The cosmetics industry, which has made great progress all the way, has encountered the challenges brought by the epidemic this spring.
Since the new round of epidemic spread, the production of Shanghai cosmetics industry has been suspended for nearly a month. More than 200 enterprises have been shut down, unable to make efforts in the golden season of “gold, silver and four”; Some cosmetics transported in the Yangtze River Delta are also blocked by the overflow of the epidemic, and the return rate remains high.
“Our biggest difficulty now is that the transportation in and out is blocked, the products can’t be transported out, and the raw materials can’t be transported in, whether imported or domestic.” Ni Lili, head of quality and safety of Galan group, told China first finance.
As Fengxian District, where it is located, basically cleared the social surface, the production of Jialan factory finally returned to normal after it was shut down for nearly a month. A week ago, more than 400 employees returned to Dongfang Meigu Park in order to debug the equipment and restore the production line, focusing on epidemic prevention related products.
After the epidemic was gradually controlled, more enterprises joined the ranks of returning to work and production. A number of cosmetics enterprises in Shanghai told first finance that they are carrying out work related to the resumption of work and production in accordance with the requirements and arrangements of the government. On April 27, the conference on epidemic prevention and control in Shanghai introduced the implementation of “limited personnel, limited areas and limited activities” for areas that have basically cleared the social surface.
As an important place in the cosmetics market, Shanghai’s interlocking industrial chain is being affected. In the neighboring Yangtze River Delta, repeated epidemics have also led to difficulties in the beauty business with unstable foundation.
At a time when capital flow and people flow are forced to decrease, how to get through the difficult times has become an unprecedented challenge in this round of beauty examination.
restart production
In the month of home isolation, Ni Lili was most concerned about the “vegetable basket” of the building in addition to home office. She was responsible for ordering vegetables for her neighbors and also used her professional knowledge to do disinfection work.
In her closed home days, she has been used to working online and remote video supervision of daily production, epidemic prevention and quality inspection. Galan factory was completely shut down from March 28, leaving only about 1 / 10 employees on site. It was approved to resume work on April 19, and the production line was restarted. By the end of April, the production capacity could be restored to 60%, giving priority to the production of epidemic prevention related products.
Since the outbreak, wearing masks for a long time and frequent use of alcohol and disinfectant are easy to cause skin problems, such as sensitive face and rough hands. In view of the phenomena of “mask face” and “alcohol hand”, Ni Lili said that in the near future, the factory will give priority to the production of products with high consumer demand, such as 728 repair cream of its sensitive muscle brand pofuyan, hand cream of core brand nature hall and Meisu, as well as disinfectant wipes and wash free hand lotion.
On April 23, a batch of materials including these products were donated to the community health center of Jinhai street, where the factory is located, to solve the skin damage problems of medical staff and anti epidemic volunteers. Since March, Galan has successively donated anti epidemic materials with a total value of more than 2 million yuan.
Another local cosmetics giant Shanghai Jahwa United Co.Ltd(600315) , in Shanghai, a small team of 21 people undertook the task of hundreds of live broadcasts in order to ensure the timely launch and live broadcasting of new products in spring and summer Shanghai Jahwa United Co.Ltd(600315) said that it had paid attention to the relevant documents on the guidelines for epidemic prevention and control, would actively maintain communication with the government, and arranged and carried out work related to resumption of work and production as required.
Due to the overflow of the epidemic, the Yangtze River Delta and beyond have also been affected. As the world’s largest beauty group, L’Oreal’s R & D and production have been affected to some extent. It has two factories in China. At present, Yichang factory is in normal production and operation, and Suzhou factory adjacent to Shanghai is orderly promoting production under epidemic prevention management. L’Oreal said that boosting consumer confidence and releasing consumer demand are indispensable to comprehensively promote the resumption of work and production. At present, the company is promoting the preparation of activities related to boosting consumer recovery after the epidemic.
raw material bottleneck
Whether international brands or OEM brands, under the control of the epidemic, the shortage of raw materials is controlling the production lifeline of the whole industry.
In Baiyun District, Guangzhou, where there are many raw material companies, many enterprises and factories shut down due to static management. Similar phenomena have also occurred all over the country. The materials of some companies have been exhausted, which directly leads to the bottleneck of raw material shortage in the cosmetics industry.
“There are many raw materials involved in cosmetics, but the formula is fixed and cannot be changed at will. Neither of the raw materials is needed. Due to transportation and other reasons, the raw materials are in short supply and cannot be produced normally. This is a big problem at present.” Ni Lili said.
What worries her more is that may 1 is the “deadline” for the implementation of a series of new regulations in the cosmetics industry. Enterprises must complete product filing and supplementary recording of registration data before that, otherwise they will face the problem of product filing / registration being revoked. In addition, enterprises also need to evaluate the efficacy claims of some cosmetics and upload the summary or human efficacy test report. However, during this sprint period, a large number of employees of enterprises in Shanghai could not be present at home, and the recruitment of volunteers by efficacy evaluation institutions could not be achieved, so the relevant work could only be postponed.
“Galan involves more than 400 products in total, and it is required to complete the supplementary recording before May 1. We have roughly calculated that about 30% of the products cannot be completed on schedule, so we hope the relevant departments can grant an extension.” Ni Lili said that based on the unstable factors in China’s foreign market since the epidemic, two years ago, the company had begun to complete the reserve development of some core formulas and the development and application of domestic raw materials. “Once the international raw material supply is cut off, we will use the alternative formula to ensure that the delivery of the terminal will not be affected. At that time, we need the help of relevant departments to quickly solve the filing problem.”
The price of crude oil has soared since February. In April, chemical giant BASF further raised the price of all polyurethane products in the European market, and LG Chemical will also raise the price of ABS products since the second quarter. In China, common daily chemical raw materials such as isobutyraldehyde and organosilicon DMC have increased significantly, which will further erode the profit space of enterprises.
The rise in raw material prices is forcing Chinese raw material manufacturers and OEM factories to accelerate independent innovation and development. For example, Bloomage Biotechnology Corporation Limited(688363) , the world’s largest supplier of hyaluronic acid, avoided the crowded track of hyaluronic acid and entered the growing sensitive muscle repair market through its self innovative brand runbaiyan.
Similar to it, there is Dr. yu’er, founded in 2018 under Freda biology. According to the 2021 annual report released by its parent company 6 Shandong Minhe Animal Husbandry Co.Ltd(002234) on April 14, Freida had a brilliant performance, with an annual revenue of 1.495 billion yuan, a year-on-year increase of 117%; Among them, Dr. yu’er’s annual revenue was 744 million yuan, a year-on-year increase of 272.14%.
“The globalization of raw materials has become a trend, and the cosmetics industry needs to promote the replacement of domestic raw materials as soon as possible.” Tian Yong, chairman of Shanghai zhenchen, a well-known contract manufacturer in Shanghai, recently proposed this.
innovation for survival
Under the haze of the epidemic, many people lamented that business this year is more difficult than last year.
In fact, in order to save themselves, all walks of life in trouble have focused on the “three piece set” of live broadcast, community and small programs, and beauty is the key track. Recently, in the live broadcast room of China Southern Airlines Company Limited(600029) , the stewardess turned into the anchor and sold popular cosmetics priced at less than half of the official price. At the same time, the price of cosmetics in e-commerce platform C store “fell endlessly”, and many big brands fell again and again. The hoarding goods bought by consumers turned into “money losing goods” in the twinkling of an eye.
Some practitioners believe that the epidemic has led consumers to be more cautious when buying, or simply give up the consumption of beauty products that are not just needed; In order to stimulate sales, brands passively participate in large-scale promotion, so as to enter a vicious circle, and even lead to the early arrival of a new round of industry reshuffle. For traffic brands, this spring will be particularly difficult.
On April 18, according to the data released by the National Bureau of statistics, the retail sales of cosmetics in March was 34.5 billion yuan, down 6.3% year-on-year, and may decline further in April.
“The impact of this epidemic on enterprises is not only the revenue in the first or second quarter, but also in the first half of the year or even the whole year. Although whether there is a loss depends on the purchasing power of consumers after the recovery of the epidemic, on the whole, the revenue must decline.” Ni Lili said.
Galan’s self rescue method is to build a development mechanism to deal with the epidemic, ensure production and supply and sustainable operation from the beginning of the epidemic; In July 2021, a digital inventory system was launched, which enhanced the anti risk ability of the enterprise through the construction of supply chain warehouse layout. Ni Lili mentioned that before the closure, the company transported about 3.9 million products for the first time and added them to 12 Shunfeng sub warehouses across the country.
During the epidemic period, how to solve difficulties and ensure supply, and smoothly return to work and production as soon as possible has perplexed practitioners in the cosmetics industry during this period of time. At the online exchange meeting on the rescue and relief work of key cosmetics enterprises in Shanghai held on April 9, representatives of 15 enterprises offered suggestions. Many enterprises, including Shanghai Shangmei, xiangyibencao, yingteli and Meichen, have mentioned self-help methods such as inter provincial shuttle bus, remote layout of suppliers, human resources optimization and resource sharing.
In July last year, the action plan for the high-quality development of Shanghai’s cosmetics industry (20212023) was issued, which proposed to strive to reach 300 billion yuan in the scale of the city’s cosmetics market by 2023, with the main business income of the cosmetics industry exceeding 100 billion yuan, forming 10 leading enterprises with an annual operating income of more than 5 billion yuan and more than 10 high-quality enterprises with an annual operating income of 2 billion yuan; It has 3 ~ 5 leading international brands, cultivated 20 first-class Chinese classic brands, incubated a number of cutting-edge brands, and the market share of independent brands in Shanghai has increased year by year.
Over the past two years, Guochao makeup has been popular frequently, and emerging brands such as perfect diary and huaxizi have constantly refreshed their sales figures, causing capital popularity. Under the ever-changing marketing model update, the little red book grass planting + KOL endorsement model gradually failed, and the R & D ability + self owned factory has become a more recognized bonus item.
