The cosmetics industry is at the forefront of China’s long-term promising track inventory.
With the rise of domestic products in recent years, we can see that the cutting-edge brands huaxizi and perfect diary have ushered in high light moments one after another. The century old brand Shanghai Jahwa United Co.Ltd(600315) , the “light of domestic products” of 20 years, Shangmei group has also entered a new channel to compete with international giants. Old domestic products are full of new vitality and new brands are rising, ushering in a new situation of vigorous development of domestic cosmetics.
According to Sullivan data, in 2020, the scale of China’s cosmetics market exceeded 840 billion yuan, ranking the second in the world, and the growth rate is the fastest among the world’s major economies. The CAGR from 2020 to 2025 is expected to be as high as 9.2%, with great growth potential in the future. With the continuous improvement of the strength of domestic brand products and more flexible response to meet the demands of Chinese consumers, coupled with the enhancement of national self-confidence, favorable policies and other multiple factors, big fish in big water, it is obvious that China has the environment to go out of the international cosmetics giant enterprises
According to the mature experience of the cosmetics industry in Europe, America, Japan and South Korea, the road of China’s cosmetics giants will also be a marathon rather than a sprint we should focus on the long-distance running ability of enterprises, rather than simply looking at short-term data. Only by running long and far can we have the opportunity to represent China to the world and rank among the international cosmetics giants
So how do you win this marathon? What abilities should we have? It deserves the attention and discussion of the whole industry.
the road to success of international cosmetics giants
Expanding categories, playing with concepts and smashing marketing, new brands emerge in endlessly every year in China’s cosmetics industry, but there are few brands precipitated. Why? We can find the underlying logic of success from the current situation and growth experience of international giants.
first, the cosmetics track is a long slope and thick snow road, which needs to be friends of time
Looking at the development history of international cosmetics giants such as P & G, L’Oreal and Shiseido, they can cut through thorns and thorns and stand tall all over the world. It is not a one-day effort, but a “marathon race” for hundreds of years. P & G was founded in 1837 and L’Oreal was founded in 1907. After more than 100 years of wind and rain, P & G has grown into a world-class cosmetics giant. At the same time, they are also widely favored by Chinese consumers.
second, adhering to multi brand development is the only way to build a world-class cosmetics company
At present, the global market capitalization of more than US $7 billion brands such as Lauder and P & G, including Lauder and P & G. In the view of insiders, multi brand development helps enterprises have more anti risk ability in the case of market rotation and demand changes, meet the needs of consumers in different segments, and better support enterprises to cross the cycle. It is worth mentioning that the multi brand strategy not only promotes endogenous growth, but also helps external financing to accelerate its strategic development and layout. At present, the market value of P & G has exceeded 370 billion US dollars and L’Oreal has exceeded 210 billion US dollars.
third, attach importance to independent research and development, which is the key factor to open the gap between enterprises
In order to race against time and win over more and more “smart” consumers, enterprises must continue to launch innovative products that satisfy consumers. Even the enduring star products must undergo rounds of formula innovation to make the efficacy and skin feel keep pace with the times. This requires enterprises to invest heavily in independent research and development, especially in basic research. Basic research is the basis of all cosmetics science. It needs to invest a lot of human and material resources, and finally open the gap between brands in product quality. This is why international giants such as P & G and L’Oreal attach so much importance to basic research. While occupying the highland in basic research, we should build an independent supply chain and firmly grasp the core achievements and production lines in our own hands. It can be said that this is a necessary factor to become an international cosmetics giant, which is also an important reason why P & G can stand firm in the market and create a market value of 100 billion US dollars.
Throughout the development history of international cosmetics giants such as P & G, L’Oreal and Shiseido, all of them have repeatedly verified this successful “methodology” – that is, adhering to the marathon business model, adhering to multi brand development and paying attention to independent research and development. This is worthy of domestic enterprises to learn and make good use of their geographical advantages, so as to seize the market share controlled by international giants for a long time.
Looking back at China’s cosmetics enterprises, old domestic products are constantly glowing with new vitality, and new and cutting-edge brands are also rising in the wind of domestic products. Among them, Shanghai Shangmei Cosmetics Co., Ltd. (hereinafter referred to as “Shangmei group”), which owns the brands of Hanshu, Yiye and red elephant, submitted a prospectus in January this year, and multi brand scientific research giants went to Hong Kong to attack the “first share of domestic beauty”, domestic goods competition ushered in a new model. Based on the analysis of its situation, it has been seen that there are many giant genesp align=”center”>
benchmarking international cosmetics giant
develop multi brand model
Originated in 2002, Shangmei group is positioned as “the leader of multi brand domestic cosmetics industry enabled by scientific research”. It has many brands such as Hanshu, Yiye and red elephant, and maintains a leading position in the fields of skin care, mother and baby, washing and care. According to public data, Shangmei group’s retail sales in 2020 were 7.291 billion yuan, ranking among the top five domestic brand enterprises in terms of retail sales for six consecutive years. In 2020, the net profit increased by 242.07% year-on-year. In the first three quarters of 2021, the net profit increased by 82.40% year-on-year. The net profit is expected to increase six times in three years dismantling the operation of its brand layout, scientific research supply chain layout, talent construction, channel and marketing is a bright spot.
Shangmei group revealed that in addition to the three mature brands of Hanshu, Yiye and red elephant, the company has launched cutting-edge brands such as bio-g, asnami and Jifang to expand the categories of sensitive skin care, medium and high-end pregnant muscle care and hair care products. In addition, three brands in preparation, an Minyou, newpage and Yamada farming, are expected to be listed in 2022. Among them, an Minyou brand is a professional skin care brand for sensitive muscles launched in cooperation with the artemisinin research team, one is a Chinese infant efficacy skin care brand focusing on baby sensitive muscles, and Yamada farming is a high-end anti-aging skin care brand launched in cooperation with the scientist Mr. Yamada farming. The three brands are widely favored by the market, The track is fast and accurate, and is expected to grow into a large-scale brand.
Since the birth of Hanshu brand in 2003, Shangmei group has incubated well-known brands Yiye and red elephant. More importantly, the balanced development of the three brands, rather than a single brand, has driven the company’s performance.
This comes from the efficient operation systematic platform created by Shangmei group, and the full link systematic operation of consumer insight – scientific research empowerment – Product Development – digital production – innovative marketing – Omni channel sales. This set of brand building system platform makes the new brand launched by Shangmei have the possibility of faster success and become a new growth curve of the enterprise.
nearly 20 years of scientific research
for quality escort
With the support of multiple brands, Shangmei keeps going through the cycle and will always be young. In this marathon race, R & D ability is not only related to the starting point of the competition, but also affects whether players can run fast and far. “light R & D and heavy marketing” is doomed to be a flash in the pan, and Shangmei has realized this for a long time. According to the data, at the beginning of its establishment, Shangmei focused on independent research and development, which was a very forward-looking and courageous decision in the current situation of cosmetics at that time, and even some “risky” decisions. Today, 20 years later, this strategic layout also gives Shangmei sufficient confidence in this competition.
According to the prospectus, Shangmei group started independent research and development in 2003, the second year after its establishment, and started the construction of its first industrial park in 2005. In 2016, after the establishment of the research and development center in Kobe, known as Japan’s “biotechnology Silicon Valley”, Shangmei group entered the first year of basic research and began to increase its investment in basic research, especially focusing on the development of independent raw materials and platform technology, It is a pioneer in the basic research of domestic cosmetics it is understood that basic research on cosmetics refers to the frontier science of cosmetics, involving mechanism research, raw material screening, efficacy evaluation, basic formula and other aspects. Just like the “physics” of cosmetics, it is the basis of all science. Transforming basic research into application results requires a lot of human and material resources and a long time cycle. Cosmetics companies with low-level R & D capabilities outside China have accumulated for many years on the basis of basic research.
At present, Shangmei group is located in the double scientific research centers in Shanghai, China and Kobe, Japan. has achieved close cooperation. At present, three major achievements have been developed, namely tiracle (double bacteria fermentation component), agse (active grape seed extract) and Artemisia annua oil an + (Artemisia annua extract). In 2022, Shangmei group further defined five new strategic directions for basic research, including targeted anti-aging research, sensitive muscle research, development of exclusive new raw materials, etc.
At the same time, Shangmei group has built its own two supply chains in Shanghai, China and Okayama, Japan, fully implemented its independent achievements, realized the coverage of the whole life cycle from development end to production end, and escorted the quality.
In terms of R & D talents, it is understood that as of September 30, 2021, Shangmei group has formed a 227 person R & D team led by 7 internationally renowned scientists, 7 scientists have held senior R & D positions in international brands and have an average of more than 30 years of R & D experience. In the past 20 years of R & D in the United States, we have always attached great importance to the introduction and training of R & D talents. LV Yixiong, CEO of Shangmei group, once said that in order to develop into a world-class cosmetics company, we must return to the construction of talents. Only by establishing an independent talent echelon system, can we support the development of multi brand strategy, pass on experience, technology and achievements, and let Shangmei go through the cycle and be young forever.
keep pace with the times in channel and marketing
accelerate brand breaking
In addition, in the current fragmented communication environment and purchase channels, Jiuxiang is also afraid of deep alleys. The innovative “marketing force + channel force” combination fist realizes user touch, product grass planting and sales transformation, which brings the possibility of brand breaking.
In terms of channels, Shangmei carries out omni-channel layout through Wuxi Online Offline Communication Information Technology Co.Ltd(300959) , so as to achieve efficient consumer reach. Tmall, jd.com and other mainstream e-commerce platforms are laid out, and the offline retail and distribution network covers the whole country, with more than 4000 Watsons stores. It is worth mentioning that Shangmei is good at capturing the channel outlet and responding quickly to occupy the market. Tiktok group, Kwai Chung tiktok, has been keen to capture and set up professional teams in the first three quarters of 2021. For example, the monthly GMV of the US group surged from 5 million yuan to 160 million yuan, of which Korea has been the top of the list of skin care products daily. tiktok D-Beauty tiktok brand activities, within 9 days to achieve the total GMV exceeds 60 million, set up a new paradigm of the voice business.
In terms of marketing, Shangmei group’s marketing strategy of keeping pace with the times continues to improve the brand power and make the brand image deeply rooted in the hearts of the people. Over the years, with the change of traffic position, keeping up with the times and consumers, a set of mature playing methods to attract young people has been formed in the 20-year operation accumulation, including the parallel troika of “depth + breadth + transformation”. Its original “new six item marketing model” has opened up the whole marketing process of large media delivery, global content grass planting, effect delivery, e-commerce marketing, live broadcast detonation, user operation and so on, and realized the integration of quality, efficiency and marketing.
The demand of China’s beauty and skin care products industry is expected to maintain strong toughness under the penetration and upgrading of consumers in the new era. Head cosmetics companies with strong R & D ability and brand strength deserve attention. On the long-term track of cosmetics, the road to the rise of giants is still a marathon race. The market begins to pay attention to the ability of enterprises to run long-distance instead of looking at short-term data, which promotes enterprises to consolidate basic ability and innovation, so as to run fast, long and far. After passing through the cycle and ups and downs of wind and rain, its color can be seen.
