China's Largest Talent Agency Enters Beauty

Wang Yibo’s entertainment and talent agency company Yue Hua Entertainment dives into the beauty industry. But the beauty brands that the company is involved in are the reverse mediocre. Whether the company can create a rich beauty performance through the huge traffic of idols still needs to be considered.

---

There is a precedent in South Korea that entertainment company steps into the beauty brands. YG Entertainment, one of the three major entertainment companies in South Korea, launched a makeup brand Moonshot in 2014. With the help of YG's celebrity, it hit the market with the same style as G-DRAGON and Lisa.

CHAILEEDO also noted that there are media reports that Yue Hua Entertainment has entered the beauty market. So, can Yue Hua Entertainment, which claims to be "the largest artist management company in China", play the beauty game well?

The boss to sell facial skincare masks in person?

Public information shows that Yue Hua Entertainment is a famous artist management company in China. Founded in 2009, its main business includes three major sectors including artist management, music IP production and operation, and pan-entertainment business. It has 66 contracted artists including Han Geng, Wang Yibo, Xuan Yi and others.

It is easy to see that Yue Hua Entertainment's celebrities are mainly young. Based on that, the founder and chairman of Yue Hua Entertainment, Du Hua, also has a good reputation among her followers. She participated in the first and second seasons of the popular Chinese variety show "Sisters Who Make Waves".

Recently, it has been publicly reported that Yuehua Entertainment is currently stepping up its efforts to "recruit" for its e-commerce business, mainly focusing on the beauty sector, while promoting its own beauty and skincare brand Dr. JE to the market.

It is understood that as early as May this year, Dr. JE brand accounts on Weibo, Xiaohongshu and TikTok were launched one after another. The brand advertises itself as a brand specializing in biotech skincare with biotech ingredients, biotechnology and biotechnology processes. It tends to help scientific anti-aging repair and create professional and effective skincare solutions.

On July 6, both the official flagship store of Dr. JE Beauty and Du Hua's TikTok account released a promotional video of the mask shot by Duhua leading the company’s stars such as Jin Zihan, Li Quanzhe, Huang Xinchun and Chen Xinwei. Currently, the video has 41,000 likes on Duhua's TikTok account. Some netizens put the video on Weibo and the play count reached 7.92 million times.

CHAILEEDO also found that Dr. JE has only launched a Blue Copper Peptide Mask, which focuses on moisturizing, repairing and firming efficacy. It is priced at 59 yuan(about $8.5) for a single piece and 229 yuan(about $32.8) for a single box (5 pieces).

In terms of brand marketing, Dr. JE's celebrity partners are all celebrities from Yue Hua Entertainment. On June 6, Dr. JE announced that Jin Zihan is a close friend of the brand. At the same time, the celebrities under Yue Hua Entertainment have released the promotional content of Dr. JE Blue Copper Peptide Mask. Moreover, the Dr. JE had earlier launched a campaign to buy masks for a chance to win tickets to a Li Wenhan concert.

External investment in several beauty brands

It is worth mentioning that in recent years, Yue Hua Entertainment has been deeply preparing the beauty sector by way of investment.

Public information shows that in March 2020, Yue Hua Entertainment took a stake in the personal care brand "STARSUGAR" with Du Hua as the company's supervisor. In February and June 2022, Yue Hua Entertainment also took a stake in the fragrance brand "SEVENCHIC", which is managed by Chinese actress Qi Wei, and the daily chemical brand colorlomo, through its subsidiary.

Shortly after Yue Hua Entertainment invested in STARSUGAR, STARSUGAR officially announced Yue Hua Entertainment’s stars Zhu Zhengting as the brand's spokesperson in October 2020. It is understood that STARSUGAR focuses on products such as shower gel, scrub and body lotion. However, CHAILEEDO noticed that STARSUGAR official accounts on Weibo Xiaohongshu and TikTok were stopped in April 2021. The products of STARSUGAR cannot be found on Taobao, JD, Xiaohongshu and TikTok. All indicate that the brand is suspected to have shut down.

Publicly available information shows that the Colorlomo invested by Yue Hua Entertainment is also performing mediocre. It is noticed that colorlomo’s positioning is salon professional bleaching and dyeing after-care. It launched a number of main perm dyeing repair hair wash and care products, pricing in the range of 89 yuan - 318 yuan(about $12.7-$45.6). Currently, the best-selling products in its flagship store on the Chinese leading e-commerce platform only sold 100 + pieces.

So far, SEVENCHIC's market performance is better. It entered the beauty industry from the fragrance sector, which is popular in the last two years. Coupled with Qi Wei's own influence, customers have a good impression of the brand. It is reported that SEVENCHIC has extended its product lines from fragrance pens to scented candles, hand care, body wash, beauty tools, etc., with prices ranging from 49 yuan(about $7) to 699 yuan(about $100.2).

Moreover, Qi Wei has been highly bound to the brand in the identification of "brand founder/chief product officer". Currently, SEVENCHIC has 217,000 followers on its Tmall flagship store and 283,000 followers on TikTok. The highest selling product on both channels is a fragrance pen recommended by Qi Wei with total sales of over 100,000 pieces.

Looking for new opportunities

And on the road to the capital, Yue Hua Entertainment has held off on going public. Yue Hua Entertainment, which was scheduled to officially land on the Hong Kong Stock Exchange on September 7, 2022, suddenly made an announcement on September 2, deciding to delay the global offering and suspend the IPO. The company did not explain the specific reasons for the delay, but only mentioned that it was "in view of the prevailing market conditions".

According to the previously published prospectus, the main source of revenue for Yue Hua Entertainment is the celebrity management business, which brought Yue Hua 530 million yuan(about $76 million), 808 million yuan(about $115.8 million) and 1.175 billion yuan(about $168.4 million) in revenue from 2019 to 2021, accounting for 84%, 87.7% and 91% of total revenue respectively. It shows an upward trend year by year.

Although Yue Hua Entertainment has a large star group with 66 contracted artists and 71 trainees. However, most of the revenue from the artist management business comes from the head artists, especially the popular stars Wang Yibo.

Yue Hua Entertainment also stated in the prospectus that the company relies most on the business supplier. Outsiders speculate, based on a number of public information, that the business supplier is Yue Hua Entertainment's current head star, Wang Yibo. According to the prospectus, from 2019 to 2021, Wang Yibo brought 106 million(about $15.2 million), 338 million(about $48.4 million) and 639 million(about $91.6 million), or a total of 1.083 billion(about $155.2 million), for Yue Hua Entertainment.

It is not difficult to see that while Wang Yibo brings high performance to Yue Hua Entertainment, over-reliance on Wang Yibo has also become a hidden worry for Yue Hua Entertainment. Some investors in the field of cultural investment said, if Yue Hua Entertainment wants to remain good performance, it is far from enough relying on top stars and celebrities' management business .

Du Hua has also publicly said that in the future, as a listed company, the development of Yue Hua Entertainment to be more diversified, "we have a lot of stars resources and channel resources, I hope that when they have the ability to help some entrepreneurs." Combined with Yue Hua Entertainment's moves in the beauty field, it seems that it is trying to seek further development opportunities in the beauty industry by integrating its stars' resources.

In contrast, the agency has the advantage of "group" in beauty marketing and comes with its own "traffic" from its stars. After all, not all brands can do what Dr. JE mask can do. That is, it can easily generate widespread attention in the star’s followers' group. But for Yue Hua Entertainment, how to turn its followers into consumers of beauty brands, and effectively operate the most valuable IP amplification, is the key to its breakthrough in the beauty market.