According to tianyancha app, as of December 22, there were 126 investment and financing events in China's cosmetics industry in 2021. Compared with 88 in 2020 and 57 in 2019, it has achieved a sharp increase.
However, the performance of foreign cosmetics enterprises in China is much worse than before. Amore The Pacific Securities Co.Ltd(601099) has been exposed for many times this year to reduce the number of offline stores, reaching hundreds; Kao's make-up brand Kate has also been passed on or withdrawn from China. L'Oreal, Estee Lauder, Shiseido and other cosmetics giants may slow down or suffer losses in China.
The "invincible legend" of foreign cosmetics giants, why doesn't it work in 2021?
affordable products are losing ground
According to media reports, Korean cosmetics giant amore The Pacific Securities Co.Ltd(601099) is making a new round of strategic adjustment for the Chinese market. The group plans to reduce the nearly 800 stores opened by its brands in China to about 140, and will invest more resources in online channels and medium and high-end brands in the future.
Securities Daily asked amore The Pacific Securities Co.Ltd(601099) for confirmation on this matter, but the company had not responded before publishing.
Looking back on the development of amore The Pacific Securities Co.Ltd(601099) in China in the past two years, we will find that "closing stores" has become the norm of the group in the Chinese market, especially in the group's affordable brand.
The official customer service of Yidi's affordable makeup brand Yidi's house once told the Securities Daily that the offline department stores of Yidi's house in China have been closed, and the products will be sold mainly through online channels, and the offline purchase channels can only go to the beauty collection store "toner".
In addition, yueshifengyin, its affordable skin care brand that was once popular in China, has also been losing ground in the past two years. South Korean local media reported that the number of yueshifengyin stores in China has been reduced from 610 to 280 in the past year.
According to the financial report, yueshifengyin's revenue has decreased for three consecutive quarters. Yueshifengyin's revenue in the first quarter of this year was 89 billion won, a decrease of 17.2% compared with the same period in 2020; According to the latest third quarterly report, yueshifengyin's revenue fell to 72.2 billion won, not only 10.2% lower than the same period in 2020, but also weaker than that in the first quarter of this year.
In fact, the decline of yueshifengyin's income also has a negative impact on amore's Chinese market income. According to the financial report, China's regional revenue decreased by more than 10% in local currency, including the decline in sales of yueshifengyin. As China's sales account for more than 70% of Asia's sales, amore The Pacific Securities Co.Ltd(601099) 's Asian revenue also decreased by 11%.
In addition, Han makeup is not the only one frustrated in China.
In December this year, it was reported that due to the impact of the epidemic, the business of cocokarafine, China's largest Japanese drugstore, was severely damaged in Japan and China, the number of guests entering the store decreased sharply, and the performance showed a loss. Therefore, cocokarafine will withdraw from the Chinese market. At present, the company is communicating the closing time with the mall.
The reporter of Securities Daily called Kekai Jialai (Shanghai) Trading Co., Ltd. many times to inquire about the progress of closing the store, but no one answered.
Official data show that there are four offline physical stores in China, which entered the Chinese market as early as 2012. The products in the store cover many first-line brands in Japan, and there are many high-end products. The reporter found on the xiaohongshu platform that the repeated words of Amway stickers about kekaijia are focused on "wool collection", "discount" and "cost-effective", creating a cheap and cost-effective image for kekaijia. The top selling cosmetics in Taobao's official flagship store are also affordable brands such as Kerun, mirong and Shana.
It is also reported that Kate, a cosmetics brand of Kao of Japan, has faded out of the Chinese market. Although the staff of the offline counter of Kate has disclosed to the media that Kate "doesn't sell well" and "wants to remove the cabinet". However, huawang denied the news that Kate withdrew from the Chinese market in mid December. It is worth mentioning that during the Expo this year, huawang displayed its high-end cosmetics brand "sensai silky". Tanaka Runyi, head of China cosmetics business headquarters, said that "sensai mercerization"'s entry into China's high-end cosmetics market is a new start for huawang group to expand China's high-end cosmetics market.
Both amore The Pacific Securities Co.Ltd(601099) and Kao are giants who have created a world in the Chinese market with affordable cosmetics.
However, according to Wang Zhexiang, a lecturer at Tianjin Medical University, Japan and South Korea's affordable cosmetics are "outdated" compared with domestic products in terms of marketing and products.
He told the Securities Daily that for a long time, the affordable Korean makeup in the Chinese market and the open shelf pharmaceutical makeup in Japan have no accurate brand positioning and characteristics. "These larger cosmetics groups will have many sub brands that focus on the parity line. However, the homogenization between these sub brands is very serious, which has no memory for users, and they can't keep up with domestic cosmetics in marketing means. In addition, the audience of parity products is more sensitive to price and has no loyalty to the brand itself. The parity cosmetics prices in Japan and South Korea There is no advantage in comparison with China. "
Magic mirror market intelligence data show that in the skin care category accounting for more than half of the beauty makeup share this year, the overall growth rate of domestic products reached 78.9%, much higher than the overall growth rate of foreign brands by 26.8%.
the high-end market "looks beautiful"
With the decline of affordable brand business, the launch of new high-end products of amore The Pacific Securities Co.Ltd(601099) group has brought about a sales growth of about 50% for China's snow show brand.
Can foreign brands give up "struggling" in the affordable cosmetics market and choose to attack China's high-end cosmetics market in the second half of 2021?
According to Euromonitor, in the mass cosmetics market, P & G's market share is 12.1%, and L'Oreal's share is about 8.9%. In addition, China's high-end cosmetics market is mainly occupied by international top brands. The top three brands are L'Oreal, Estee Lauder and Louis Vuitton, with market share of 18.4%, 14.4% and 8.8% respectively. Three brands won nearly 42% of the market share.
It should be noted that although foreign-funded enterprises are everywhere in the high-end market, the advantages may not be effective quickly for foreign-funded brands that are only actively transformed in the second half of 2021.
Judging from the latest financial reports of L'Oreal, Estee Lauder and P & G, the performance growth of the three giants in the Chinese market began to slow down.
In the second half of this year, the senior management of L'Oreal Group admitted at the performance meeting that the growth in the mainland slowed down in the third quarter. Both physical retail and tourism retail are facing epidemic pressure, and the particularly important duty-free sales in Hainan are also affected; Tracey Travis, chief financial officer of Estee Lauder group, also introduced at the financial report teleconference in the second half of the year. In mid July and August, the sales growth in China slowed down, the e-commerce channels slowed down, and the tourism retail business in Hainan also slowed down briefly; P & G group previously said that in the first quarter of fiscal year 2022 (July September 2021), the sales of its high-end cosmetics SK-II had been flat with the same period last year, while the group's overall China business rarely stopped growing.
In addition, Shiseido, which still has a place in China's high-end market, its latest financial report showed that the group's Chinese market revenue fell 15% to 46 billion yen in the third quarter. Due to the high marketing cost, after stripping the personal care business, Shiseido accumulated a loss of 7.562 billion yen in the first three quarters of China (January September 2021), which changed from profit to loss compared with the same period last year.
An investor told the Securities Daily that the general direction of enterprise transformation is right. Affected by the epidemic and economic situation, the increase of upstream costs such as raw materials and production and sales erodes the income space of affordable commodities. Using the existing brand influence and perfect system to expand to medium and high-end brands with greater income space is conducive to stabilizing business performance and maintaining the growth foundation.
However, it believes that in the current background, the growth of cosmetics market is stagnant. For existing enterprises, they should not only continue to maintain growth, but also face the competition from domestic products.
Jiang Han, senior researcher of Pangu think tank, told Securities Daily, "To solve the problem of China's performance, it is necessary for these big brands to really sink down to study the Chinese market and understand the underlying needs of Chinese consumers. Only by truly penetrating the Chinese market and carrying out the localization of comprehensive product design and R & D, can they occupy a place in the change process of the Chinese market."
"When the economic and consumption environment changes, even if the total growth stagnates, the stock may still be adjusted. Therefore, only by consolidating the core target group, actively developing new target groups and accelerating product R & D and launch can we run faster than others." These investors said.
(voice of Securities Daily)
