Beyond Perfect Diary: 8 new Chinese beauty brands to watch
For years, foreign brands consistently ranked among the top revenue-making companies in China’s beauty industry. In 2019, the top spot was finally taken for the first time by a local Chinese brand — Perfect Diary, which was started in 2016. China is now seeing more new beauty brands emerge, each vying to be the next number one. We look at what’s driving this upsurge and shine the spotlight on eight Chinese brands.
One factor behind this rise in new beauty brands in China is the outpouring of nationalistic support for domestic brands. In particular, young Chinese born after 1995 are far less likely to snub home-grown brands than their parents. The spread of social media is another reason, allowing products to be marketed quickly and without cost, as well as through channels that the younger generations have a greater affinity with.
The beauty industry’s bullish conditions have also helped. Although China’s overall economic growth has slipped due to the US-China trade war, the industry has so far escaped unscathed, climbing 12.3%, or 410.5 billion yuan (US$58.4 billion), in 2018 from the previous year. Beauty startups also raise funding more easily, thanks to enthusiastic investors.
Consequently, there has been a deluge of new beauty brands, but many lack recognition and financial muscle. To stand a chance against their big-name rivals, these newcomers need to emphasize their unique traits, such as research and development (R&D), distinctive concepts and celebrity-backed ventures.
1: Backed by R&D
To make a name for itself, a new beauty brand must first gain the trust of consumers. One way to win them over is to take a more serious attitude towards R&D.
Launched in 2014, this skincare brand promises to “awaken skin through ingredients” such as hyaluronic acid and nicotinamide (a form of vitamin B3). It employs experts who have had over 10 years’ experience at P&G and partners with research laboratories in Japan.
The brand has over 120,000 followers on Weibo and over 116,000 on China’s social media e-commerce platform Xiaohongshu, also known as RED or Little Red Book. HFP products are mostly sold on Alibaba Group’s Tmall retail platform. For four years in a row, HFP has participated in the Singles Day shopping event on 11 November. During last year’s event, the brand sold over 1.69 million units of the HFP undiluted solution line — about one unit sold every 0.05 seconds — while its overall sales exceeded the previous year’s record of 300 million yuan (US$43.3 million).
■ WIS
Created in 2011, this skincare brand is a result of an R&D collaboration with renowned Swiss cosmetics ingredient manufacturer Rahn.
WIS often hires celebrities to endorse its products and is active on Weibo with about three million followers. It sells its goods on Tmall, JD.com, and RED; its followers on the latter platform exceed 143,000. During last year’s Singles’ Day shopping event, sales topped 100 million yuan (US$14.4 million) within the first four hours and six minutes. From August, it began selling its wares in all Watsons stores in the Greater China region.
2. Focused on concepts
Originality is vital when it comes to ensuring a strong brand presence in China’s crowded beauty market. As it turns out, there’s no shortage of brands with elaborate concepts.
■ Girlcult
Set up in 2018, this makeup brand has steadily picked up fans overseas, including in Japan, with its enigmatic case designs and characteristic glossiness and color schemes. With 64% of its users born after 1990, its strategy targets young consumers who are “not yielding to the masses and also not concerned about price segmentation”.
Girlcult sells its makeup on Tmall, RED, JD.com and its own website, although over 90% of its revenue is made through Tmall. The brand has over 28,000 RED followers and over 15,000 Weibo followers. In 2018, it locked down funds in an angel round and recently raised several tens of millions of yuan in a Series A round.
■ Hedone
After studying in London, Rachel Qu worked at a local subsidiary of L’Oréal. In 2018, she founded her own makeup brand, Hedone, where she is now CEO. Hedone has up to 35,000 followers offering products springing from creative sources and bearing names such as “1986 Journey to the West Eye Shadow Palette” and “Seven Deadly Sins”.
Often partnering with popular influencers, the brand is active on social media with up to 35,000 followers on Weibo and over 110,000 followers on RED. It also sells its wares on Tmall and JD.com. In 2018, it raised funding in a Series B round.
■ Farbérly
This skincare-focused brand was launched in 2017 by CEO Xiumei Wang. Chinese brands generally tend to set lower prices than their overseas counterparts. To avoid getting entangled in price wars, Farbérly has dared to set higher-than-usual prices — adopting a concept of “small luxuries”. It buys ingredients from French supplier Sederma, a subsidiary of British company Croda, and manufactures a portion of its products overseas. Within just the first year since its launch, sales topped 100 million yuan (US$14.4 million).
Farbérly sells its products across China, not only on Tmall, JD.com, and RED but also through representative stores in brick-and-mortar shopping malls. It has over 85,000 followers on Weibo.
3: Created by influencers
The spread of social media in China has given rise to an army of influencers, many of whom have launched their own beauty brands.
■ Junping
Launched in 2013 by Junping Fang, one of China’s most famous male beauty bloggers, this skincare brand uses only natural ingredients. Known as Junping Damowang (or Junping Demon), Fang has over 8.8 million followers on Weibo, more than 7.7 million on the micro-video sharing app Miaopai and over 2.68 million on RED. His brand uses technology from Nikko Chemicals Laboratory in Japan and a German company.
In 2017, the brand raised 20 million yuan (US$2.8 million) in a pre-Series A funding round. Its products are sold on Tmall and JD.com. During last year’s Singles’ Day, it sold over 200,000 face masks and over 120,000 cleansing oils, a 50% increase from the previous year, while the repeat purchase rate reached about 60%. The brand also focuses on offline events, such as skincare courses the day before a sale event.
■ CROXX
This makeup brand was launched in 2017 by male beauty influencer Benny Dong Zichu, who posts makeup videos under the name Qian Hu Changsheng on anime and entertainment platform Bilibili. He has almost 1.55 million followers on Bilibili and over 4.37 million on Weibo. CROXX products are sold only on Tmall, yet business has been brisk; sales reached up to 100 million yuan (US$14.4 million) in 2018. Dong wants to further develop the brand’s sales channels and even head into brick-and-mortar retail, with a sales target of up to 300 to 400 million yuan.
■ Big Eve
With over 11.67 million followers on Weibo, fashion and beauty influencer Dayi Zhang is known as China’s Kylie Jenner. Her Tmall apparel shop, ifashion, became so popular that it caught the eye of notable influencer management firm Ruhnn, which set up a joint venture with her in 2016. Big Eve was born in 2018 from that endeavor.
In March 2019, Zhang handed over the 49% of the stock she owned in Big Eve to Ruhnn in return for 15% of its stock. A month later, Ruhnn listed on the NASDAQ, and Zhang subsequently became a major stockholder, owning 13.2% of the company.
Big Eve sells its goods exclusively on Tmall, possibly due in part to the Alibaba Group investing 300 million yuan (US$43.3 million) in Ruhnn in 2016. Reportedly, within only 40 seconds of opening its Tmall store, Big Eve sales reached over 1 million yuan (US$144,300).
Text: Denyse Yeo
Original text (Japanese): Team Roboteer
