Recently, Chinese cosmetic collection store HARMAY affiliated company Shanghai Harmay Lexiang Corporation Development Company Limited was recently fined about $140,000 for producing and operating cosmetics with non-compliant labels. Upon investigation, the batch of cosmetics with non-conforming label were all small samples of major brands, involving Clarins, Decorte, Dior and other brands. According to the administrative penalty letter issued by the Shanghai Municipal Administration for Market Regulation, Shanghai Municipal Administration for Market Regulation conducted an on-site inspection of the HARMAY cosmetics collection store on April 16, 2021(Beijing Time). The site found that it was selling a total of 4 brands of 24 cosmetics with missing items such as "Clarins Extra-Firming Jour (5ml)" in their Chinese label content. At the same time, the Shanghai Municipal Bureau of Supervision said that it also found that some of the cosmetics sold during the investigation of the above case still had missing items in the Chinese label. According to statistics, all of the cosmetics with Chinese label violations were small samples of international brands including Tiffany, Burberry, Decorte, Clarins and other 11 brands totaling 35 cosmetics. The labeling violations are mainly focused on three aspects including the label without cosmetic ingredients list, no production batch number, and no imported cosmetics record number. Among them, Decorte series had the most violated issues involving 17 small sample products, accounting for almost half of the total number of the above brands. The penalty letter shows that the parties selling a total of 35 cosmetics mentioned above without tax (tax rate 13%) sales amounting to over $23,900, with a value of $38,600 and a total of 1,134 cosmetics in stock. And according to the Chinese "National Medical Products Administration": In China, the smallest sales unit of cosmetics should have a label. The labels should comply with relevant Chinese laws, administrative regulations, and mandatory Chinese national standards. The content needs to be true, complete and accurate. Ultimately, Shanghai Municipal Administration for Market Regulation imposed a penalty of "confiscation of illegal income of over $23,900 and a fine of over $115,800," totaling approximately $140,000. This reflects that there are still cosmetic operators in China who are not sufficiently aware of Chinese cosmetic laws and regulations and are not strict in their control of incoming products. Alternatively, some people in the actual business process also have a fluke mind and are obsessed with pursuing commercial interests but ignore risk control. Cosmetic samples are propping up a large market, but the relevant Chinese authorities need to strengthen regulation in order to ensure the healthy development of the Chinese cosmetics market. Public information shows that HARMAY, a Chinese beauty retailer with years of experience in online operations, opened its first brick-and-mortar store in Shanghai in 2017 and has quickly become popular with its warehouse-style, "sample paradise" and other features. It now has nine stores in China selling more than 400 brands including well-know boutique and overseas niche brands. In the sector of Chinese beauty collection stores, HARMAY has also been favored by capital. Earlier this year, HARMAY received about $200 million in Series D funding and has now completed four rounds of funding in total.

In 2021, Shanghai Jahwa's revenue was $1.204 billion, up 8.73% year-on-year. Its net profit was $102 million, up 50.92% year-on-year. It achieved the highest increase in the past six years. On March 16, Beijing time, Shanghai Jahwa released its annual results announcement for 2021. During the year, the company achieved operating revenue of $1.204 billion, up 8.73% year-on-year. Its net profit achieved $102 million, up 50.92% year-on-year. Its net profit after extraordinary gains and losses reached $106 million, up 70.76% year-on-year. It reached the highest level in the past six years. Among them, the skin care category grew at a rate of 22.22% for the year far exceeding the average growth rate of China's cosmetics industry, and its revenue share rose to 35%, making it the company's top business category. In terms of product innovation, Shanghai Jahwa applied a new product development methodology led by consumer insights and deepened cooperation with Alibaba Group's Tmall New Product Innovation Center to enhance its product innovation capabilities. It achieved initial results: the repurchase rate of HERBORIST in its Tmall flagship stores and department stores increased from 33.7% in 2020 to 41.6% in 2021. All single product of its new Tai Chi series of HERBORIST entered Top SKU of the brand and became the top 5 hot-selling products in the its e-commerce sales during the Double Eleven(Chinese Shopping Carnival) in 2021. The repurchase rate of Dr. Yu in Tmall flagship store increased to 42.6% from 36.4% in 2020, and the GMV of Dr. Yu's Intensive Hydrating & Activating exceeded $1.575 million in the first week of launch. Moreover, due to better meet the preferences and needs of Generation Z and accelerate the rejuvenation of the brand, Shanghai Jahwa cooperated with cross-border IP to promote the brand to increase its reputation. It attracted new customers in cross category and brand value has been enhanced. Dr. Yu co-branded with China’s space to customize a limited gift boxes to enhance the brand image with the popular topic of aerospace, with a cumulative exposure of 140 million+. Gough joined hands with the anime IP Doraemon to create an image with high-tech attributes, and the brand accumulated 180 million+ exposures. During the reporting period, the company's online business revenue reached $504 million, accounting for 42.04% of revenue. Its online revenue accounted for basically the same percentage compared to 2020. With the decline in special channel revenue, the gap caused by the decline in special channel business was made up by the rapid growth of e-commerce business. The Company's offline business maintained stable growth. The new retail business expanded rapidly, with a year-on-year growth rate of over 100%, accounting for over 10% of China's offline business. Secondly, the department store channel actively improved its optimization efficiency, with a total of 866 existing counters and stores as of the end of the year, while successfully turning losses into profits through the online operation of the Four Seasons SPA business. The CS channel improved profitability significantly through traditional CS reconstruction and Watson's profit increase. Moreover, Shanghai Jahwa also set up a live broadcast center with a total of 18,000 hours of live broadcast time to help the company's self-broadcast business. During the reporting period, the company also actively built an integrated online and offline private domain and refined communication for users across the domain, accumulating over one million users and more than 9,000 private domain communication groups, building a 1-to-1 communication channel for VIP customers, progressively improving the overall user experience and increasing the full lifecycle value of users by 16%. Founded in 1898, Shanghai Jahwa is one of the oldest companies in the cosmetics industry in China. The group focuses on three major areas: cosmetics, personal care and household cleaning, maternal and child care. It owns many famous Chinese brands such as skin care brand HERBORIST, florida water brand Liu Shen, infant and child brand Giving, male skincare brand gf and Dr. Yu focusing on repairing skin barrier, etc.

South Korea's well-known affordable cosmetics brands have started to raise prices. The price of 26 cosmetic products of MISSHA has been raised by an average of 11% since this month. On March 14, a hashtag about #a maximum price hike of 36% of Innisfree # went viral on Chinese social media Weibo, with 150 million views as of press time. Innisfree is a representative affordable cosmetics brand in South Korea, which has 80 SKUs in Tmall's flagship store with a price range from $1 to $110. Recently Innisfree increased its prices on more than 50 products with a rise of up to 36%. South Korea is a major consumer and exporter of cosmetics in the world. The pandemic has already brought considerable operating pressure to South Korea’s cosmetics industry, while the rising cost of raw materials has again squeezed profits. Several high-end cosmetics brands in South Korea raised prices late last year, and this month, even some affordable cosmetics started to increase. Innisfree is one of them. Another example is MISSHA, a well-known affordable cosmetics brand in South Korea, which has 33 SKUs in its official flagship store on Chinese e-commerce platform Tmall, with prices ranging from $7 to $41. MISSHA has increased the price of its 26 cosmetics by an average of 11% since this month. The impact of the pandemic, the rising cost of raw materials, and the rise of domestic brands in China. These combined reasons lead to a decline in South Korean cosmetics exports to China, further squeezing the profit space of South Korean enterprises. The popularity of K-beauty is on the decline. Against this backdrop, the price hike of affordable Korean cosmetics such as Innisfree has caused discontent among Chinese consumers, most of whom said they would choose domestic cosmetics over Korean ones. In fact, not only Korean beauty brands that are raising prices. Around the start of 2022, Global beauty brands Estée Lauder, Chanel, La Mer, Tom Ford, Unilever and other high-end beauty brands have started to raise prices as well. Whether Korean brands or international brands, price increases are the general trend. The difference is that international brands benefit from their higher brand value, so the price increase may not have a great impact on product sales. While for low-end brands, the price increase will greatly affect consumers' shopping decisions.

Ten of the world's biggest beauty groups, including L 'Oreal, Estee Lauder, Henkel, P&G and Shiseido, have halted operations in Russia. As the conflict between Russia and Ukraine continues and intensifies, the international political situation becomes increasingly severe. In addition to the military conflict, a series of sanctions against Russia are spreading. Led by the United States, a number of countries have announced economic, financial, scientific and technological sanctions against Russia. Now, some of the beauty giants have joined the sanctions. L 'Oreal, the world's largest cosmetics company, and rival Estée Lauder have both closed stores in Russia and stopped online sales. Estée Lauder, whose brands include Michael Kors, DKNY, Clinique and Bobbi Brown, has been in Russia for more than 30 years, and Russia was one of its strongest markets in the most recent quarter, accounting for about 2.7 percent of the company's revenue. In addition to L 'Oreal and Estée Lauder, some other world's biggest beauty groups, such as Henkel, P&G and Shiseido, have halted operations in Russia. In 2021, the combined sales of the 10 beauty groups exceeded 800 billion yuan (about 12.543 billion USD), with sales in Russia expected to exceed 16 billion yuan (about 2.51 billion USD). The suspension of business on the above cosmetic enterprises is difficult to estimate for the time being. However, Russia's cosmetic industry has inevitably suffered a huge impact, both for Russia and the beauty enterprises rooted in Russia, the impact is far-reaching and immeasurable. The sanctions against Russia by beauty giants make us think – how important it is to produce domestic beauty brands when the beauty market is still firmly controlled by the international giants. In China, domestic beauty brands are on the rise. Brands like Winona, Perfect Diary and Florasis have all set up their research and development centres and opened offline stores. According to the financial report for the third quarter of 2021 released by Yixian E-commerce, the parent company of Perfect Diary, its Q3 total revenue reached 1.34 billion yuan (about 2.10 million USD), and its gross margin increased by 2.2% to 67.9% year on year; In the first three quarters of this year, Yunnan Botanee Biotechnology Group Co.LTD, Winona’s parent company, achieved operating revenue of 2.113 billion yuan (about 3.313 million USD), up 49.05% year on year. Florasis, who represents Oriental aesthetics, explores the wisdom of ancient China, posted sales of 3.35 billion yuan (over 5.252 million USD) in 2020 and 2.6 billion yuan (about 4.077 million USD) in the first half of this year. It is time for everyone to realize the importance of local beauty brands, not just international beauty giants. In order to enter the high-end market and compete with international brands, more effort needs to be put into product innovation.

On the afternoon of the 15th, the news of Deng Lun's tax evasion being recovered and fined $17 million ranked to the top of the trending topic on China's social media platform Weibo. Currently, Deng Lun has about 40.29 million followers on the Weibo (Chinese social platform) and has accumulated 21.26 million followers on the Chinese short video platform TikTok. On the afternoon of the 15th, the news of Deng Lun's tax evasion being recovered and fined $17 million ranked the top of trending topic on China's social media platform Weibo, which drew much attention across the Chinese network. According to the news from the State Taxation Administration, through the analysis of big data of taxation, it was found that Deng Lun was suspected of tax evasion and was still incomplete to rectify the situation after being reminded and urged by Chinese taxation authorities, so a case was opened and a comprehensive and in-depth taxation inspection was carried out according to the law. It was found that during the period from 2019 to 2020, Deng Leng evaded over $7.51 million in taxes and underpaid nearly $2.21 million in other taxes by fictitiously converting his personal labor compensation into corporate income for false declaration through fictitious business. According to the State Taxation Administration, during the tax inspection, Deng Lun was able to actively cooperate with the inspection and voluntarily pay over $7.02 million in back taxes, while voluntarily reporting tax-related violations that were not yet in the possession of the Chinese tax authorities. As a result, Deng Lun recovered the tax, paid a late payment fee and imposed a fine totaling 17 million. The information shows that Deng Lun graduated from the acting department of Shanghai Theatre Academy and is a popular traffic star in the Chinese film and television industry. Currently, Deng Lun has about 40.29 million followers on the Weibo (Chinese social platform) and has accumulated 21.26 million followers on the Chinese short video platform TikTok. According to incomplete statistics, Deng Lun currently has endorsement with about 17 brands including six beauty brands and international top companies such as L'Oreal Paris, Sulwhasoo, Unilever. After Deng Lun was exposed to tax evasion, the above beauty brands deleted their posts related to Deng Lun. It is noteworthy that in addition to the brand termination, TikTok and Weibo also blocked Deng Lun and Deng Lun's studio accounts one after another. In the news unleashed 45 minutes later, Deng Lun also issued a letter of apology on the Weibo platform and said "has profoundly recognized my mistakes", "accepts all the decisions of the tax authorities" and "is willing to assume all relevant responsibilities".

High-end is a process of time and technology accumulation. During this process, the improvement need not only the most intuitive price but also product quality, and brand value sense. This is an important reason for the success of the high-end road of Chinese beauty brands. Along with the maturity of the Chinese cosmetics market, Chinese consumers' concept of cosmetic consumption has gradually increased and has shown high-end development characteristics. In the current consumer upgrade, high-end has been defined by many Chinese beauty companies as an important breakthrough. "Towards the high-end" has become a keyword for many brands in the Chinese cosmetics industry. How to break through? 1. Increase scientific research, tapping high-profile spokespersons/entering in high-end retail stores to enhance brand competitiveness. There is no doubt that scientific research is the core competitiveness in the cosmetic industry. Therefore, in recent years, scientific research from Chinese brands is also frequently increasing: Perfect Diary’s parent company YATSEN E-commerce continued to invest in building YATSEN Open Lab fro R&D system. Florasis announced a five-year plan to build an oriental beauty R&D system. PROYA and raw material giant BASF signed cooperation to carry out a number of in-depth technical cooperation. However, although the scientific research is the basic, the road for the Chinese brands to high-end is not stopped. With the progress of scientific research, the brand image is bound to need a round of updates. For example, in 2021, in addition to updating the logo, Perfect Diary abandoned the previous standard of spokesperson of traffic stars and chose the powerful Chinese actor Zhou Xun as its global brand spokesperson and singer Troye Sivan as its brand ambassador. It received an enthusiastic response once launched, which is exactly what Perfect Diary tends to achieve. In addition, the presence in high-end retail stores such as Sephora is also of some significance in assisting the high-endization of Chinese brands. MARUBI, Marie Dalgar, INOHERB Tang and WEI are some of the few Chinese beauty brands that are present in Sephora. 2. As for Chinese IP, describing Chinese story is the code of premium. Take the Chinese skincare brand Dong Bian Ye Shou as an example, after clearly focusing on the brand concept of Chinese unique herbal activity, it was promoted through the creation of brand magazines to spread the brand culture concept, the opening of the tiger theme art exhibition. The brand's Chinese style cultural temperament and tone in the series of operation precipitation spread. These Chinese brands, which have been pointing to high-end since their birth, have one quality: they are rooted in Chinese culture. It is noteworthy that brands that build their brand image by telling Chinese stories generate a premium space and possibilities far beyond other categories. 3. Acquisition and expansion, "shortcut" of breakthrough. Looking at the success of international giants such as L'Oreal Group, the acquisition is an important means of implementation. YATSEN E-commerce, in addition to the operation of the main brand Perfect Diary, has launched the skincare brand Abby’s Choice, acquired the popular makeup brand Little Ondine, the French high-end beauty brand Galénic, and the British high-end skincarehas brand Eve lom. Its high-end ambitions are obvious by acquiring sub-brands to help the group high-end. Undoubtedly, the acquisition is a shortcut, but the financial strength of beauty companies have certain requirements. Most of the imported brands acquired will retain the original operating team. In the strict sense, these "naturalized" brands can not be considered Chinese beauty brands. Therefore, although the acquisition is a shortcut, but it is not the right way to high-end Chinese beauty brands, and whether consumers buy is also unknown. 4. Get rid of the label of "Affordable Brand Compared to Top Brand" In the makeup category, regardless of international brands, many of China's makeup brands are caught in peer competition. The common genes of most Chinese makeup brands are quick to launch of new products, small specifications and low prices. For the serious competition of makeup, high-end indulge in empty talk. If we talk about the feasibility of high-end, subjective value delivery of perfume category are exploring a new world in the Chinese market. Rooted in the soil of Chinese culture, the Chinese market has now nourished the Chinese high-end perfume brands such as To Summer, Documents, Fu Sheng Liu Ji, etc. The emergence of these brands to make up for the olfactory products on the oriental flavor gap, and this oriental flavor with national characteristics also gave the Chinese perfume brands and other international brands the opportunity to compete on the same stage. At present, the competitiveness of high-end Chinese brands is still less than international brands. "Too expensive to buy" is indeed a problem that lots of Chinese beauty brands exist. Affordable brands are still the main gimmick of many Chinese beauty brands publicity. Consumers are also more accepting, but the profit margin from the international brand of high-end products is also a certain distance. In short, high-end is a process of time and technology accumulation, the process improvement not only needs the most intuitive price, but also product quality, brand value. This is the important element of the success of China's beauty brand high-end metamorphosis or not. At present, the high-end Chinese beauty brand still a long way to go.

Recently, there is news that L'Oréal Group's brand Saint-Gervais Mont-Blanc will withdraw from the Chinese market. The person in charge of the L'Oréal Group said Saint-Gervais Mont-Blanc is currently operating normally. Recently, there is news that L'Oréal Group's brand Saint-Gervais Mont-Blanc will withdraw from the Chinese market. What is surprising that the brands withdraw from the Chinese market after only 2-year launch of China. On the 14th, the person in charge of L'Oréal Group said that the brand Saint-Gervais Mont-Blanc is currently in normal operation, but now the official website is close. In France, the "Thermal Spring Water" of Saint-Gervais Mont-Blanc is particularly famous due to it can relieve burns, scars, eczema and other skin diseases. The brand itself has a history of about 200 years and is dedicated to the repair of sensitive skin with its 100% of the French spring water from Mont Blanc. In 2016, the brand was acquired by L'Oreal Group, and entered the Chinese market for the first time through e-commerce channels in August 2019 turning into one of the top four "pharmaceutical" brands of L'Oreal Group, along with VICHY, LA ROCHE-POSAY and SkinCeuticals. When it first entered the Chinese market, the brand focused on the "Professional Repair and Care Series" including three star products: Saint-Gervais Mont-Blanc Soin Anti-Rougeurs, Saint-Gervais Mont-Blanc CICA, and Saint-Gervais Mont-Blanc Eau Thermale Du Mont Blanc. The L'Oréal Group has high expectations for the brand's performance in the Chinese market due to the huge potential of the Chinese cosmetics market, and Saint-Gervais Mont-Blanc has become the first brand to choose the Chinese market when the Group was extending its overseas market. However, from the performance of Saint-Gervais Mont-Blanc in the Chinese market in recent years, its development does not seem to be as expected by the group. Saint-Gervais Mont-Blanc has been operating in the Chinese market for more than two years. But in its annual report, the mass cosmetics division where it is located did not mention the brand's market performance. On the other hand, L'Oréal's Active Health Cosmetics division, which owns brands such as LA ROCHE-POSAY and SkinCeuticals, was named for its strong growth rate achieving a high growth rate of 30.3% in fiscal 2021. The two brands doubled in four years and achieved revenues of 3.924 billion euros (about $4.282 billion). As for the e-commerce channel, which is the main channel for Saint-Gervais Mont-Blanc to enter the Chinese market, the flagship store of Saint-Gervais Mont-Blanc in Jingdong, a Chinese e-commerce platform, only has 4 SKUs left, including spray, essence water, cleanser and mask. While its official flagship store of Tmall, another mainstream Chinese e-commerce platform, has a discount of 3.8% under the discount of a single product. On the other hand, its official accounts on several Chinese social platforms, including Weibo, Xiao Hong Shu and WeChat, have stopped updating. Before that, it was updated every other day or every week. The official Weibo account currently has only 3,800+ followers and was updated on November 11 last year. Its official WeChat Mall, which is operated by L'Oreal (China) Co., Ltd, shows that the system is being updated for maintenance and cannot be opened. In fact, when Saint-Gervais Mont-Blanc entered the functional skincare sector in China in 2019, it coincided with China's strict crackdown on "pharmaceutical" propaganda, which was also the year when Chinese sensitive skincare brands Winona and Dr. Yu blooming. "The brand matrix of L'Oreal in the field of active and healthy skin care in the Chinese market is relatively mature from the perspective of efficacious and specialized skin care with the popular price of Cerave, the mid-range price of LA ROCHE-POSAY, and the high-end price of SkinCeuticals. These three brands have shown high growth in recent years. From the view of positioning, it seems that Saint-Gervais Mont-Blanc cannot help L'Oreal open up a blank market in China. " A Chinese cosmetics industry sources said. What Saint-Gervais Mont-Blanc is facing is China's increasingly strict regulatory regulations, slow growth performance and the high growth of competing products. If the above problems are not solved, it is feared that the withdrawal of Saint-Gervais Mont-Blanc from the Chinese market will become a fact.

In 2018, South Korea's 3CE Stylenanda was acquired by L'Oréal Group. In 2019, the brand officially entered the Chinese market. Currently, the trademark and product sales rights of 3CE in mainland China belong to L'Oreal. Recently, 3CE Stylenanda won a final judgment in a trademark infringement lawsuit. The Beijing High People's Court decided to reject the plaintiff's appeal and to uphold the first instance judgment of the Beijing Intellectual Property Court, namely that the trademark 3CE, a brand of L'Oreal Group, and the trademark "3CE" registered by Chinese counterfeiters are not significantly different in terms of word composition, call and overall appearance. Because they cause confusion among consumers as to the source of the goods, they also constitute similar trademarks used on similar goods. The court ruled that the Chinese counterfeit "3CE" trademark was invalidated. The logo of 3CE, a makeup brand of L'Oreal Group, was originally "3 concept eyes" in English. However, in 2012, the trademark "3 CONCEPT EYES" was applied for in the Chinese market by Shanghai Fenlan Cosmetics Co. After careful identification, we can find that the trademark of "3CE" registered in China is highly similar to the trademark of 3CE, a makeup brand of L'Oreal Group, which is a blatant "plagiarism". The trademark of L'Oreal Group's makeup brand 3CE is designed with the classic triangle black and white line design and its makeup products are popular in Asia. But there are some manufacturers imitate or copy the trademark so consumers need to further improve the ability to identify when buying products. 3CE always adheres to the protection of consumer rights and interests and promotes a more stable market. At present, the trademark and product sales rights of 3CE in mainland China belong to L'Oreal Group. In 2018, South Korea's 3CE was acquired by L'Oreal Group. In early 2019, the brand officially entered the Chinese market and focused on e-commerce channels. In January 2019, 3CE entered the Chinese e-commerce platform Tmall and opened a brand flagship store, which became the No. 1 Korean makeup brand. On the first day, its sales exceeded $2.27 million and sales of three main products entered the TOP 10 of the sale. In only 48 days of entering the Chinese market, it became the No. 1 sales in the industry.

Perfect Diary's parent company, Yatsen E-Commerce, reported its revenues of $924 million in 2021, up 11.6% year on year. It suffered a net loss of $245 million, compared to a net loss of $426 million in the same period a year earlier. On the evening of March 10, Beijing time, Yatsen E-Commerce released its unaudited results for the fourth quarter and full year of 2021. According to the data, Yatsen E-Commerce's revenue for 2021 reached $916 million, an increase of 11.6% year-over-year, with full-year gross margin increasing 2.5 percentage points year-over-year to 66.8% and net loss narrowing by 42.5% year on year. In response to this performance, Huang Jinfeng, founder, chairman and CEO of Yatsen E-Commerce, said, "The industry is currently facing greater challenges. Consumer demand is weak and competition has become more intense. The industry's average promotional discounts and marketing investment have climbed. Despite this, the company achieved growth in sales revenue and gross margin for the year. In the future, we will seize the opportunities of this wave of market adjustment based on our existing brand layout of three segments, while reducing unnecessary investment and improving refined management and operational efficiency to prepare for a long-term battle." The full-year 2021 revenue of $916 million for Yatsen E-Commerce did not reach the revenue of $949 million which was previously predicted by an agency, mainly due to the increase in the fourth quarter was less than expected. In the fourth quarter of 2021, Yatsen's total revenue fell 22.1% to $240 million from $310 million in the same period last year, according to the report. The decline in sales of cosmetics brands was the main reason for the drop in revenue in the fourth quarter of Yatsen E-commerce. Despite weak performance in color cosmetics, the company's gross margin for the year increased 2.5 percentage year on year to 66.8% and net loss narrowed 42.5% year on year to $255 million, with a non-GAAP operating loss of $165 million, benefiting from rapid growth in the skincare category and continued improvement in brand strength. According to the data, during the period, skincare segment of Yatsen's annual revenue increased 360% year-over-year and increased its share of the company's total revenue from 4.0% to 21.3%. The performance of the skincare sector is related to its recent strengthening in the category. 2021 saw the completion of the acquisition of two high-end skincare brands, France's Galenic and EVE LOM. According to the company's external release, during last year's Double 11(Chinese Shopping Carnival), the sales of the skin care sector of Yatsen E-Commerce increased by over 400% year-on-year, and the total turnover of the relevant high-end skincare brands broke 100 million yuan (approximately $16 million) in the first year of participation in Double 11. Among them, France Galenic broke the Tmall International record, and EVE LOM surpass the total sales of Double 11 in 2020 within two hours. In addition, with the trend of efficacy skincare, DR.WU, a brand of Yatsen E-Commerce that is positioned as a "physician's specialty", also performed well, with year-on-year sales increasing 6.7 times, and its iconic product, DR.WU Mandelik Daily Renewal Serum, was the No. 1 in the acid category in Tmall's Double 11. Yatsen E-Commerce's annual report shows a more significant improvement in operational efficiency, with operating costs of $873 million in 2021, down 8.7% compared to $957 million in 2020. Also, sales and marketing expenses have increased, rising from $539 million in 2020 to $633 million in 2021. According to the financial report, Yatsen E-Commerce's full-year R&D investment for 2021 increased 113.5% year-over-year, totaling more than $22 million and accounting for 2.43% of total revenue, placing it at the head of the Chinese beauty group. Up to now, Yatsen E-commerce has 118 patents worldwide, a 71% year-on-year increase in the number of patents, including 39 invention patents (some of which are in the process of being transferred). Huang Jinfeng has publicly stated, " R&D empowers category innovation and category innovation promotes R&D breakthroughs. Only with superior product strength and more technological beauty achievements on the ground can we meet more consumers' expectations for beauty." Yatsen Holding Limited is a leading player in China's beauty market. Founded in 2016, the Company has launched and acquired multiple color cosmetics and skincare brands including Perfect Diary, Little Ondine, Abby's Choice, Galénic, DR.WU (its mainland China business), Eve Lom and Pink Bear. The Company's flagship brand, Perfect Diary, is one of the top color cosmetics brands in China in terms of online retail sales value. Leveraging its digitally native direct-to-customer business model, the Company has built core capabilities that enable it to launch and scale multiple brands quickly while offering a wide selection of products to a growing variety of customers.

The top 10 cosmetic companies in terms of global revenue in fiscal 2021 were L'Oreal, Unilever, Estee Lauder, P&G, Johnson & Johnson, Shiseido, Natura&CO, LVMH, Beiersdorf, and Kao. On March 10, Brazilian cosmetics giant Natura&CO released its 2021 financial results. At this point, the global head cosmetics company's fiscal year 2021 results have all been announced, and the world's top 10 cosmetic companies followed. Natura&CO's revenue last year was 40.2 billion reais (about $8.022 billion), up 8.8% year-on-year, with sales growth recorded for its Avon, The Body Shop, Aesop and other brands. According to statistics, the top 10 cosmetic companies in terms of global revenue in fiscal 2021 were L'Oreal, Unilever, Estee Lauder, P&G, Johnson&Johnson, Shiseido, Natura&CO, LVMH, Beiersdorf, and Kao with the overall volume of revenue of the 10 companies reaching $139.089 billion exclusively in cosmetic businesses. In 2021, the revenue of the top 10 global cosmetic companies cosmetic sector is better than in 2020. Among them, LVMH has the fastest growth rate, with its cosmetics sector revenue including brands such as Dior, Guerlain, Givenchy, Benefit and Fresh increasing by up to 27% year-on-year, with China's Hainan duty-free stores making a significant contribution to that. "We find in 2021 that Chinese customers buy more from LVMH than in 2019, despite the fact that they cannot travel abroad." said Bernard Arnault, Chairman and CEO of LVMH. In addition to LVMH, L'Oréal, Estée Lauder and Beiersdorf all have more revenue in fiscal 2021 than they did in 2019 before the pandemic, and they all have one thing in common behind them: premium brands driving growth. In 2021, L'Oreal's premium cosmetics division overtook the mass cosmetics division for the first time and became the group's largest division, with sales of $14.183 billion, up more than 20% year-on-year, and strong performance from its Lancôme Absolue series, HR, Shu Uemura and others. Last fiscal year, Estee Lauder's Advanced Skincare Division net sales increased 28% year-over-year to $9.534 billion, with an operating profit of $3.067 billion, of which LA MER achieved double-digit growth in global sales. Last year, La Prairie, Feelunique and Aquaphor were key to Beiersdorf's growth, with La Prairie sales up more than 20% year-over-year. Compared to LVMH and Estee Lauder, P&G, Unilever and Kao, which are known for their personal care businesses, all had less than 10% revenue growth and lower net margins. However, under the law of high-end winning and cost pressure, most companies have already started to act and committed to sell their products more expensive. There are two main ways: acquisition of high-end brands and product price increases. The high-end brands represented by CPB, Shiseido and NARS have been the main growth drivers for Shiseido in the past few years. Last year, after setting up high-end beauty as its core business, Shiseido sold PURE&MILD, Za, SENKA, UNO and AQUAIR, and transferred its professional hairdressing business to Henkel this year. Then, high-end brands such as EFFECTIM and BAUM were launched. In addition, P&G also acquired high-end skincare brand Tula Skincare and hair care brand Ouai. Last year, Beiersdorf acquired the parent company of Chantecaille, a luxury beauty brand. LVMH acquired Officine Universelle Buly, a century-old fragrance brand, last year. Unilever, on the other hand, has made its high-end cosmetics business, which has a volume of about $791 million, a priority for development. Most of these brands came from acquisitions, including Dermalogica, Garancia, Tatcha and others. In addition to acquiring high-end brands, Unilever is also increasing the prices of its original product lines. "The main challenge for 2021 is the sharp rise in costs." Unilever responded with a pricing move that increased prices by 2.9 percent for the year, said Unilever CEO Joanne Lu. P&G also said at its latest quarterly earnings meeting that it will raise prices in all of its top 10 categories, including cosmetics, in 2022. In addition, earlier this year, Estee Lauder, LA MER, Lancome and other brands also broke the news of price increases. It is worth mentioning that Natura&Co is preparing for its two brands, Aesop and The Body Shop, to fully enter the Chinese market. The Body Shop's first store in China may land in 2022.

Beauty and fashion software services company Perfect Corp has agreed to merge with Provident Acquisition Corp, a special purpose acquisition company, with plans to go public in the United States. Perfect Corp. recently announced that it has entered into a merger agreement with Provident Acquisition Corp., an SPAC company, and is expected to list on NASDAQ under the ticker symbol "PERF" in the third quarter of this year. According to the merger agreement, SPAC of Perfect Corp. will be valued at approximately $1.02 billion. Moreover, the merger is expected to raise $335 million for Perfect Corp., including $50 million in PIPE, $55 million in FPA and $230 million held in trust by Provident. Founded in 2015, Perfect Corp. focuses on developing SaaS technology services for the beauty and fashion industries through AI and AR. Specific solutions include 3D face and hand modeling. It also offers AI skin detection and simulation, AR image support consulting, real-time virtual product trials, and personalized facial feature detection and recommendations. In general, with products from Perfect Corp., users can try cosmetics and skincare products anytime and anywhere, instead of sitting in front of a mirror, spending 10 minutes applying foundation and lipstick, spending 5 minutes wiping them off after they don't like the look, and then spending 10 minutes on a new round of makeup afterward. To date, technology service solutions of Perfect Corp. cover 19 of the top 20 global beauty groups and have partnered with more than 420 beauty brands in over 80 countries worldwide, while its apps have been downloaded over 950 million times worldwide and its virtual product trials exceeded 10 billion times per year. Based on the beauty and fashion sectors, Perfect Corp. is now gradually providing similar services to brands in the eyewear, nail, watch, jewelry and fashion accessories industries. In addition to brand-side partnerships, Perfect Corp. has likewise partnered with platforms such as Ali's Tmall and Taobao Beauty, Google, YouTube, Snapchat, Instagram and others in order to help brands better engage, interact and retain consumers by calling on makeup trial tools on the platform. In terms of financial data, revenue of will grow at a compound annual rate of 63% from 2018 to 2020. As for the net dollar retention rate, which is more central to SaaS companies, Perfect Corp. is 155% from 2018 to 2020, while the average annual customer retention rate from 2017 to 2020 is 94%. The average annual customer retention rate from 2017 to 2020 is 94%. Zhang Huazhen, the founder and CEO of Perfect Corp., said, "Perfect Corp. drives the transformation of the beauty and fashion industry, pioneering an innovative consumer journey with the world's leading AR and AI SaaS technology services. At the same time, our innovative technology provides brand consumers with a fun, convenient and personalized omnichannel shopping experience, regardless of brand size and various customer engagement channels." "The current consumer trends of increased omnichannel penetration, heightened environmental awareness and growing ESG focus are fueling our growth and service utilization. The merger with Provident allows us to access public capital markets, attract more world-class investors, enhance corporate governance, expand our markets, expand AI and AR technology development, and explore untapped areas such as other fashion-related industries and the application of play beauty technology to the metaverse." Zhang Huazhen added. It is worth noting that the investors involved in this PIPE include major international beauty brands such as CHANEL and SHISEIDO as well as head social platforms such as Snap. Prior to this, Perfect Corp. had also received investments from well-known institutions such as Alibaba, Goldman Sachs, and CCV. Among them, CCV invested in Perfect Corp. exclusively in Series A financing in 2017 and has continued to raise capital since then.

Chinese beauty brand Florasis released its first five-year plan for research and development. In the next five years, Florasis will invest more than $158 million in several product innovation, basic research, and areas of applied basic research. "Over the next five years, Florasis plans to invest more than $158 million in R&D" said Li Huiliang, chief scientist of Florasis. In 2021, Florasis's GMV exceeded $854 million which means that Florasis tend to spend 18.5% of its GMV in 2021 on R&D for the next five years. At the beginning of this year, Mr. Li Huiliang, who has focused on Chinese cosmetics R&D for more than 30 years and is known as "the first person in Chinese cosmetics R&D", joined Florasis as the chief scientist. As the first generation of cosmetic R&D personnel after China's reform and opening up, Li Huiliang has been engaged in cosmetic R&D for more than 30 years and has served as the technical director of Shanghai Jahwa and the deputy general manager and chief technical officer of Huaxi Bio. Referring to the reason for joining Florasis, Li Huiliang said, "People may pay more attention to the marketing of the brand, but Florasis also has strong R&D. To some extent, Florasis has the foundation and conditions to become a century-old brand." Currently, the world's dynamic century-old beauty groups have businesses that cover multiple categories such as cosmetics and skincare. "There is no doubt that Florasis will definitely make an effort in the skincare as well." Li Huiliang said. In the future, Florasis will further build a "system for oriental beauty research and development ", covering all aspects of research from cosmetics to skincare. According to the introduction, the system covers a number of aspects from cosmetics to skin care cosmetic material science innovation research, oriental makeup research and related innovation product development, raw materials, and supply chain AI refinement management. Specifically, based on the characteristics of oriental women's skin texture and facial features and needs, Florasis will continue to make efforts in several dimensions with oriental characteristics, such as plant resources with Chinese characteristics and oriental women's skin physiology, to form its own culture at the scientific research end. In fact, it has been a long time since Florasis wanted to develop skin care. "Before Florasis, the brand's parent company, Yige Group, had developed the research and development of skin care products and formulations." Florasis’ chief product officer Shang Lu introduced, "for example, as early as 2016, the creation of the skincare brand OGP is even earlier than Florasis. And Florasis has also previously launched lip masks and sunscreen products." As Shang Lu said, Florasis has been developed for many years in terms of research and development. However, previously, based on multi-dimensional considerations, Florasis rarely made a presence in the industry. Along with the addition of Li Huiliang, the brand's R & D strength also began to appear. According to reports, as of the end of February 2022, the parent company of Florasis has a total of over 200 R&D staff and more than 120 patents, including 38 invention patents and 19 utility model patents, the number, and quality of patents are ranked among the top Chinese cosmetics brands. At present, Florasis has also entered into cooperation with many Chinese universities such as Zhejiang University, Beijing Technology, and Business University, Shanghai Jiao Tong University, and others. "Florasis tends to build a strong cosmetic R&D base around Chinese culture to support not only cosmetics but also skincare research and development." Li Huiliang said. Founded in 2017, Florasis is a Chinese beauty brand that focuses on Chinese style positioning, with the brand concept of "oriental cosmetics with flowers for makeup". It is reported that in 2020, the total GMV of Florasis is about $475 million and its revenue reached $285 million. Its cumulative number of users who have purchased exceeded 8 million and the customer unit price is about $27. In 2021, the GMV of Florasis exceeds $854 million. During the promotional campaign on June 18 of 2020, Florasis surpassed Perfect Diary and a number of major international brands to become the TOP 1 in the cosmetics category on the Chinese e-commerce platform Tmall.