Dr.Plant: Focusing on Segmented Market is Good Way to Stay Afloat

Since the pandemic, consumers will be more prudent in choosing cosmetics, with more purity and safety on their minds.

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A year's plan starts with spring, and the industry changes at a fast clip. What new trends will emerge in 2023? Where do the new growth points lie in the market? Based on the upcoming 6th Chinese Cosmetics Trend Conference on February 13, CHAILEEDO interviews the founders and industry personages of 50+ well-known companies at home and abroad to get the cosmetics industry off to a flying start with a fresh view.  CHAILEEDO invited Xie Yong, founder of Dr.Plant and chairman of Beijing Dr.Plant Biotechnology Co., Ltd., to share with us the cosmetic trends in China.

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

Xie Yong: One word to sum it up, focus. The past year was the third year of the pandemic, so the industrial peers all thought that it would take a turn for the better at the beginning of 2022, but our expectation failed. Since the second half of 2022, we can feel that most means proven effective to weather the pandemic are rendered useless.

Industry-wise, I get most feeling concerning the brick-and-mortar stores, as many previous business competitors are quitting the brick-and-mortar model including some peers. Offline operation changes remarkably, which is especially shown in business competitors and their products. I can feel an about-turn in their business model. This can also be felt for online business, which is undergoing rapid development, with a lot of segmented brands emerging. But on the whole, the odds for a large-scale operation is low, the industry is still committed to cosmetics industry in the long haul. Some companies with great innovative or R&D capability can secure leading resources while the rest become more online-oriented though.

Dr.Plant was basically advance on schedule, but it was only after the summer of 2022 that we felt that demand and spending power were on the wane due to the effect of the pandemic, which affects us greatly. Good thing was that in September, October, and the Chinese Double 11 Shopping Festival, we bounced back and bottomed out the performance, maintaining or even exceeding a little that of last year. But at the end of the year, and I felt it coming down again, and everyone shall share the same feeling. Because the nationwide fight against COVID was all-consuming.

With negativity brought by the pandemic, consumers will be more prudent in choosing cosmetics, with more purity and safety on their minds. Skin care products containing plant ingredients mean safety to some extent. Dr.Plant has made some progress in this area, and we have achieved some results in cooperation with the State Key Laboratory of Kunming Plant Research Institute of Chinese Academy of Sciences. And we are very pleased with that.

In fact, we have a lot of R&D power in our country. If the cosmetic industry can use some of the country's emphasis on R&D power, then I think it is our industry's luck and our customers 'luck.

CHAILEEDO:  For 2023, do you have any plans for Dr.Plant's development to share? What's your future exploration and innovation be like in the beauty industry?

Xie Yong: We can't disclose anything specific for now, but one thing is clear that other than the existing Dendrobium extract ingredient, we are continuously pushing in R&D and ingredient, hoping to produce ingredients to represent China. After the reform and opening-up, China has been a major producer in cosmetics for years, but think about it, which product really contains authentic China-made ingredients? Few and far between, including so-and-so acid or so-and-so ingredient, are basically foreign names, which means that the inventors of them are basically foreign companies, Chinese ones play no part in it. That's why we should move fast in making our own stuff.

In fact, our civilization and plants have coexisted for millennia. But the discovery chemical composition actually has two or three hundred years of history. It brings uncertainty to the human body and society, and we are not knowing everything about it. But plant ingredients are really safe, because we have been dependent on them for survival, so this is why Dr.Plant is dedicated to studying and developing plant ingredients.

In China, there are a lot of very good plant ingredients left undeveloped, and this hinges on our researchers' efforts. Dr.Plant's R&D certainly does not mean a annual plan for 2023. Once our future direction is set, the result will take three to five years to deliver, because we never rush for anything. So what Dr.Plant will bring out in 2023 is what's been planned three or five years ago.

R&D is no easy task. First, the cycle is long-drawn-out. Second, it costs a great deal. Third, risks are inevitable, which baffles us for long. Fortunately, we have a group of PhDs from Chinese Academy of Sciences and our own R&D personnel working together. I advocate long-termism and gumption.

Enterprise strategy is simple and long-term. Dr.Plant will not change our course, because we only have one ultimate goal, to develop into an R&D-oriented innovative company, that is, unceasingly through product raw material and raw material technology research and development, and it technology research and development, unceasingly find customer demand, give them the right product.

The direct impression for most of Dr.Plant is that we are store holders, because we open a lot of stores, like 3000 to 4000 in figure. Fact is, this is not the whole picture, Dr.Plant is devoted to research and development, if it is not enough it technology, it is impossible to manage so many stores, not enough product innovation, cannot have customers to go to our store, cannot meet the demand of so many consumers.

CHAILEEDO: Where do you see the Chinese beauty market's trend going in the year ahead? 

Xie Yong: Changes in the year ahead should certainly be an incremental part of long-term changes. As for the long-term direction, European, American, Japanese and South Korean markets are a good reference, that is, the market is under constant concentration, with also that kind of long-tailed polarized market existing as well. So the result is that, first, a few companies will gather more and more resources. Second, if want to survive, either give away the market or to compete, or occupy some more differentiated market.

China is a market with a vast area, very complex hierarchy, and the consumption habits and customs bears big-time differences from other countries, which also creates many opportunities for some brand's long-tailed market. If a brand wants to survive, it is a good way to focus on segmented market, and this is a way to avoid being concentrated.

CHAILEEDO: What are the chances of breaking the deadlock for the brick-and-mortar stores in 2023?

Xie Yong: I think it should not be limited to the so-called “brick-and-mortar channel”. Instead, we should think of the opportunity of breaking the deadlock as a two-pronged attack, including online and offline approaches. More importantly, the combination of the two approaches can be a real opportunity.

Offline business does have an irreplaceable edge, namely trust, as many consumers often consider buying drugs, milk powder and cosmetics in brick-and-mortar stores are more reassuring. Correspondingly, online services can be full of tricks, an advertisement site or a link can vanish for no reason the next day, so how can consumers protect their after-sales rights? It's pretty common these days. But there are still many opportunities online, the key is to locate customers' demand, and cater to the demand and consumption habits, hence producing the right products and using the proper platform to promote them.