In September of this year, Perfect Diary completed a new round of funding of $120 million, with a post-investment valuation of $4 billion. Within six months, Perfect Diary’s valuation has fully doubled. This unicorn has become one of the most influential players in Chinese beauty at the moment.
As a beauty brand that also started in Guangzhou, from Marumi, Cazilan, Wimbledon to Perfect Diary, Guangzhou has witnessed the ups and downs of Chinese beauty.
It’s not just a matter of time, but also a matter of time and space.
It’s not just a matter of time, it’s also a matter of time. The first thing you need to do is to get a good idea of what you are looking for. When she posted an inquiry in the group, an experienced person told her, “The ones shipped from Baiyun, Guangzhou are mostly fakes.
This is a label for Guangzhou beauty factories that they want to get rid of but can’t always tear clean. Guangzhou’s big-name beauty counterfeit dens to beat the news, but Guangzhou has also given birth to old beauty brands such as Cazilan, Wimbiquan, Queen of Han, as well as new flow brands such as Perfect Diary and Vanmirin. Guangzhou is home to more than half of the country’s beauty processing plants, beauty industry is also the pillar of the Baiyun District.
From Guangzhou, the old and new generations of beauty brand iteration, can clearly see the triple door of the national goods beauty: manufacturing, brand power to scientific research. Through the advantages of “Made in China”, the beauty bosses in Guangdong initially made money extremely easily, but around 2013, the power of e-commerce rose, and new channels slowly became king; then, social media to help consumers become increasingly sophisticated, the flow of traffic is very popular, capital involvement, the market play more dangerous and changing.
Channels are changing, it is also true that it affects the national beauty industry and the tens of thousands of small and large beauty owners behind the rise and fall of wealth. But regardless of the channel, wealth, traffic how the east rose and the west fell, in the current stage of view, the king of the country’s beauty is still not back.
Ten years ago, the Guangdong beauty business: picking up money everywhere
Even more than a decade ago, cosmetic production in China was no longer a high-barrier industry. Incubated by a strong supply chain in the Pearl River Delta, Guangdong gradually gathered raw material supply plants and packaged goods factories, with more than 5,000 cosmetic processing plants in Guangzhou’s Baiyun District. It is no exaggeration to say that “70% of the country’s cosmetics are produced in Guangzhou”.
Marumi, Cazilan, Wenbiquan, Queen of Han, etc. are all beauty brands that emerged in Guangdong in the early 21st century, and behind them, there are thousands of unknown beauty brands in Guangdong.
At a time when upstream and downstream channels were still opaque, the demand for supply of very common beauty products was strong. Many processing factory owners are still lamenting to Jiawen about the rush of beauty products at the factory entrance.
Jia Wen is the founder of a local beauty brand, and has been in the beauty industry for more than a decade.
“The money is so good.” She lamented. Under the mature procurement of raw materials, processing, applied molding formula, production costs can be controlled to a very low level, while in the product packaging design, only need to go to Hong Kong to take a stroll, the bosses a snapshot, back to “reproduction” playing version, two months can be produced.
There are few factors that can cause them to lose money, except for branding costs.
But in the books of these Cantonese businessmen, branding and packaging design is an unnecessary expense. “They may feel that even though they can generate incremental volume after branding, the premiums are taken away by the advertisers and no more money is made.”
Garvin recalls that very few brands at that time would want to pay for a professional design firm to do the packaging design, and all felt it was expensive and not worth it. And the trial and error cost of originality was high. As for branding, optimizing channel management, and communicating ideas to consumers, something that would only pay off in the long run, “it was even less necessary.”
For the keen Guangdong businessmen, aiming at the hot products, similar to what is now found to be “explosive” products, this ability is very strong, coupled with the flexible production capacity of the rear, to make a batch of products and quickly sold, has become a conventional mode of wealth accumulation.
At that time, they mainly rely on two channels: one is the beauty mall, many stall bosses will come into stock; the other is the beauty fair, in good time, to go to a fair, a year of business.
“They are all too smart business people. It’s easy to make money, several houses, several cars, a comfortable and rich life, where is their motivation to think about innovation and branding anymore?” To some extent, Garvin argues, Cantonese people’s innate business acumen has hindered their progress.
There are of course exceptions to this rule, as Qatilan was founded in Guangzhou in 2001 to rival foreign brand Maybelline, but with a better price/performance ratio. Qazilan broke through the franchise stores in third- and fourth-tier cities, offering agents a threshold as low as 100,000 yuan. In the fourth year of its establishment, it chose to use the profits of the first three years to invite Cecilia Cheung to be the spokesperson, strong brand warfare. At the same time, it increased the screen advertising and exposure during the continuous expansion, and by 2008, there were 8,000 Qazilan outlets.
The fierce branding made Cazilan go from a nobody to the public. In the end, many small and medium-sized brands were trapped in a situation where they had to boil a frog in warm water. Ten years down the road, the prosperous beauty industry in Guangzhou has left behind only a few handfuls of brands, such as Marumi, Qazilan, Queen of Han and Wenbiquan.
For an industry, when the threshold is extremely low, production costs can be infinitely compressed, there will eventually be bad money to expel good money. In the heyday of the beauty industry in Guangdong has long been the chaos of moths and internal strife.
In cosmetics low threshold of production of raw materials and processes, copying the brand counterfeiting is not difficult. And by exceeding or adding illegal amounts, consumers felt immediate results. But as many agents know, if the cosmetics are shipped from Baiyun, Guangzhou, it’s time to be careful. As a result, fish and dragons and rivers are slowly becoming the norm for beauty in Guangdong.
Illegal production of natural life soon, but only by imitation to make a quick buck the days of the past. The rise of the Internet, the degree of consumer education on the beauty of beauty, more and more recognizable; the rise of the power of e-commerce, but also for the beauty industry has brought revolutionary changes in the channel.
The Great Shuffle
The lowering of monthly rents for stalls in several of Guangzhou’s major beauty cities is a clear sign of this. It is reminiscent of the Huaqiangbei market where millionaires once walked out of their stalls and the last ones that were eager to dump them.
Beauty owners who never thought of branding or expansion were quickly pushed out.
Brick-and-mortar stores are seeing a decline in business, OEM orders from factories are dwindling, and they can no longer make as much quick money as they used to. But this is only the first change. Even those well-known brands that have “established a foothold”, may not be able to keep up with this new battle.
The impact of the channel change is fierce.
Around 95 years, department stores in shopping malls is the main channel of national cosmetics; to 2000 years ago, the rise of independent cosmetic street-side general stores, these people achieved today’s top 100 brick-and-mortar beauty stores scale; to the rise of e-commerce in 2013, is a new rewrite. These three watersheds, creating the pattern of today’s national beauty.
Jia Wen felt that five years ago, the Guangdong beauty inside began to show a sense of decline. Even those who have made a name for themselves, such as Queen of Han and Wen Biquan, are beginning to look weak. Color Zone, which once rose to prominence in Guangzhou, caught fire around 2008, but misjudged its marketing and weakened a few years later, eventually withdrawing from the market altogether.
And by 2018-2019, the rise of social media, the many MCN agencies and Darth Vader for beauty seeds and reviews has become a lesson that beauty brands need to learn all over again.
Big hit brands like Perfect Diary and Hanaiko are hogging the vision from every stream of information. The perfect diary started off with full online channels, from the little red book, microblogging, to the overwhelming volume of B station, from hand-holding traffic star endorsement, as well as Li Jiaqi’s live-stream recommendation, online marketing trend overshadowed most of the traditional Chinese beauty.
Perfect Diary’s search results on Xiaohongshu
“And it’s a much different game now, with capital coming in and a new way to play,” Garvin exclaimed. Just at the end of September, the Perfect Diary announced the completion of the latest round of financing of 140 million U.S. dollars, investors including Warburg Pincus, Carlyle Investments, Zhengxin Valley Innovation Capital, and plans to go to the U.S. IPO by the end of the year.
For the country’s beauty, brand building is a hurdle, and now also into the flow of the two words, which is a new set of rules.
From the product to the brand, to the flow of today’s play, practicing beauty over a decade Jia Wen still do not believe in the mouth, “you do a brand, not after more than a decade, where the bottom line out to say what it? Even with today’s traffic play, there’s still a question mark about how long the live band will last.”
Could this be another way to make a quick buck? Will it have gone the same way as the first generation of beauty bosses? No one knows. Domestic beauty brand, even if the recent fever of the perfect diary, Van Millin, are also through OEM OEM development up, the initial stage and no own factory. In a report in the Beijing News, the price of thousands of Van Mirin “precious lady cream” was found to be only a few hundred dollars wholesale price, while several manufacturers said, “more than a dozen dollars can OEM.”
The brand has changed, the flow has changed, but the product power of Chinese cosmetics has really changed?
Without the underlying technology, it is the weakness of the national beauty forever.
This is something that Jia Wen has been very confused for a long time.
3C digital products such as mobile phones, technical breakthroughs, from the material to touch to functional experience are visible, perceivable, premium is the bottom; but the beauty, rub to the face of the cream, should not also have a technical core?
Garvin visited the industry leader Shiseido and was shocked at the strength of its research backstage. Shiseido’s team structure has thousands of formula beaters, which is not bad for a top domestic cosmetics factory with dozens of them.
She approached the formula research and development office that works with Shiseido to inquire about cooperation, but they said that Shiseido sunscreen ingredients are developed by themselves and no OEM can copy them. “It’s for underlying innovation, and you can see how good it is when you look at people’s formulas.”
From 1976 to 2019, Shiseido has won 27 awards at the IFSCC (International Federation of Cosmetic Technicians Clubs)
This is another question of long-termism. Compared to whether you want branding or not, insisting on investing in research is an even longer, seemingly unrewarding road. But it’s also a choice that national beauty products have cast with their feet.
“What choice many national brands have made, this is not a matter of personal short-sightedness, it is the joint cause of the industry and the environment.”
When the industry was not mature, industry regulation and consumer maturity played an important role in urging the industry. Garvin mentioned that the Food and Drug Administration will now keep an increasingly close eye on the promotion of beauty products, and whether the efficacy of each advertising phrase is based on technology and what the logic is, all of which need to be put into practice.
From beautiful beauty blogger recommendations, reviews, Taobao live to friends of the micro-business, beauty product appreciation in all pervasive. In the era of prevalent consumerism, the premium price of beauty products can be infinitely raised, swinging between daily necessities and consumer goods. “Lipstick effect” does not seem to be highlighted this year, after all, the mask so that consumers stay in the cool period for a while.
The same is probably true for national beauty, where reality has most people on the side of the immediate good, but there are always winners, willing to be a long-term actor. At that point, it won’t be too late to crown it the light of national beauty.
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