a profit. net of 544 million yuan.

Even more astonishing perhaps in the beauty industry is the rise of Yatsen, which seemed to come out of nowhere to become the first Chinese cosmetics brand to be listed in the United States.

The company was founded in 2016 by David Huang, an MBA graduate from Harvard Business School and a former employee of the multinational consumer products company Procter & Gamble.

Yatsen offers three main lines of skin care and makeup products: Perfect Diary, Little Ondine, and Abby’s Choice. At the end of 2020, it debuted on the New York Stock Exchange with an initial public offering of $ 617 million. Shares jumped two-thirds on the first trading day.

Beauty is in the eye of spectators ready to invest in domestic industry

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The company achieved a turnover of 800 million dollars last year and has made no secret of its goal of becoming the “next L’Oréal”. In an expansion strategy, it acquired the high-end brands Galenic in France and Eve Lom in the United Kingdom.

Winona, along with Marubi, Proya, and Oushiman, are among the top six local names of the top 10 skincare brands chosen by Chinese shoppers last year, according to a latest ranking from Kantar Worldpanel.

Perfect Diary tops the makeup brand rankings, along with five other local brands in the beauty rankings.

Perfect Diary owes much of its success to the popular marketing concept of “private traffic,” which involves promotion across thousands of WeChat groups.

The total number of subscribers on video and social media platforms stood at some 48 million at the end of November 2020, including 15 million subscribers on WeChat.

Using online influencers on popular live streaming channels to market their products, Perfect Diary recruited actress Zhou Xun to promote their latest lipstick line and popular streamer Li Jiaqi to give testimonials for them. other of its beauty products.

Another big name and a relatively new brand of domestic beauty products is Hua Xizi, or Florasis, founded in 2017 in Hangzhou. At the 2019 Tmall Singles Day shopping festival, its turnover reached $ 14.2 million in just one hour.

The brand’s Chinese name was a stroke of marketing genius. “Hua” means “flower” and “Xizi” means “western beauty”, which comes from a famous poem by ancient poet Su Shi. The name suggests to the consumer that he can nourish his skin and become the “western beauty” of the poem.

Marketing through digital channels has been particularly successful for national brands.

Wang Yaning, a graduate student from Shanghai in her early 20s, said she bought a new lipstick after being promoted by an online “influencer.”

“I spent about 50 yuan for an orange lipstick, and I liked the texture so much that I bought a second one in a different shade,” she said. “They have a wide choice of colors. I like that.”

But online testimonials can make some consumers suspicious.

Shanghai college student Lu Xiaoyun, who has bought makeup products from domestic and foreign brands for years, said she has become skeptical of products sold by “influencers” online.

“I now research online community reviews and microblogging posts before purchasing new makeup,” she said. “I almost always avoid a new product if everyone seems to be promoting it. I feel like they’re trying to hide something.”

“The internet has given birth to a wide range of emerging national beauty brands, but they face challenges after becoming famous overnight,” said Xiao Yao, partner of brand consultancy Ries.

One is the cost of obtaining high level status.

Yatsen reported 43% growth in first-quarter revenue to 1.44 billion yuan, but a net loss of 234 million yuan due to increased marketing spending.

In the post-pandemic era, the idea of ​​”beauty” is evolving, with a deeper concern for its connection to health and well-being. Preferences are becoming more and more individualistic.

Pu Chunhua, chief marketing officer of Shanghai Jahwa, said the company has built a larger portfolio of personal care and beauty items to meet the demands of various consumer groups.

One of the company’s brands, Herborist Derma, promotes traditional herbal extracts as a selling point to attract younger consumers. It requires a lyophilized powder to be transformed into a liquid serum just before application to the face.

Shi Qing, director of beauty and housekeeping products at Alibaba’s Tmall, said beauty and personal care products contributed 40% of the sales increase during the mid-sales event. year.

New product features with Chinese-style elements and eye-catching packaging designs are becoming more and more important in boosting sales, she added.

But how important is packaging?

Shu Yao, a vlogger on the Bilibili platform with half a million subscribers, uploads four or five videos each month to showcase new products and promote her most recent skincare and skin care preferences. makeup.

She wasn’t too excited about the Hua Xizi eyeshadows and lipsticks that hit the market with oriental-style packaging and design cues from ethnic minority groups.

“The overdecorative styling looks nice on the outside, but the makeup is not a collector’s item after all, and I didn’t find the quality of the product to live up to the fancy packaging,” she told her subscribers.

The dramatic rise of the domestic beauty industry underpins the efforts of Fengxian District in southwest Shanghai to establish itself as an industry hub.

He has developed an infrastructure plan to attract businesses beyond beauty and cosmetics, encompassing biopharmaceuticals and health and nutritional foods.

Earlier this year, L’Oréal China launched the “Big Bang Beauty Tech Startup Challenge” in collaboration with Fengxian to encourage innovations in the industry.

(Shanghai Daily intern Ying Luyang contributed to this story.)

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