Botanee Guo Zhenyu: New world cannot be found using the old map

On November 30, the 2021 Cosmetic Newspaper's Annual Meeting and China Cosmetics Industrial and Commercial Summit hosted by Cosmetic Newspaper were held in Wuhan. Guo Zhenyu, Chairman of Botanee, delivered a speech themed The Growth Path of Chinese Brands from a Global Vision at the Weimei Lecture Hall, the full text of which is as follows.

Dear colleagues, today my report is themed The Growth Path of Chinese Brands from a Global Vision. I would like to report to you on the road that Botanee and Winona have travelled over the years. I will share with you four points, namely the rise of Chinese brands, Winona's brand development, the skin health ecology of Botanee Group and Botanee's road to globalization.

Today, almost all the major international brands have entered the Chinese market. Since Procter & Gamble entered China in 1988, the Chinese market has been the international market. In this market environment, the first is to survive, and then to become strong, and finally to go global. 

Guo Zhenyu, Chairman of Botanee

In this environment, how do domestic brands stand out? Only by opening up and going global can we gain     the ability and strength. Today, China's economy accounts for 17% of the world economy. We are the world's second largest economy. We are ranked the first in the world in many industries, such as automobiles, mobile phones and steel. China's cosmetics market is the world's second largest cosmetics market, but China’s  skin care product market is ranked the first in the world.

On March 25 this year, Botanee Group rang the bell on SZSE ChiNext Exchange and then became China's cosmetics company with the highest market value. Some people in the industry will ask: why can Winona become a company with highest market value since its brand awareness is not high and the enterprise comes from the border city Yunnan?

My answer is that if our brands want to survive among the multinational corporations, we have to become the top. When Winona was born, it was positioned as the world's number 1 brand of functional skin care. Any

industry in China today has a world leader, but in the field of functional skin care we can be the first world leader.

Our resources are limited, so Winona is positioned for sensitive skin. Many people say that sensitive skin is a small track for competition, but with increased life stress, environmental pollution, the misuse of cosmetics and other factors, sensitive skin is common. Therefore, Winona focuses on providing solutions to sensitive skin. 

In 2020, Winona has become the number 1t brand of functional skin care products in China and one of the top eight brands of functional skin care products worldwide. I have every confidence that in a few years Winona will become the top brand of functional skin care products in the world. 

We spend a lot of money on research and development

We pursue the following three aspects in operation. Our high goal is to develop into the world’s first functional skin care brand. Our big vision is to bring health and beauty to people. We are on the Internet expressway. In the cosmetics consumer market, product power is very important. If a product is not attractive enough, it has no opportunity in market competition. The second is research and development. We spend a lot of money on research and development. Eight percent of our employees are research and development personnel, and we have world-class research and development hardware.

Our functional cosmetics should be able to solve skin problems, such as skin sensitivity, acne and skin pigmentation. We find the cause of these problems from the perspectives of physiology and pathology in the skin study, and then find the target spots of these problems, and find out what ingredients can be used in the target spots to solve these problems. It is a dimension reduction to develop functional cosmetics according to the idea of developing medicine. 

For example, we find that purslane essence can calm the skin. Extract of Yunnan Camellia semiserrata Chi can inhibit the production of melanin by inhibiting tyrosinase and thus have whitening effect. Therefore, we introduce these ingredients into Winona's formula as our active ingredients. 

Functional skin care products should also focus on safety. Cosmetics are consumer products. The most important thing is safety, followed by functions. Our laboratory has 16 criteria for safety and 6 criteria for functions. However, safety cannot be only chatter. Therefore, the safety and functions of all Winona products have been clinically verified by dermatology departments in 63 hospitals nationwide (including Level III Class A hospitals).

Today Winona is able to compete with foreign functional skin care products in the Chinese market and wins the competition, which is inseparable from our academic and technological empowerment. Winona products are products medically co-created by 63 dermatologists and a dozen of top dermatologists, which is the support for evidence-based medicine. And we have published 140 academic papers from basic research to clinical validation. We are also a leader in the functionalskin care industry, as we are involved in the development of 15 national expert guidelines and consensus and take the lead in the development of 16 functional skin care group standards. 

What we have to do in marketing is leverage and strategize. The resources of each enterprise are limited. We are targeting consumers from post-90s and post-00s. The 25-year-old group is broadly represented. The women aged 40 would find out what the girls aged 25 are using because they want to stay young. The girls aged 15 would find out what these older sisters are using because they worship them. We're targeting Gen Z because Gen Z are the natives of the Internet. 

As you know, we have completed clinical validations at 63 hospitals (including Level III Class A hospitals). Dermatologists recognize Winona very much from the academic perspective. When consumers ask what is recommended for scientific skin care, they often recommend Winona, which creates demand. Winona is recognized through our brand operation and is ultimately bound with consumers. 

New world cannot be found using the old map

Today's consumption channels have completely changed. We have to adopt completely new ways. I used to work at Kangwang. As long as its advertising was launched at CCTV and eight satellite TVs, the products would be put on shelves for sale. In the past it was simple, but today with this old map, you can't find New World. Because in the era of Internet, the traditional brand marketing methodology has stopped working. Therefore, to develop a brand, you have to enter the circle to complete a breakthrough.

At this time, building a brand requires the support of big data and user portraits. You need to find your target users, and then in this channel find the center of the circle. The means to complete marketing in the center must be the content. Consumers will not pay for it unless all the content is of high quality. In addition, the quantity should be sufficient and it should be infinitely close to consumers. Therefore, the core of brand marketing today has become using communication materials and media to complete the circle breaking and go from a closed circle towards the public. 

In terms of channel layout, we insist on laying the offline foundation plus all online channels. We lay an offline foundation in hospitals, pharmacies and Watsons to build a professional brand image. Our products are available in all online channels, including Tmall, JD.com, Pinduoduo, vip.com and emerging channels such as TikTok, Xiaohongshu, bilibili.com and Kuaishou. With the development of such channels, we gradually follow up with such channels.

In marketing, we pay attention to the combination of quality and functions and the linkage with super leading star anchors, and then win double harvests through the topic exposure, and gradually build brand awareness.

We will be work with celebrities, kols and dermatologists to do live streaming, during which we carry out new marketing for functional skin care products in the form of variety shows. The synergy of online and offline channels makes the number 1 brand of functionalskin care in China today.

In the Nov. 11 online shopping carnival this year, Winona is the only domestic brand among the top 10 brands of Tmall beauty and skincare category. It is also the only one domestic brand that has maintained stable among the top 10 brands over the past 4 years. We were ranked 9th last year and are  ranked 6th this year. The top 10 brands are all international brands, except for us.

We are also actively expanding our traffic in private domains. We set 500 counters offline. Each counter guide is responsible for not only the offline business but also for running a mini program counter online. The members of mini programs are run by the headquarters on a unified basis and are our traffic in private domains.

In the public domains, the purchased traffic cannot become profit unless it is converted; otherwise, it is an expense only. However, in case of our traffic in private domains everyservice for a consumer is free traffic so

we're actively expanding our private domain operations to keep consumers stay in our traffic pool in private domains through services and value. 

Create complete healthy skin ecology

One thing we've done over the last decade is creating a brand called Winona. There's only one selling point - sensitive skin. One thing I'm going to do for the next five years is to create healthy skin ecology. Winona is just a single brand. We're also going to launch some high-end restorative anti-aging brands on the functional skin care competing track.

Since we are going to create a healthy skin ecology, then artificial intelligence-assisted skin problem diagnosis, skin testing and personalized services are also within our layout, and aesthetic medicine is also included. Therefore, what is Botanee's healthy skin ecology for the next five years? Botanee's healthy skin ecology is the whole process from problem skin to normal skin and perfect skin and the cultivation of a closed loop of healthy skin consumption ecology in the process of selecting, breaking through and recreating circles.

For functional skin care products, we will adopt a multi-brand operational strategy. We need to embrace changes in technology related to Botanee's healthy skin ecology, and then create innovative organizations, and form health ecology primarily with intensional hatching plus extensional mergers and acquisitions, whichis the goal for the next five years. 

Today we are a company with market value of RMB100 billion. What is our DNA? It is the basic research and clinical validation, the strict control of product quality, and the endorsement of dermatologists and the empowerment of consumers. Through the brand building of Winona over the past 10 years, we have also built our middle platform capabilities, which include an omni-channel network, diversified marketing, science-driven product innovation, perfect data and business middle platform and a world-class supply chain.

On the road of globalization, as for cosmetics, European and U.S. brands achieve globalization mainly through the incubation of local products, the creation of brands and group mergers and acquisitions. It is planned that Botanee's globalization also adopts this way: create a local brand, enter the European and U.S. markets, compete in the world market and set a benchmark, and then achieve globalization. Of course, we will adopt group mergers and acquisitions. We are also looking for strategic alliances and investment opportunities to expand global markets. We will ultilize our diversified product portfolio to launch our existing business to global markets, and thus go global.