This is a meeting for the future!

The beauty industry has changed dramatically since the COVID-19 outbreak.

 

The cosmetics industry often used the term "cold winter" to describe the "temperature loss" of offline physical retail in the past few years. In the first year after COVID-19 this "winter" seems particularly cold.

When "doing business" becomes "make a living," when "striving for career

" becomes "seeking survival" - it seems that more and more beauty industry practitioners are gradually “busy picking up the sixpence on the ground”, but forget to look up at the global ‘sea of stars’

 

"Some people say COVID-19 is the last nail in the coffin of globalization," Said economist Xu Xiaonian, "on the contrary, I think COVID-19 has proven that globalization cannot go backwards, and going backwards is not good for anyone. We have to follow the global economy through the whole COVID-19 prevention process ... We areon the same boat."

Who are we in the same boat with?How do we work together?

On November 31, the 11th China Cosmetics Industrial and Commercial Summit and the 2021 Cosmetic Newspaper's Annual Meeting (hereinafter referred to as the "Annual Meeting") were held at Wuhan Marriott Drow Hotel. After 10 years of brilliance, at the beginning of the next 10 years, this Annual Meeting continues to uphold the professionalism and height of "setting the tone" for the industry and set the "globalization sea of stars" as the theme. 

The venue was packed with guests. The "future-oriented meeting" was on fire and people were willing to stand in the hallway and wait on tiptoe - at the meeting site alone, more than 1,000 practitioners from the cosmetics industry enterprises, cosmetics commercial enterprises, e-commerce platforms, MCNs, Internet celebrities and many more from beauty industry from the whole country gathered.Tonight, in the hero city of Wuhan, we raised a glass, invited the moon and toasted the future for the globalization sea of stars. 

 

01

Why does China’s beauty industry need to talk about globalization?

The beauty industry is changing rapidly and has had a hard time after the COVID-19 outbreak.On the one hand, some brands rely on crazy discounts to survive amid the competition of live streaming; on the other hand, the production cost become high due to the continued rising prices of raw materials.

On the one hand brands have “narrowed living space” in the offline channels; on the other hand, the online traffic expenses are more and more expensive...

Therefore, as the end of 2021 approaches, what exactly are we talking about when we talk about the globalization of the beauty industry?

President of Cosmetic Newspaper Du Wei said: "Globalization is the ultimate path for enterprises and brands to grow and enhance their market competitiveness. Progress and prosperity are possible only if they compete and develop in an open environment. The ultimate form of opening up is globalization." 

△Du Wei, President of Cosmetic Newspaper

Now many cosmetics enterprises might ask “Now I need to consider basic survival issues, how can I think about globalization?” But Du Wei firmly believes: "Even if you do not consider globalization, globalization will come to you."

For a Chinese cosmetics enterprise, whether in the start-up stage or growth stage, its globalization strategy is to have global thinking and vision first. We need to integrate high-quality global resources such as global raw materials, technology, research and development, and production to win a place in the globalized Chinese market when we are not yet able to send our brands abroad.

World-class markets will certainly produce world-class brands. Guo Zhenyu, Chairman and President of Yunnan Botanee Bio-Technology Group Co., Ltd., said bluntly: "Chinese brands are rising with the great renaissance of the Chinese nation. We should determine the brand positioning according to the world's top standards."

△Guo Zhenyu, Chairman and President of Yunnan Botanee Bio-Technology Group Co., Ltd.

Take Winona for example. Why does a brand in the division market have the highest market value in China? Guo said that domestic cosmetics brands are on the rise. In China with a population of 1.4 billion, Winona is positioned as a sensitive skin segment track with a compound annual growth rate of 46%. In 2020, the number of DTC customers reached 6.6million."Winona, already China's No.1 functional skin care brand, will become the world's No.1functional skin care brand with increasing investment in research and development."

"Winona's today is just the beginning." Guo Zhenyu said firmly. 

02

Come to China! Go overseas! 

Global beauty brands move with China

For a long time, the Chinese market has become a stage for the collision, intersection and wrestling of global beauty brands with its strong centripetal force. On the one hand, Chinese enterprises are constantly trying to go overseas; on the other hand, overseas beauty brands have taken root in China.

Ye Weimin, Deputy General Manager and Chief Operating Officer of Shanghai Jahwa, said that from the past to now, Shanghai Jahwa has always been trying  to go global, constantly expand overseas business and develop tax-free business. For example, customers in more than 40 countries and regions in the world can now buy MAXAM products; Secondly, international brands begin to be introduced into China. Since 2004, Shanghai Jahwa has had various cooperation with international companies such as Adidas Personal Care Brand under Coty Group, Sephora, Kao, Mayborn, Church & Dwight.

△Ye Weimin, Deputy General Manager and Chief Operating Officer of Shanghai Jahwa

Through cooperation with different multinational companies, Shanghai Jahwa has cultivated an excellent team, upgraded its supply chain capability and improved its global supply chain layout. Globally, Shanghai Jahwa has five wholly-owned factories located in London, Rabat, Shanghai, Dongguan and Hainan to meet global market demand.

Lei Kaiting, General Manager of China Enterprise Affairs of Beiersdorf, agreed that as an enterprise with 139 years of history, Beiersdorf has also faced challenges and explored the path of globalization for more than 100 years. "Globalization is a process of constantly adapting and integrating with local cultures and local societies." 

△Lei Kaiting, General Manager of China Enterprise Affairs of Beiersdorf

When talking about the localization of Beiersdorf in China, Lei Kaiting revealed that in the Chinese market, Beiersdorf lays a solid foundation by relying on the research and development strength of the Beiersdorf Innovation Center and the continuous empowerment of Tmall New Product Innovation Center, deepening innovation and upgrading and incubating and hatching more products that will explode the market, so as to make skin care brands better match the innovation-driven force of the growth of the Chinese consumer market and actively promote the innovation and reform of the Chinese beauty and skin care industry.

In addition to aspects from beauty brands side, Founder and CEO of UCO Group Zhang Ziheng, who is good at opening channels in China for overseas brands, believes that to link with global beauty brands, "whether domestic or international brands, as long as they can capture the tone of young people, they can capture the young consumer market." 

△Zhang Ziheng, Founder and CEO of UCO Group

He said unlike other consumer sectors, beauty & cosmetics market, especially high-end beauty & cosmetics market, has unique needs and challenges. UCO is never positioned as a simple TaoBao Partner (TP), but starts layout from the brands’ strategic e-commerce planning. Therefore, UCO attaches great importance to personalized user experience. All teams are operated by their own teams, with system support for customized solutions, and combine beauty expertise with data system capabilities.

This year, UCO acquired digital marketing and big data analysis company Protime, strengthening the data analysis model. By relying on industry resources and capabilities, UCO will carry out brand incubation and expand business in China. 

03

Big changes! The following changes have taken place in China's beauty market

At the meeting throughout the day, professionals from platforms, brands and media took the stage to bring the latest analysis of the Chinese beauty market.

Chu Mou, Head of Beauty Platform Division of JD Retail Beauty Department, said in the speech titled Online Beauty Consumption Trends and Changes that the future beauty market has no division of offline and online channels; affected by the COVID-19 global pandemic, the market share of high-end beauty closely follows the mass market; the penetration rate of online sales channels rises; The makeup market has a high growth space and is expected to return to the proportion of 21% in China in 2021 after decline due to COVID-19, which, however, is far below the global level (45%). 

△Chu Mou, Head of Beauty Platform Division of JD Retail Beauty Department

Chu Mou said, according to the research of Xiaohongshu & Ipsos, the Chinese mass popular  brands have experienced explosive growth and rapid increase in concentration by relying on high-quality and fair-price products. Among others, emerging Chinese brands have gained high growth and a lot of hype through flexible marketing strategies and user-centered product selection strategies. They showed great growth potential. For example, COLORKEY and Dr. Yu reached the growth of 8529% and 182%, respectively. In addition, overseas niche makeup brands (such as Suqqu, By Terry and Fenty Beauty) with texture/function as their selling point have developed rapidly in China; during the period from 2017 and 2019, the GMV share ofthe brands on Tmall platform increased from 2.8% to 9.6%.

Li Shuo, Chief Reporter of Cosmetic Newspaper, also delivered the 2021 China Cosmetics Industry Enterprises Survey Report at the meeting. The Report includes the over 100 days efforts of 18 journalists from Cosmetic Newspaper interviewing 255 enterprises. 

△Li Shuo, Chief Reporter  of Cosmetic Newspaper

Insights into the cosmetics industry: "new," "expensive," "rational," and "involution" become four key words.

How competitive is the Chinese cosmetic industry? Li shared that in the first half of this year, nearly half of cosmetics enterprises did not achieve year over year growth in revenue. In July-October2021 the

domestic cosmetics market entered a weak period. Affected by the rising costs of raw materials, packaging materials and energy and other factors, the gross profit of domestic cosmetics enterprises is declining. Moreover, the cost of traffic increases and the marketing expenses increase accordingly. Overall, cosmetics enterprises' research and development expenses are on the rise, and "streamline SKU" has become the consensus of more than 70% of the enterprises. 

Li Wei, Co-founder of Beauty Evolution, brought an interpretation of upstream big data. Plant extracts account for nearly one-third of the 2021 top 30 list of functioning ingredients released by Beauty Evolution. Sodium hyaluronate, niacinamide, tocopherol (Vitamin E), asiaticoside extract and glycyrrhiza glabra root extract are among the top five. 

△Li Wei, Co-founder of Beauty Evolution

Beauty Evolution's insights also find that there are fewer skincare freshmen and more pan ingredients skincare junkies. Sixty-nine percent of beauty users will look at the product's full ingredient list. Consumers' attention to ingredients has shifted from safety to effect, concentration, activity and formula. This also means that the era of the national pan-ingredient centric skin care is coming, and consumers demands for scientific skin care will continue to rise.

Xun Shujia, Brand Marketing Director of Frog Prince, brings more new opportunities in baby areas.

△Xun Shujia, Brand Marketing Director of Frog Prince

Xun Shujia shared that the National Medical Products Administration issued a series of regulations, such as Provisions on the Supervision and Administration of Cosmetics for Children, the Measures for the Supervision and Administration of Production and Operation of Cosmetics, the Administrative Measures for the Registration and Record-filing of Cosmetics and the world's first regulations on children's cosmetics Provisions on the Supervision and Administration of Cosmetics for Children, to regulate and set forth all-round requirements for children's cosmetics. It is made clear that, in addition to the labeling requirements, other provisions on children's cosmetics will take effect as of January 1, 2022.

"Changes in demandsgive products a chance to be born, and changes in the scene give brands a chance to break through." The change of China's underlying consumption logic has also led to the change of the new consumption scene. The novice "moms" who are most post-90s love to try new brands, embrace domestic products, are more independent and love themselves, which has also led to a more professional and segmented baby care field. 

04

Debate about distributors' value. 

The top 100 business alliance embraces expansion

As the reserved program of the China Cosmetics Industrial and Commercial Summit, the debate among the beauty "bigwigs" from all walks of life brought the Summit to a climax. In the debate session of In the Great Change Period, Distributors' Value Is Remodeled, General Manager of Zhejiang Jinzhuang Cosmetics Co., Ltd. Huang Bo presided over the debate, successively asking "Is it obsolete to divide distributors by provinces?" "How should distributors be transformed?" and other issues of wide concern. 

△From left to right: General Manager of Zhejiang Jinzhuang Cosmetics Co., Ltd. Huang Bo, Chairman of Changsha Zhaoshun Department Store Trading Co., Ltd. Deng Xiahui, General Manager of Anhui Hongfang Cosmetics Co., Ltd. Liu Feng, General Manager of Wuxi Commercial Building Group Tongjin Department Store Co., Ltd. Jiang Zhijian, General Manager of Jiangxi Laohuangniu Supply Chain Co., Ltd. Huang Qiyang, Executive Director and Deputy General Manager of UNQ Holdings Limited Shen Yu, General Manager of Offline Channels of Peilai Group Huang Minjia and General Manager of Ningbo Huanmei Enterprise Management Co., Ltd. Duan Weiguo

Changsha Zhaoshun Department Store Trading Co., Ltd. Deng Xiahui firmly believes that distributors will not disappear, their role only will change with the market changes.. "The traditional distributor role of making money on time and informational differences is awkward. In an era when informational differences are fading,distributors need to figure out how to create their own value, embrace changes and lower their expectations appropriately."

General Manager of Offline Channels of Peilai Group Huang Minjia believes that China's Internet is highly developed and the price system is very transparent. How to realize distributors' resources? How to monetize fans? How to empower the stores together with the brands? - These are questions that need to think about. "The beauty industry is a lifetime long path. Brands should revolutionize themselves and change constantly." 

General Manager of Anhui Hongfang Cosmetics Co., Ltd. Liu Feng said distributors must have the ability to innovate, not just following the trend. Only by laying a solid foundation can they undertake various trends and traffic, and undertake the regional and offline businesses derived from online bestsellers. "A lot of people actually died on their way to find methods."

On the afternoon of November 30, 2021, the China Top 100 Cosmetics Business Alliance Awarding Ceremony was launched. At the ceremony, Cosmetic Newspaper founder Du Hongjun announced the list of new Presidents, Executive Vice Presidents and Secretary Generals. This means China’s Top 100 Cosmetics Business Alliance expands alliance in more than 20 provinces, and continues to strengthen the mainstay role of China cosmetics channel elites in the cosmetics physical retail space.

It is worth noting that on December 1^st – 2^nd, the first Wuhan Global Cosmetics Fair  (GCF) will also be held in Wuhan Living Room. At that time, hundreds of enterprises from China and abroad will collectively appear at GCF. Leading MCNs, internet celebrities and e-commerce platform representatives will also hold major special activities in the GCF at the same time to share highlights. 

 

In the "globalization sea of stars," we pay attention to the "Functional Skin Care and Beautiful Consumption" and infrastructure for the survival and development of enterprises; the construction and continuation of the vitality of enterprises' brands; and the health and order of market competition.

Let's do it! Chinese cosmetics practitioners! Take the ideal as the rudder and faith as the sail. Someday, with our sail piercing the clouds, we will mount the wind, break the waves and traverse the vast, rolling sea of stars!