Tao Wengang

Wuhan Pinguan Media Co.,Ltd.,China

“Prefer marketing to R&D.” When it comes to domestic brands,especially robust new prominent brands,apart from “startling” performance,the above argument is often accompanied.Now,this slightly awkward situation is hoped to be changed by new prominent brands in the “first echelon”.

According to my incomplete statistics,during the short 18 days from Aug.2-20th,2021,the parent companies of four new prominent brands - Perfect Diary,Florasis,Winona and Simpcare - successively announced to build R&D centers.In March 2021,the R&D building invested with more than one hundred million yuan by HFP was announced to be thrust into operation.“Actually,for the several decades of industrial development,there have been cases of ‘collectively building R&D centers’ like that but most have not be deposited.” said a senior industry insider.

Then,can the R&D centers(laboratories)established by leading new prominent beauty makeup brands this time become a “booster” for them to march towards authentic big domestic brands?

“Rush” to build R&D centers

The parent companies of four new prominent brands,i.e.Perfect Diary,Winona,Florasis and Simpcare seem to have “reached an agreement” on adding some “sensational news” to the industry.On Aug.19th,2021,Botanee,the parent company of Winona,announced that for highlighting Yunnan’s characteristic plant industry and keeping on intensively studying and developing functional products,the company would invest one hundred million yuan in Kunming for setting subsidiaries to conduct experimental technology researches and other relevant businesses.On the next day,Nuode Shuoyuan,the parent company of Simpcare,officially announced that it had formally reached strategic cooperation with National Engineering Research Center for Genetically Engineered Drugs,and that the united laboratory on functional skin care products jointly constructed by both parties had been inaugurated.

On the same day,Shanghai Yige Ningxiang Biotechnology R&D Co.,Ltd was incorporated.The business scope of the company includes R&D of biology-base material technology and biochemical engineering product technology.The shareholders of the new company are Hangzhou Huaningxiang Biotechnology Co.,Ltd and Cosmax(China)Cosmetics Co.,Ltd,both of which are affiliated companies of Florasis.

In addition,the new comprehensive R&D center of Yige Group,the parent company of Florasis,was formally thrust into operation on Aug.12th.Before that,Florasis also established “Oriental Beauty Makeup Research Institute”.

In this “R&D competition”,Perfect Diary was not absent.At the beginning of August,Yatsen,the parent company of Perfect Diary,announced that it had reached cooperation with National Engineering Research Center for Nanomedicine of Huazhong University of Science and Technology to co-construct a united laboratory.Yatsen’s product R&D principal once revealed that so far,Yatsen and the United Laboratory of Nanomedicine Engineering Center had jointly developed several materials,which had been applied to products of several brands subordinated to Yatsen.

Previously,Yatsen had conducted cooperation with domestic and overseas famous institutions and experts such as Chinese Academy of Sciences,the U.S.FDA pigment manufacturer Sensient Technologies Corporation,LSC3D Skin Research Center of University of Lyon Medical College in France and the French plant stem cell cultivation institution Naolys successively.

Apart from the above leading new prominent brands,according to my incomplete statistics,nearly 10 new prominent brands such as Uniskin,kimtrue,Hunting Girl and Peterson’s Lab have their own R&D centers or laboratories cooperated with a third party.

Actually,it is not occasional that these new prominent brands are intensively building R&D centers at this time.A senior industrial practitioner said,“In fact,the cosmetics industry has been attaching importance to R&D.In the 1990s,R&D bases were built in Chongqing,Wuhan and Shantou and later the industry was transferred to Guangzhou,Shanghai,Jiangsu and Zhejiang.The enterprises paid attention to technologies and R&D,so there were research institutes and R&D centers everywhere.If merely viewed from the perspective of quantity,there may not be as many enterprise R&D centers now as before.”

Why are this batch of new prominent brands paying increasing attention to R&D? In general,the reasons are as follows.

Efficacy assessment has become a “standard configuration”.Under the guidance ofRegulations on Supervision and Management of Cosmetics,a series of supporting polices have been implemented successively.On Apr.9th,2021,National Medical Products Administration continuously released three new regulations,i.e.Rule and Category about Classification of Cosmetics,Criterion on Cosmetics Efficacy Publicity Assessment and Technical Guidelines for Safety Assessment of Cosmetics(2021),which came into effect on May 1st.It means that the cosmetics industry has formally entered the efficacy era.

A principal from Botanee Group points out that in the requirements about efficacy publicity assessment items of cosmetics,the column of efficacy publicity includes “sensitivity”,which needs to be supported by document literature and research data and requires consumers’ use tests,laboratory tests and human body efficacy assessment tests.However,according to Guo Zhenyu,Winona completed these assignments as early as more than 10 years ago,and performed clinical verification as well.

“Now filing requires specialization and raises higher requirements for factories.OEM factories need brand licensing but many brands are unwilling to do so.These brands have realized that they will establish R&D centers and their own R&D teams.” said an anonymous industry insider.Ⅰf efficacy assessment was only a routine of functional skin care brands before,now it has become a “rigid demand” for all skin care brands.Therefore,in a R&D center for new prominent brands,the “clinical assessment laboratory”,“efficacy assessment laboratory” or “material assessment laboratory” is almost a standard configuration.

Build a brand moat

Product homogenization is a major malpractice in the skin care product market.For some new prominent brands lacking core technologies,“both success and failure are caused by foundries.”

A principal from Guangzhou Quanzhi points out,“Many new prominent brands begin to realize that some OEM factories are busy with production and can hardly develop featured products for them.Some so-called popular products have a short life cycle due to lack of differentiation.This mode of simple duplication is inconsistent with the tonality and location of their brands and has defects.Some new prominent brands begin to realize this problem and so have established their own R&D systems and teams successively.”

A relevant principal from Perfect Diary says that to build a moat through R&D is the only way for new prominent brands to develop themselves.At present,new brands subordinated to Yatsen are still in the initial development stage of brand investment,and require an input of a large quantity of resources for realizing the initial construction,integration &exploration and improvement of R&D capacity.

HFP’s R&D director once revealed in public that each brand should find its own technical barrier in different periods.HFP’s short-term and long-term barriers are its exclusive original active matter and unique technological designs on the one hand,and wide-range and long-term data collection and deposit on the other hand.This technological deposit cannot be separated from long-term assessment of product recipes and active ingredients.

Gather strength for a new growth

When new prominent brands leap over peaks of one hundred million yuan,1.0 billion yuan,2.0 billion yuan and 3.0 billion yuan all the way from zero,how to seek a new growth has become a urgent affair.Some enterprise R&D centers have gradually become a new “growth point” for new prominent brands.For example,Abby’s Choice second generation of ceramide masks with a sales volume as high as 120,000 pieces in Jun.18th big promotion are based on“nano carrier skin targeted delivery”,a technological achievement of Yatsen and the United Laboratory of Nanomedicine Engineering Center.A product R&D principal of Yatsen once revealed that the laboratory had developed several materials and applied them in products of several brands subordinated to Yatsen.

A relevant principal from Winona said that its R&D strategy of “one generation of R&D,one generation of storage and one generation of listing” has brought about the powerful strength and steadily-increasing performance of Winona and Botanee.

Can the label of “preferring marketing to R&D” be removed?

In China’s beauty makeup market,international brands,classical domestic brands and new prominent brands have almost formed a situation of “tripartite confrontation”.However,in the R&D area at a higher dimension,there is still a long way to go for local brands.Beauty makeup giants such as P&G and L'Oreal have invested heavily in R&D.According to public data,P&G’s global investment in product R&D every year has exceeded 2.0 billion U.S.Dollars while the total area of L’Oreal’s R&D and innovation centers in China has exceeded 20,000 square meters.

On the contrary,in China,the label of “preferring marketing to R&D” has not been removed yet.According to the financial statements of some leading beauty makeup enterprises,in the present stage,the marketing expense of many enterprises is several or even dozens of times the R&D expense.And these data are keeping on being “magnified” by public voices.Then,can leading new prominent beauty makeup brands intensively building R&D centers this time become a key for new prominent brands to remove the label of “preferring marketing to R&D”?A senior industry insider said that in the past,there were about two to three times that beauty makeup brands intensively building R&D centers.“In the era of circulation,many enterprises built R&D centers due to decline in performance.Some enterprises even built laboratories overseas and paid a wage to R&D staffs on a monthly basis.However,there were no really good achievements.” He supplemented that at the time of flourishing WeChat businesses,many brands invested hugely in building R&D centers but most of them were “shells” and some enterprises even went bankrupt before recruiting employees.

According to the R&D principal of a certain skin care product enterprise,if they do not value talents and only build gorgeous buildings and buy sophisticated instruments,just like many brands like broadcast live and put emphasis on “good looks”,then R&D centers will produce no good things.It is also a reason why many R&D centers failed to deposit during the previous period.He also mentioned that in the current stage,some new prominent brands behaved showily in their initial stage of growing up;however,when they developed to a certain scale,they had to return to the “right track”.“It’s gratifying that these brands have gradually realized it.”

Actually,enterprises including Yatsen and Botanee have increased R&D input over the years.From 2018 to 2020,the R&D expense of Yatsen increased from 2.641 million yuan to 66.50 million yuan,with an increase of 25 times over three years.Ⅰn the first quarter of 2021,the investment of Yatsen was about 27.74 million yuan with a year-on-year increase of 127.54% and the R&D investment accounted for 1.92% of the gross revenue.It is revealed that Yatsen has established a professional R&D team composed of 200 highly-educated talents,accounting for about 20% of the total number of employees in the group headquarter.In the first half of 2021,the R&D investment of Botanee increased by 85.24% on a yearon-year basis.It is known that apart from obtaining clinical verification from dermatology departments of 54 domestic and overseas leading hospitals,Botanee has obtained 46 patents and 11 core technologies.

From this round of new prominent brands intensively building R&D centers,it can be predicted that new prominent brands will invest more and more in R&D,while new local big domestic brands are probably being conceived.The increasing attention to R&D may become a watershed for new prominent brands to march towards authentic big domestic brands.“In the past,due to backwardness of domestic brands in production and brand creation,some consumers had formed a stereotyped image about domestic beauty makeup.In the future,we will continue to strengthen fundamental capacity building concerning R&D,production and brand creation,and focus on longterm values.The industry needs to give new prominent brands some time and patience.” Perfect Diary claimed,“As long as we continue to invest in R&D and adhere to innovation and independent R&D,there will be more Chinese brands going globally.”

China has become the second largest economy,where many industries are ranking the first in the world.In this era background,more and more domestic brands begin to emerge in the cosmetics area,and this world-level market will inevitably produce world-level brands.