Beiersdorf: Technological Skincare and Precise Skincare become New Normal

Chinese digital technology innovation may be the new opportunity that is attracting many companies to invest and develop in China.

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A year's plan starts with spring, and industry changes do not wait. In 2023, what new trends will emerge in the industry? Where are the new growth points in the market? Based on the upcoming 6th China Cosmetics Trend Conference on February 13, the column "Trend Talks" interviewed 50+ founders of famous companies and industry professionals from home and abroad to help open the door to the cosmetics industry with fresh perspectives. CHAILEEDO invited Xue Wei, Managing Director of Beiersdorf Group Northeast Asia, to share with us the cosmetic trends in China.

CHAILEEDO: What changes in the industry have impressed you in the past year?

Xue Wei: The biggest change and common challenge for many industries in 2022 is the impact of the ongoing global epidemic overlaid with geopolitical conflicts. The closed management under the impact of the epidemic has had a major impact on the production of companies, and challenges have been encountered in all supply chain segments of shipping, delivering and incoming materials. The geopolitical conflicts have intensified the global supply chain conflicts, and the global energy supply crisis and the continuous rise of international commodity prices have had an impact on the global industry chain.

The good thing is that China has one of the world's most complete supply chains, as well as the world's leading E-commerce market and digital infrastructure. It also provides a better platform for further consumer upgrades in China. And the transportation network in Shanghai is extremely developed, while the industry is highly concentrated. As the situation of the epidemic is getting better constantly, we have made timely adjustments to address these issues well.

Under the influence of macro factors such as the epidemic and rising prices, people have tightened their "money bags" and gradually diversified and upgraded their consumption demands. The role of "brand power" in driving consumption is also becoming more and more obvious, as consumers trust more reliable, high-quality brands and products, especially Chinese consumers' brand awareness and identity which is stronger and stronger.

Looking at the segmented beauty industry, consumers' demands for maintaining healthy skin and solving skin problems has shifted from simply pursuing ingredients to researching efficacy, and the epidemic has accelerated this trend. The industry will move into an era of efficacious cosmetic management, responding to consumer demands on all fronts, from product development to manufacturing operations and retailing, while transforming to a healthier business structure by segmenting the market and becoming younger constantly. With the new cosmetic regulations launching, it will undoubtedly be more beneficial for us. And for the companies like us that have long adhered to product research and efficacy, to bring our advantages into play while driving the cosmetics industry to flourish.

With China's "Carbon Peaking and Carbon Neutrality" strategy in full swing, people's awareness of health and environmental protection is increasing. Organic, natural and healthy ingredients are being sought after and becoming the choice of more and more consumers, and the beauty industry is entering the "Sustainable" era.

CHAILEEDO: What strategic development plans can Beiersdorf share for 2023? What kind of exploration and innovation will be carried out in the beauty field?

Xue Wei: "Digitalization and Innovation" are the two cores of Beiersdorf's strategy in China, which are manifested in two aspects: internal and external.

Internally, we use big data to achieve faster decision-making. Currently, Beiersdorf has established three centers in Shanghai, namely the Innovation Center, Marketing Center and Manufacturing Center, which is a flexible supply chain that accelerates the production efficiency and decision making throughout the chain, making B TO C, M TO C and C TO M possible. Through the construction of digital infrastructure such as CRM, data-based management platform and content management platform, we help enterprise employees to improve the efficiency of work and decision making, thus enhancing the effectiveness in reaching consumers and communicating with them accurately. In addition, we insist on continuously bringing in innovative and high-quality talents, and have the idea of "closed-loop management, digital empowerment, and agile iteration", so as to better implement the concept of "providing better products and services to consumers".

Outside the company, Beiersdorf has used digitalization to create many brand success stories. Through digitalization, Beiersdorf has helped its Nivea brand enhance its personality and transform into a younger brand, and has built a complete brand matrix for Nivea to better serve consumers with skin care needs.

In terms of innovation investment, to adapt to the complex and changing Chinese market, we have landed the world's second largest innovation research center in Shanghai after our headquarters in Hamburg to customize new products for Chinese consumers. Relying on advanced research technology from Germany, local digital innovation and an eco-system co-created with consumers, Beiersdorf is continuously developing the market in the facial care sector, represented by the Nivea brand's LUMINOUS630 light spot whitening series, and hopes to introduce more high-quality skin care products that meet consumer needs.

At the same time, Beiersdorf is focusing on and deepening its commitment to sustainable product development, constantly increasing its investment in green innovation in product formulation and packaging to balance environmental protection, social responsibility and economic success. In addition to using sustainable certified palm oil and its derivatives as raw materials in R&D and production, all product packaging is developed and integrated in a green and sustainable way with the 4 "R" perspective of 100% refillable, reusable or recyclable, and using recycled materials, optimizing the design to achieve lightweight and low-carbon packaging.

CHAILEEDO: Several international beauty groups have changed their strategy from "invest in China" to "to invest in China". What do you think of this change? What investment opportunities do you see in the Chinese market?

Xue Wei: China's fast-growing domestic consumer market is an important growth opportunity for us in the context of economic recovery. Chinese consumers' rapidly growing demand for high-quality, personalized products naturally brings us huge room for development for foreign companies. Looking into the future, consumers' demands for products will change significantly, and they will continue to increase the demand for product efficacy, which will make technological skincare and precision skincare become the norm in the future.

At the same time, we have identified the digital technology innovation in China as an invaluable opportunity, which is an important factor in attracting many companies to invest and develop in China. Nowadays, the "Technology + Skincare" model has become an important future direction for the industry. Therefore, in terms of digital construction, Beiersdorf has been improving the digital infrastructure and proactively building its digital talent pool with digital platforms and tools. Strengthening cooperation with Chinese companies in innovation, especially in the digital economy, is undoubtedly of great importance to the company.

China sets clear targets for "Carbon Peaking" by 2030 and "Carbon Neutrality" by 2060. As one of the world's leading countries in green development, Germany has mature development concepts and technological advantages in this area. The two sides can further develop new growth points for cooperation.

CHAILEEDO: Compared with other foreign companies, what is the most important feature of Beiersdorf's localization? In the face of the current uncertain environment, what are the latest adjustments and achievements?

Xue Wei: The characteristics of Beiersdorf's "Localization" in China are to start from consumers' needs, accelerate digital transformation and innovation, implement sustainable development, rely on the Group's 100-year strong product development technology, and make use of C2B innovation capabilities to tailor more products to meet Chinese consumers' needs.

For one, Beiersdorf continues to strengthen its localization in China. We start from consumers' needs and combine digital platforms and e-commerce platforms to create and manage the entire chain for consumers, including their purchasing behavior and loyalty to the brand, so as to further enhance the brand's reputation.

Secondly, Beiersdorf's localization in China is committed to creating a digital innovation ecology. Beiersdorf has launched an in-depth cooperation with Tmall New Product Innovation Center (TMIC) to accelerate the conversion of C2B model and co-create digital new product development, such as the Nivea Men's Natural Power Series and Nivea Double Tube Body Essence Series, etc. as a result. In addition, we will continue to maintain and enhance the construction of the digital ecosystem on social media platforms such as WeChat, Weibo, Xiaohongshu and Douyin to achieve ecological co-creation of content.

Thirdly, we are committed to green and sustainable innovation and respond to the national "Carbon Peaking and Carbon Neutrality" goal. In China, Beiersdorf has carried out a series of sustainable development plans. We put "green and low-carbon" into the whole chain of business activities, including R&D, production, supply chain, sales and consumer interaction, in order to demonstrate a leading global beauty group's support and action for China's "Carbon Peaking and Carbon Neutrality" construction. We will further increase R&D investment in green innovation for product formulations and packaging, and customize more environmentally friendly products. Beiersdorf will also introduce more products related to "climate neutrality" and resource conservation, thus creating interactive channels with Chinese consumers to save energy and reduce carbon.

As a global beauty group, Beiersdorf will continue to innovate in the midst of dynamic change, building new moats and even reaping new benefits from change.

CHAILEEDO: How does Beiersdorf see and respond to the challenges of China's up-and-comers?

Xue Wei: Beiersdorf respects every rising star and we look forward to working with them to take the industry to a new level. Not only do they have youthfulness and innovation as their entry point, they have also experienced the complexities of the Chinese market and bring new practices and insights to the industry.

Whether it is an up-and-coming brand or an established group, there is room for us to break through in our own track, so we will continue to focus on building our brand matrix. Beiersdorf is a group and brand with "long-termism". We focus on the long-term development of skin ecology and strive for it. There is no better example of this philosophy than the transformation of our Nivea brand, which is "to sink its heart and soul into the brand and look to the longer term". As a century-old German skin care brand, Nivea has never lacked the qualities of stability, longevity and rationality, marked by the color blue. But when we face the Chinese market, where "young people win sales", we need to create a more dynamic, soft and tense brand personality for Nivea. We have spent the last year and a half advancing our women's skincare portfolio, continuing to invest in innovation, and advancing our online channels and marketing to achieve a more healthy brand structure.

The Chinese skincare market has tremendous potential for growth and we are ready to take on all kinds of challenges in the skincare space and hope to grow together with the industry. Secondly, with the further standardization of the development of the Chinese cosmetic industry, the competition in the industry tends to be healthier and more benign. In addition, Chinese consumers are not only experts in skincare, but also a group of global leaders and innovators, and we hope to grow together with them in the future.