With the introduction of CFO and chief scientist, huaxizi started the first step of transformation. On April 7, the relevant person in charge of huaxizi confirmed to the reporter of Beijing Business Daily that fan Xinpeng had served as the chief financial officer (CFO) of huaxizi. In addition, Li Huiliang, the newly appointed chief scientist, also made a public appearance recently. For a long time, “heavy marketing” and “online popularity” have been one of huaxizi’s deepest impressions to the outside world. However, at a time when the flow dividend is gradually disappearing, it is difficult to rely on marketing alone. Increasing R & D investment and promoting brand transformation is an important direction for huaxizi in the future. Before that, huaxizi needs to remove the label of “heavy marketing”p align=”center”>
listing speculation revives
It has not been a day or two for the outside world to speculate that huaxizi wants to be listed. This time, the reason for the sound is mostly related to the experience of the CFO who has just been introduced. It is understood that fan Xinpeng worked in global investment banks, accounting and law firms for nearly 20 years, took the lead in more than 40 mergers and acquisitions, investment and financing transactions, and served as an executive director at Morgan Stanley. Fan Xinpeng’s joining this time is also seen by the industry as a signal for huaxizi to release listing or seek financing.
Wu Daiqi, CEO of Shenzhen siqisheng company, believes that huaxizi’s introduction of CFO can do better in enterprise financial budget and financial risk control. It is very necessary for large-scale enterprises, and it does not rule out the possibility of huaxizi’s planned financing or listing.
In this regard, the relevant person in charge of huaxizi told the Beijing Business Daily: “the company has a stable cash flow. At present, there is no clear financing or listing plan. In the future, if we can find like-minded long-term strategic partners that are conducive to the long-term and healthy development of the brand, we will be open-minded.”
It is worth noting that huaxizi’s statement on the listing rumors this time is slightly different from that a year ago. During March 2021, some media reported that huaxizi was seeking CFO’s participation or had plans to go public for financing. At that time, huaxizi said: “the company has no financing and listing plans at present.”
In the view of angel investors of daily chemical industry in summer, huaxizi is more likely to introduce CFO and seek strategic financing. Although huaxizi has a healthy cash flow, the follow-up marketing, product research and development and other sustainable development need long-term capital investment.
In addition to introducing CFO, huaxizi recently invited Li Huiliang, the chief scientist with rich R & D experience. On March 4, Li Huiliang made an official public appearance at the five-year planning meeting. According to public information, Li Huiliang once served as Bloomage Biotechnology Corporation Limited(688363) , deputy general manager and chief technology officer. At the same time, Li Huiliang has been engaged in the research and development of cosmetics for more than 30 years, and has participated in the product research and development of Shanghai Jahwa United Co.Ltd(600315) brands such as Liushen, MAXAM, baicaoji, goufu, Yuze and Qichu.
focusing on marketing is a misunderstanding
When it comes to huaxizi, the most talked about is not the product, but its marketing model. After all, huaxizi has created a “myth” of selling 5 billion a year without opening a store, listing or financing.
According to the data, the Gmv of huaxizi will reach 3 billion yuan in 2020; The Gmv in 2021 is 5.4 billion yuan.
Huaxizi did not disclose the specific marketing expenses, but from the public reports of the media, its investment in marketing can be described as a large sum of money. From the public data, huaxizi’s sales mainly rely on webcast.
Some data show that huaxizi invested 20 million yuan in marketing expenses per month only on the live broadcast platform in the early stage. According to Taobao data, if the total Gmv from May to June 2019 is less than 100 million per month, the marketing expense rate of huaxizi on the live broadcasting platform alone is about 20%.
At the same time, according to the data of AI media network in March 2020, huaxizi’s head KOL accounts for 1.9%, shoulder KOL accounts for 1.9%, waist KOL accounts for 36.1% and tail KOL accounts for 60.1%. In addition, some data pointed out that in February 2020, more than 80% of huaxizi’s sales came from tmall, while 40% of its sales in tmall came from Li Jiaqi.
As a result, huaxizi was labeled as “emphasizing marketing over R & D” and “online red brand”.
In huaxizi’s view, “heavy marketing” is a big misunderstanding for it. The relevant person in charge of huaxizi said that huaxizi has laid a low-key layout in R & D for many years, and currently has more than 120 patents. “The 2022 conference will focus on the long-term development of products, R & D, service and organization. While strengthening products, R & D and services, the company is also actively introducing more high-end talents in various fields and improving the company’s governance structure.”
In Wu Daiqi’s view, the investment of marketing expenses is the development model necessary for the establishment of new brands. New brands need marketing to open the market and obtain consumers. For enterprises, what needs to be paid attention to is how to balance the “degree”.
facing competitive pressure
Li Huiliang previously told the media that all large or very dynamic cosmetics companies in the world have make-up and skin care. Therefore, huaxizi will certainly work on the side of skin care. At the level of R & D investment, according to the plan, huaxizi will invest more than 1 billion yuan in the next five years to carry out layout in a number of product innovation, application basic research and theoretical basic research fields, so as to create a perfect category and technologically advanced Oriental beauty R & D system.
In Wu Daiqi’s view, huaxizi may further extend from the original “color makeup” segment to other categories of beauty makeup, such as popular skin care products and functional skin care products, so as to achieve greater brand development.
At present, although huaxizi has achieved the goal of selling 5 billion yuan a year, compared with most domestic brands, huaxizi doesn’t have many SKUs. Beijing Business Daily reporter found that at present, the number of products on sale in huaxizi Taobao flagship store is only 70. In contrast, the perfect diary has nearly 90 products on sale in its flagship store, excluding other brands such as wanzixinxuan.
In the past two years, perfect diary has acquired many cosmetics and skin care brands, derived from cosmetics to skin care and other fields. At present, it has nearly 10 brands. If huaxizi develops into a full category, it will face the competition of new and old brands. At present, perfect diary, Proya Cosmetics Co.Ltd(603605) , Shanghai Jahwa United Co.Ltd(600315) and other domestic cosmetics brands are seeking transformation and increasing R & D investment.
In addition, like other beauty brands in China, huaxizi also faces competition from foreign brands. According to the data, the top five brands of tmall cosmetics sales in 2021 are L’Oreal, Lancome, Estee Lauder, frefangsi and axxzia Domestic cosmetics brands are not included in the list. According to the big consumption data of cbndata, domestic consumption in the first and second tier cities accounted for 6.3%, and that in the third and fourth tier cities accounted for 23.85%, with growth rates of 22.43% and 45.79% respectively.
Insiders said that the emerging domestic beauty brands represented by huaxizi basically follow the route of “parity” or even “low price”, which is in a sinking market. It is difficult to really compete with foreign brands. Domestic beauty brands are also trying to tear off the low-cost label and start the process of brand high-end, but it is not easy.
Although huaxizi has its own plans from category extension to R & D investment, all these need sufficient financial support. With the gradual disappearance of flow dividends, long-term capital investment is required for both expanding categories, launching skin care products and developing R & D. huaxizi’s theory of no lack of money may also change with the continuous increase of investment.
