Recently, Armani Beauty opens its global flagship in Shenzhen, China---called Armonia--- which claims to be large, high-tech and high-touch. (Credit: from WWD) The immersive retail space, located in One Avenue shopping center with the 3,230-square-foot area. It is designed to bring and reflect the beauty of harmony (armonia in Italian) and positive thinking, according to WWD. These are at the heart of the luxury brand's identity and purpose, said Véronique Gautier, global president of L'Oréal Armani Beauty. It is understood that the store has three main areas, namely The Precision Lab, The Emotion Lab and The Light Lab, where consumers can experience skincare, fragrance and makeup. It is worth noting that Armani’s Signature VIP loyalty program and access the Armani beauty e-boutique are accessible through WeChat program, where consumers can book an individual consultation in any of the three labs. CHAILEEDO noted that there are 9 BAs of this store showing in Armani mini program. On Dec. 22, Armonia will officially open as a research laboratory for Armani. It is also testing new experiences for consumers there. The same-concept store will open on the Chinese island of Hainan in the first quarter of next year with elements of Armonia likely to be incorporated. As Armani Beauty upgrades its smaller retail spaces around the world. The change is the first for the brand in six years. In September this year, Armani joined hands with Times’ DF in Haikou to open the a pop-up store with the theme of Dance of Paeonia, featuring a number of experiential activities and thematic artwork, attracting many visitors to the store. CHAILEEDO noted that Armani has 130 counters in China. According to Véronique Gautier, Armani beauty global president, at L’Oréal, said that the brand ranks fourth in makeup; seventh in fragrance, and is among the top-10 in skin care. Armani Beauty is under the management of L'Oréal Group. According to the results of the first three quarters announced by L'Oréal, the L’Oreal Luxe, including brands such as Lancôme, Kiehl's and Armani, made the highest contribution to revenue. The first three quarters sales of 10.48 billion euros (about $11.1 billion), an increase of 22% year-on-year. The earnings report mentioned that it was mainly due to the division's continuous innovation in three categories confirming its global position, which, as well as highly promising new products such as Prada and Armani, contributed to the division's considerable earnings. Source: WWD If there is any infringement, please contact us to remove it.

Chinese Double 11 Shopping Festival also failed to save cosmetics consumption. On Dec. 15, the National Bureau of Statistics released the main data on total retail sales of consumer goods in November. The data shows that total retail sales of cosmetics saw a decline in November rarely, reaching 56.2 billion yuan (about $8 billion), down 4.6% YOY. Since the beginning of this year, the Chinese cosmetics retail market has continued to be in a downturn. Chinese Double 12 Shopping Festival, which just passed, also seemed "quiet". Many industry sources predict that the total retail sales of cosmetics will continue to decline in December due to the epidemic and the winter of retailing will continue for a while. According to the latest data released by the National Bureau of Statistics, the total retail sales of consumer goods in November was 386.15 billion yuan (about $55.4 billion), down 5.9% year-on-year. From this dimensional data, the total retail sales of cosmetics in November were slightly lower than the total retail sales of consumer goods due to the impact of the Double 11 promotion, etc. In this regard, the National Bureau of Statistics publicly stated that "by the impact of COVID-19 and other factors, the consumer market was significantly under pressure in November. The market sales decline has expanded. However, with the continuous optimization of the epidemic prevention and control measures, the consumer demand will steadily releases, shopping network trend further strengthened, the development of consumer market resilience will continue to show up." From an overall perspective, the total retail sales of consumer goods were 39.92 trillion yuan (about $5.7 trillion), down 0.1% year-on-year from January to November this year. The total retail sales of cosmetics were 365.2 billion yuan, down 3.1% year-on-year, not beating the general market, but the situation is still grim. Looking back at the total retail sales of cosmetics from January to November this year, the total retail sales of cosmetics in China rose in only four months, January, February, June and July. But the rise was small with all in single digits. The cosmetics industry has always had prosperity in September and October every year. Coupled with the continuous development of online e-commerce channels, the shopping promotion in each fourth quarter every year can also contribute to a larger revenue performance for beauty companies. However, since August this year, the total retail sales of cosmetics have declined for four consecutive months, and the industry-wide Chinese Double 11 Shopping Festival has failed to save the sluggish cosmetics consumption. In November, the year-on-year growth rate of total cosmetics retail sales fell for the first time in nearly five years, according to CHAILEEDO. All decline The downturn in cosmetics retailing has also been met with a cold in imported cosmetics in China. According to data from the General Administration of Customs, imports of beauty cosmetics and toiletries in November this year amounted to 34,427.9 tons, down 14.26% compared with the same period last year. The import amount was 12.57 billion yuan (about $1.8 billion), down 11.54% year-on-year. From January to November this year, the cumulative import of beauty cosmetics and toiletries products was 388,671.5 tons, down 11.2% compared with the same period last year; the import amount was 138.64 billion yuan (about $19.9 billion), down 5.8% year-on-year. An imported cosmetics trader told CHAILEEDO, "Imported beauty cosmetics have been struggling." He said that the epidemic is only one side of the decline in the amount of cosmetics imports. The main factor is the macroeconomic regulation of the national economy. "Now the people have no money in their wallets, so the demand for imported cosmetics is declining year by year. There are fewer consumers are picking cosmetics inside the offline shopping mall." In addition, the cosmetics industry has seen declines of varying magnitudes from all areas since this year. According to research data from CHAILEEDO, in the first nine months of this year, overall sales in the online channel declined slightly compared to last year, with a monthly average sales decline of 0.4%. Also according to data released by Minsheng Securities, in November, the GMV of the Tmall beauty market was 57.8 billion yuan (about $8.3 billion), down 10% year-on-year, of which GMV of skincare was 47.7 billion yuan (about $6.8 billion), down 6% year-on-year, while GMV of color cosmetics reached 10.1 billion yuan (about $1.4 billion), down 23% year-on-year. The decline in online platforms is obvious and offline stores are having a hard time. According to data from CHAILEEDO, the researched 13,000+ CS stores achieved total sales of about 830 million yuan (about $119 million) in November 2022, down 17.6% year-on-year. The number of customer orders was 7.089 million, down 21.1% year-on-year. Entering the post-epidemic era In recent years, the cosmetics industry has entered a period of accelerated reshuffling under the grip of new regulations overlaid with the epidemic. In December, the change in the epidemic prevention and control policy allowed many industry players to see the "dawn". However, CHAILEEDO learned from a number of industry sources that they still have a negative attitude toward the national cosmetic consumption figures in December, "December is expected to decline even more than November" and "this year is not expected, let's look ahead to 2023". For example, in the past Chinese Double 12 Shopping Festival, many brands and factories in charge said that they didn’t put much effort into this shopping festival. The pull of the promotion on business performance is "not obvious". A brand responsible said "There is only less than half a month's time from policy liberalization to the Chinese Double 12 Shopping Festival. The recovery time for the industry is too short. Many companies are even too late to prepare in advance. Coupled with the overall consumer purchasing power has declined, the overall data this year are flatter." An OEM marketing director also said that many brands will focus on doing internal inventory and summary. Their main resources and energy were put into next year's market expansion and sales channels. Basically, they will not have a big move in this year. "If the market withstands the first wave of impact after the 'opening', consumption and customer flow should pick up after the Spring Festival, by the second quarter of next year at the latest." An industry insider who has been engaged in cosmetics retailing for more than 30 years believes that. In recent times, a number of industry insiders posted that the cosmetic industry has now truly entered the "post-epidemic era". In the post-epidemic era, the battle for brands is obviously long and arduous. But all in all, the cosmetic industry has been experiencing a 3-year-long "winter" and now the light has dawned. We just need to wait to survive the last wave of the "cold" and truly welcome the arrival of spring.

NPD, a global market information company, released data that fragrance sales grew 4 percent from Oct. 4 through Dec. 2. “Fragrance sales reached new heights following the pandemic, and it’s particularly impressive that the market is maintaining this elevated level rather than softening, which is typically the case after such an unprecedented performance,” Larissa Jensen, beauty industry adviser at NPD, said in a statement. Last month, NPD reported that fragrance sales reached $1.3 billion in the third quarter of 2022, up 11% from a year ago. prestige beauty grew 15% in the quarter, with sales reaching $6 billion. And it's likely to see even more impressive gains this year. “Considering that most holiday shopping for fragrances occurs within the two weeks leading up to Christmas, and December alone accounts for over 50 percent of fourth-quarter sales, much of the fragrance category’s sales success for 2022 is yet to be determined,” said Jensen. And the Chinese perfume market should not be underestimated. CHAILEEDO data shows that China's perfume is expected to achieve 20.15% year-on-year growth in 2022, reaching 16.1 billion yuan (about $2.3 billion), with growth rates far exceeding categories such as cleansing and makeup remover, essence, mask and personal care. In this year's Chinese Double 11 Shopping Festival, a growth rate of perfume on TikTok China was about 20%. The fragrance has become a new market trend. OIBP data shows that the overall size of China's fragrance market is expected to reach 30 billion yuan (about $4.3 billion) in 2025, a figure that is three times the growth rate of the global market. In this tens-billion-yuan market, the market share of mass perfume will decline by about 15%. While at the same time, the niche perfume and its representative high-end market will grow by 18%. The international beauty giants have also invested more in high-end perfumes in recent years. Recently, Estee Lauder spent $2.8 billion to buy Tom Ford. The latest financial report verified the right decision of Estee Lauder to increase the code of perfume - in Estee Lauder's fiscal year 2023 Q1, it declined 11% YOY. While Tom Ford and Le Labo perfume achieved double-digit growth, Jo Malone also had high-single-digit growth. L'Oréal is also ambitious with high-end fragrances. It announced a month ago that its Fine Cosmetics division has set up a new luxury fragrance brand division. Maison Margiela, Atelier Cologne, Viktor&Rolf, Azzaro, Diesel and Cacharel will be moved to the division. After Atelier Cologne and Mason Margiela, PRADA perfume has become a potential brand for L'Oréal Group to bet on the Chinese market.

According to data from the National Bureau of Statistics, total retail sales of cosmetics rose in November month on month. But overall still slipped by single digits compared to last year. In terms of vertical comparison, the year-on-year growth rate of cosmetics in November remained the lowest in five years. On December 15, the National Bureau of Statistics in China announced the retail sales data of consumer goods in November 2022. In November, the total retail sales of consumer goods was 3.8615 trillion yuan, down 5.9% year-on-year. From January to November, the total retail sales of consumer goods 39.919 trillion yuan, down 0.1% year-on-year. Promoted by the Chinese Double 11 Shopping and other influences, the national online retail sales are on the rise. From January to November, the national online retail sales of 12.4585 trillion yuan, up 4.2% year-on-year. Among them, the online retail sales of physical goods amounted to 10.81 trillion yuan, an increase of 6.4%, accounting for 27.1% of the total retail sales of social consumer goods. In terms of cosmetics-related data, total retail sales rose from a year earlier, but overall it still slipped single digits compared to last year. Specifically, in November, total retail sales of cosmetics were 56.2 billion yuan, down 4.6% year-on-year; from January to November, total retail sales of cosmetics were 365.2 billion yuan, down 3.1% year-on-year. In a vertical comparison, the year-on-year growth rate of cosmetics in November remained the lowest in five years. 2020 was the peak of growth in the past five years, with a growth rate of 32.3%, and the growth rate has continued to fall since then. The total retail sales growth rate of cosmetics has now been negative for four consecutive months. In terms of customs data, beauty cosmetics and toiletries imported 34,427.9 tons in November, down 14.26% compared with the same period last year. The import amount was 12.57 billion yuan, down 11.54% year-on-year. The total import of 388,671.5 tons in November, down 11.2% compared with the same period last year; the import value of 138.64 billion yuan, down 5.8% year-on-year. In November, pressure of market sales is mainly affected by the short-term impact of the epidemic, the improved quality and efficiency trend in consumer market has not changed. With further optimization of the implementation of the epidemic prevention and control measures on the ground, expanding domestic demand and promoting consumption series of policies gradually take effect. The development of consumer market resilience continues to appear. The residents of consumer demand will continue to release. Market sales are expected to steadily recover. The Bureau of Statistics said that in November, in the face of a more complex and severe international environment and Chinese domestic epidemic multiple challenges, the national economy maintains the recovery trend. The scale of investment continues to expand. The overall stability of market prices, the continued growth of new dynamics, people's livelihood protection is strong and effective. The general situation of economic and social enjoy stability.

The 5th China International Import Expo（CIIE） will be held at the National Exhibition and Convention Center (NECC) Shanghai from November 5 to 10, 2022. It is reported that L'Oreal Group, Estee Lauder Group, Unilever, and others will be present at the 2022 CIIE. The CIIE is the world's first import-themed national exhibition, with the number of exhibitors remaining at around 3,000. In the past five years, the CIIE has been successfully held for four consecutive sessions, with exhibitors releasing more than 1,500 new products, technologies, and services. The cumulative turnover of the first four sessions of the CIIE has increased year after year from $57.83 billion to $71.13 billion, and $72.62 billion to $78.42 billion. A total cumulative turnover was more than $270 billion. This year, among the exhibitors of CIIE, the world's top 500 and industry-leading enterprises amounted to more than 280, and the second cooperation rate reached 80%+. The three giants of global high-end fashion, the top ten medical equipment companies, the top ten pharmaceutical companies, and the top ten vehicle companies all exhibited, and 40 countries along the "Belt and Road" and 13 RCEP member countries had exhibitors. Nearly 600 trade missions under 39 government trade missions and nearly 100 trade missions under four industry trade missions will form a group to participate. This year, the beauty and daily necessities zone under the consumer goods section is planned to have three core categories, namely "facial care and color cosmetics", "body care and daily necessities" and "professional beauty". This year, the zone will focus on "beauty technology", "green low-carbon" and other industry hot topics to carry out a series of thematic activities. According to the official website of the CIIE, the Consumer Goods section will strongly recommend overseas small and medium-sized enterprises and emerging brands to exhibit. In addition to the world's top 500 and leading cosmetic industry companies, many high-quality niche brands are also highlighted in the section. From mass skincare products to professional color cosmetics, from body care to niche bath balls, global goodies can be found in this section. At the CIIE, buyers and consumers from all over the world will be able to see the debut of beauty products. The last CIIE had a total exhibition area of 366,000 square meters, with nearly 3,000 exhibitors from 127 countries and regions during the six-day exhibition period. Beiersdorf, KOSÉ, and COTY made their debut in the fourth edition of the CIIE. For Chinese companies, USHOPAL, the new Chinese luxury beauty brand group, and YASTEN, the parent company of Perfect Diary, also made their debut at the CIIE. In addition, exhibitors also included: L'Oreal, Procter & Gamble, Unilever, Estée Lauder, Shiseido, Kao, Johnson & Johnson, Amore Pacific, and many other companies that have participated several times. What “Innovation and Technology” will these companies show in the CIIE? In last year's CIIE, Estee Lauder Company brought its 14 brands sold in China and some hair care, skincare, and color cosmetics brands that have not yet entered the Chinese market, such as AVEDA, Dr. Jart+, LE LABO, and Too Faced, to the Consumer Products section. In April, Estée Lauder's Vice President of Public Affairs, Liu Wei, said that this year's zone would reproduce several new product debuts and world premieres. With more products integrating cutting-edge technology and the latest concept of green, Estee Lauder would bring a better experience for exhibitors and visitors. The CIIE has become the first choice for L'Oreal's annual debut of the latest beauty technology achievements. This year, L'Oreal will bring an unprecedented matrix of "five" new exhibits - new brands, new products, new technologies, new ideas, and new projects, including the handheld hair coloring device, dual optical facial tightening device, and many other new exhibits. This will showcase technology-enabled beauty and bring a multi-dimensional upgraded beauty experience to Chinese consumers. According to Unilever's WeChat Official Account, Unilever will bring more than 20 best-selling brands and hundreds of products in China and internationally to the CIIE, including AHC, Vaseline, Dove, and brands that have participated for five years, such as Tunemakers and Olly. And, Unilever continues the sustainable environmental concept from last year. This year, it will set up a sustainable zone, where exhibitors can experience recycling waste bottles, aiming to create a sustainable life. It is worth mentioning that this year is the 100th year of Unilever's investment in China, and Unilever will also set up a special time tunnel display area in the pavilion to showcase the 100 years of promoting China's daily chemical industry. In recent years, China's cosmetics market has grown rapidly. 2021 data shows that China ranks second in terms of market size at $81.1 billion, or 15.5 percent, making it the second-largest consumer of cosmetics in the world. Speaker of the Ministry of Commerce of The People’s Republic of China Shu Yuting said that as the world's first major international exhibition with the theme of import, the CIIE will continue to play a prominent role in international procurement, investment promotion, people-to-people exchanges, and open cooperation, and its comprehensive effect is expanding.

Estee Lauder recently revealed its first male skincare lab in China, focussing on scientific study, product development, and packaging design for male cosmetics. (Credit: Estee Lauder) On December 15, Estee Lauder China Innovation and Research Center was officially opened in Shanghai. The R&D center will focus on Chinese consumers and respond to local needs by conceiving, evaluating, formulating, and developing new products in a variety of areas including skincare, color cosmetics, fragrance, and hair care. Fabrizio Freda, President, and CEO of Estee Lauder Group, said, "We will strengthen our ties with Chinese consumers through this first-class R&D center. Driven by innovation and balanced with sustainable development, we will contribute to China's goal of achieving high-quality development." The R&D center covers an area of 12000 square meters, with advanced formula and clinical laboratories, shared space, interactive testing devices, packaging model studios, pilot workshops, etc., accelerating the realization of consumer insight to commercialization. The R&D center also has a special live broadcast room and experience center, so that Chinese consumers have the opportunity to participate in the co-creation of new products on-site. "As Estee Lauder Group has entered the Chinese mainland market for nearly 30 years, we continue to deepen our long-term commitment to the Chinese market." William Lauder, Executive Chairman of Estee Lauder Group, said, "We will continue to build a local talent team and cultivate a new generation of makeup scientists for China and the world." Estee Lauder plans to spearhead innovative research on Chinese and Asian skin characteristics in several sub-categories and product lines related to Asia. The R&D center will set up a Men's Skin Care Research Center to focus on scientific research, product and packaging innovation of men's skin care products, and clinical testing for Chinese male consumers. In addition, the R&D Center will soon be the Estee Lauder Group's first facility to achieve dual LEED and WELL Platinum certification, demonstrating the Group's commitment to sustainability. In this new R&D center, the Estee Lauder Group will focus on innovations in green chemistry, responsible sourcing, and sustainable packaging. "The increasing innovation and R&D capability will bring more new products that meet their needs, expectations, and aesthetics to Chinese consumers, and inject new vitality into the sustainable development of China's business." Said Fan Jiayu, president and CEO of Estee Lauder Group in China. Source: Estee Lauder

Abstract: Baixinglong's gross margin declined from 40.18% in 2020 to 34.8% in 2021 and further decreased to 29.56% in the first half of this year. Baixinglong admitted that there is a risk of facing a further decline in the gross margin if pulp prices rise further in the future. On December 14, cosmetic packager Baixinglong rang the bell on the Beijing Stock Exchange, with a stock code (833075), offering 12,314,850,000 shares (including over-allotments) to the online market at an issue price of 11.8 yuan (about $1.7) per share. As of press time, down 6.78%, now quoted at 11 yuan/share (about $1.58/share). Shenzhen Baixinglong Creative Packaging Co., Ltd. was established in 2008, with five subsidiaries and three production bases, specializing in the production of creative packaging products and creative design, with complete research and development, planning, design, and production links. Prospectus data showed that Baixinglong’s operating revenue of 282 million yuan (about $40.6 million), 426 million yuan (about $61.3 million) and 246 million yuan (about $35.4 million), respectively from 2020 to the first half of 2022. The net profit for the same period reached 22.4 million yuan (about $3.2 million), 42.1 million yuan (about $6.06 million) and 23.72 million yuan (about $3.4 million). However, the company's gross profit margin declined from 40.18% in 2020 to 34.8% in 2021, and further reduced to 29.56% in the first half of this year. Regarding the decline in gross margin, Baixinglong explained it for a number of reasons such as sales model, new revenue guidelines, raw material costs, freight prices, downstream demand, pricing strategy, and the characteristics of the creative design service business. Baixinglong acknowledges that if the pulp price increases further in the future, there is the risk of facing further decline in gross margin. Nevertheless, the gross profit margin disclosed in the prospectus of Baixinglong is still much higher than that of companies in the same industry. According to the China Packaging Industry Annual Operation Report (2021) released by the China Packaging Federation, in 2021, China's packaging industry above-scale enterprises completed a cumulative operating income of 1.2 trillion yuan (about $173 billion), a total of 8,831 enterprises above-scale industry, the average income of enterprises of about 130 million yuan (about $18.7 million). According to this, the revenue capacity of Baixinglong is in the middle and upper reaches of the industry. The main advantage of Baixinglong lies in its four-in-one development strategy of "brand strategy planning, creative design, technology research and development, and product delivery", with creative packaging and scientific research capabilities. From the prospectus, we know that since its establishment in 2008, Baixinglong has won 103 international design awards, 157 patents and 271 copyrights. It has independently developed technologies such as high gloss three-dimensional hot stamping, 3D suspended micro-nano anti-counterfeiting technology, textured hot stamping technology, UV digital embossing three-dimensional texture technology and anti-counterfeiting snap. This has laid the foundation for the long-term cooperation between Baixinglong and enterprises in consumer goods such as wine, cosmetics, tea and food. Among them, the creative packaging of cosmetics category accounts for about 23.81% of its total revenue, amounting to 58.366 million yuan (about $8.4 million), which is one of its major businesses. It is understood that its cosmetic, boutique-class business partners include Louis Vuitton, GUCCI, BVLGARI, L'Oreal, Elizabeth Arden and other internationally renowned brands. Among them, Baixinglong and BVLGARI and L'Oreal established a direct business relationship to public relations, holiday gift boxes as the main sales products. Brands such as Gucci, Disney and Diageo, on the other hand, reach cooperation through traders. From January to June 2022, Baixinglong's total sales to the top five customers were 99.9 million yuan (about $14.4 million), accounting for 40.54% of total revenue. The fourth-ranked cosmetic and boutique packaging customer, BALANCEINC, accounted for 4.63%.

The list includes L'Oreal, LVMH and Kao. Only 12 companies that achieved Triple-A, out of more than 15,000 companies scored. (Credit: CDP) CDP’s annual environmental disclosure and scoring process is widely recognized as the gold standard of corporate environmental transparency. In 2022, over 680 investors with over US$130 trillion in assets and 280 major purchasers with US$6.4 trillion in procurement spend requested companies to disclose data on environmental impacts, risks and opportunities through CDP’s platform. A record-breaking 18,700 companies responded. A detailed and independent methodology is used by CDP to assess these companies, allocating a score of A to D- based on the comprehensiveness of disclosure, awareness and management of environmental risks and demonstration of best practices associated with environmental leadership, such as setting ambitious and meaningful targets. Those that don’t disclose or provided insufficient information are scored an F. (Credit: CDP) L’Oréal is the only company that received the CDP Triple-A rating for the seventh year in a row. Nicolas Hieronimus, CEO of L’Oréal, said: “As the world’s leading beauty company, I believe that we have a duty to lead by example. We want to leverage our scale to become a catalyst of change and mobilize all parts of our ecosystem to address the pressing climate and environmental challenges we all face. By working together, we can create the beauty that moves the world.” Antoine Arnault, head of communication, commented: “Given our deep dependency on biodiversity, LVMH is particularly committed to scaling up regenerative practices within its supply chain that bridge the preservation of biodiversity and the fight against climate change.” In addition, Firmenich and Beiersdorf also obtained 3A evaluation. Source: CDP, L’Oréal, LVMH

The Double Twelve Shopping Festival was the last online shopping carnival at the end of the year in China, but the return of top influencers this year failed to reverse sales. (Credit: Website) On December 10, Li Jiaqi, who had "disappeared" for 10 days, finally returned to the studio. On the other hand, the first live show of China famous actor Li Dan on Taobao has attracted a lot of attention. Even if top insiders participate in the Double Twelve Shopping Festival, it is hard to cover up the fact that this year's shopping festival is cold. Many people in the beauty industry have told CHAILEEDO that "there is almost no brand stock this year" and "there is no enthusiasm". From the data, Li Jiaqi launched a total of 35 beauty personal care products on the evening of December 10, and only 10 products have been sold out. In the live broadcast on the 11th, only 25 beauty personal care products were launched, and only 7 products were sold out. Compared with the Double 11, the Double 12 is a tragic battle. Talk Show actor Li Dan, in the second Double 12 warm-up live streaming then plummeted, only 2.266 million watched, and beauty category sales are low, some product sales only single-digit. Live streamers' attitude and arrangement for Double 12, reflected in the big data is also not ideal. According to the Tmall APP hot sales list compiled by Green Eye Intelligence for the Tmall Double 12 skincare and color cosmetics category hot selling single products, the highest selling product in the skincare category is only 60,000+ pieces, and the highest selling one in the color cosmetics category is only 20,000+ pieces. When the big becomes the norm, the market tends to be saturated, and the network traffic of Double 12 has long faded. The 1-2 times a year promotion has become a weekly and monthly promotion, and the promotion "lowest price" has long been no longer scarce. The various promotions of the just-passed Double 11 and Christmas have continued to drain consumers' purchasing power, as evidenced by the declining total retail sales of cosmetics. "It's December 12 and the November 11 delivery hasn't arrived yet", the topic on Weibo has been read more than 87.27 million times. Affected by the epidemic and other effects, many consumers still have not received the Double 11 products. The beauty industry has experienced logistical disruptions, production suspensions, and reduced disposable income as consumers suspend work. The desire to consume some non-essential products will naturally be reduced, and such a market downturn will continue for some time.

Abstract: According to CHAILEEDO data, there were 85 investments and financing in the Chinese beauty industry from January to November this year, with a single financing of over 100 million yuan (about $14.3 million) accounting for 25.9%. The number of investments and financing in China and internationally in beauty industry is 105 in total. In the international market, Estee Lauder acquired Tom Ford, L'Oreal invested in biotechnology companies. Recently, Unilever's first investment in Southeast Asia was ESQA, an independent vegan beauty brand in Indonesia. We can see that capital and international giants are still increasing the development of beauty. So, during the winter of beauty this year, what kind of beauty companies are favored by capital? What are the heated trends that capital is chasing today? Keywords: technology beauty, clean beauty, synthetic biology According to CHAILEEDO statistics, from January to November this year, there were 85 investment and financing events in Chinese beauty industry, down 32% year-on-year. Two more companies received financing in December. As of the press, there are 87 financing in the Chinese beauty industry this year, covering beauty and personal care brands, ingredients R&D enterprises, OEM/ODM enterprises, beauty technology enterprises, cross-border e-commerce, brand management and other categories. Moreover, international beauty giants L'Oreal and Estee Lauder have also participated in a number of investments or acquisitions this year. After de-emphasis, the number of Chinese and international beauty investments and financing is 105. Excluding brand management and cross-border e-commerce companies, CHAILEEDO collated 10 cosmetic-related companies that have disclosed financing amounts of more than 100 million yuan (about $14.3 million) so far this year. HARMAY and WOW COLOUR, two beauty collection stores, were invested more than 500 million yuan (about $71.7 million). It is worth noting that HARMAY has completed four rounds of financing, and the two rounds of financing officially announced this year amounted to $200 million, which also made it the top Chinese cosmetic enterprise financing this year. Of course, investing in brands is still the focus. Several brands have even received multiple rounds of financing. For example, after receiving a 10-million-yuan investment from ZCapital in January, DOCUMENTS received another minority investment from L'Oreal in September. The synthetic biology brand GsynBioT also received two tens-of-millions financing. The technology skincare brand YOUNGMAY received three rounds of investment. CHAILEEDO collected 40 financing for beauty brand this year. It was found that the categories are diverse, covering makeup personal care, fragrance, beauty device, oral beauty, etc. Compared to the previous two years of makeup fever, makeup brands received less attention, clean, organic or technology skincare has become the focus this year. In addition, the upstream ingredients companies become the favorite. Synthetic biology has become the most hit. Compared to clean beauty which emphasizes plant extraction and clean ingredients, synthetic biology has more distinctive technology and R&D attributes and also has a higher industry threshold. Companies that are mature and have certain R&D results are more concerned with capital. In general, with independent R&D system and technical advantages will be the main theme of the beauty industry. This type of enterprise is also relatively easier to obtain capital attention. What do the international beauty giants love to invest in? For the Chinese market, the international giants are still focusing on, L'Oreal, Shiseido, Unilever, BASF, etc. are involved in the investment of some Chinese enterprises. In the international market, the beauty giants also did not stop the pace of conquering the market. Through the investment trends of 11 well-known international beauty companies since this year, CHAILEEDO found that the acquired/invested companies cover a number of sectors and categories such as ingredients, skincare, personal care, color cosmetics and even beauty technology, synthetic biology, etc. Almost every month, there are investments and mergers and acquisitions. Among them, L'Oreal, Shiseido, Unilever's investment is the most frequent, especially the L'Oreal Group. From September to November, L’Oreal has officially announced three financing/acquisition. In September, L'Oréal announced the acquisition of Skinbetter Science, a high-end skincare brand and another investment in DOCUMENTS, a high-end fragrance brand in China. DOCUMENTS was founded in 2021, which is the first investment made by L'Oréal China Ventures since its establishment in May. L'Oréal is not the only one with a focus on the high-end. Last month, Estee Lauder spent $2.3 billion to finally acquire Tom Ford, a high-end ready-to-wear and beauty brand. The leading luxury goods group Kering also join the competition of acquiring Tom Ford. Some insiders speculate it is an important step for Estee Lauder to enter the fashion industry Byredo was also involved in this trend of acquiring. After several rounds of battles, high-end perfume group Puig was bought by the top luxury fragrance brand Byredo to extend its brand matrix in May this year. According to international media reports, L'Oreal Group had also planned to acquire the brand. This shows that high-end brands have always been a must-have for head beauty groups. Brand awareness is one aspect. The long-term development of a brand ultimately depends on its core technology. The layout of upstream enterprises is also one of the important reasons why the giants can continue to develop. For this reason, the first investment of Shiseido China's first investment fund, Ziyue Fund, chose the recombinant collagen ingredients company Trautec, which is also an important step for Shiseido to deploy new biomaterials for beauty and explore functional skincare products in advance. Recently, L'Oréal also announced an investment in biotech company Microphyt to further its sustainability goals. New strategy to explore the future From the current investment and financing, expansion is one aspect, while strategic contraction, brand integration and the construction of incubation centers are another focus of beauty companies. Recently, P&G revealed its latest growth strategy at its investor day event, saying the company has no plans to rely on acquisitions to drive growth. In fact, P&G once relied on a major acquisition spree to boost its revenue, with its biggest acquisition being the $57 billion Gillette announced in 2005. In recent years, however, P&G has trimmed its brands from more than 170 to 65. It has acquired only the probiotic skincare brand TULA this year. In addition, Unilever is also in the process of slimming down its brands. According to previous international media reports, Unilever has started to evaluate its beauty and personal care brands, and some underperforming brands may be sold. Not only P&G and Unilever, even Shiseido, which has officially announced three financing/acquisitions this year, has been seeking brand optimization and internal restructuring in recent years. Just this month, Shiseido announced a number of internal organizational and personnel changes. It reorganizes six old divisions into seven new ones and appoints a new leadership team for each of them, moving toward its medium- to long-term strategy "WIN 2023 and Beyond". The strategy plans to achieve sales of approximately 1 trillion yen and an operating profit margin of 15% by 2023 as a Skin Beauty Company. Regardless of the ups and downs of the market, opportunities are always emerging. Companies should nurture quality companies while optimizing internal structures. Reviewing the situation and making the change at the right time is the way to grow for the beauty giants.

CHA LING officially said that the store closure is due to operational planning adjustments. It is worth mentioning that the same group's high-end beauty KENZO will also close its official flagship store on Tmall recently. This may indicate that LVMH is shrinking its beauty business in China. Today there is news that LVMH's Oriental skincare brand CHA LING has closed all offline independent stores in China. CHAILEEDO found that the current sales channels of CHA LING are only China Sephora online and offline, as well as Cha Ling Tmall flagship store according to CHA LING official account. There are no offline independent store sales channels. It is reported that Tea Spirit is an Oriental skincare brand founded by the LVMH Group, with Pu-erh tea as the main tone of the brand. In 2016, CHa LING opened its first offline store in Paris Le Tent Marche department store. It soon came to China. The three stores of CHA LING in mainland China were opened at HKR, IFC in Shanghai and The Mixc in Hangzhou. It can be seen that CHA LING's location is one of the most luxurious shopping centers in the city. In Hong Kong, CHA LING also opened offline stores in Harbour City, Pacific Place, Hysan Place and K11 Musea. However, it started to go downhill after the world's first store in Le Tent Marche went out of business. Today CHA LING is no longer on the list of stores in several shopping malls in Hong Kong and three stores in Shanghai and Hangzhou were recently closed. CHA LING said that the store closure is due to operational adjustments. In China, CHA LING’s products will be sold in Sephora as an exclusive brand. Its online official mall on the Chinese social platform WeChat "CHA LING WeMall" also closed in this change. It is reported that the products of CHA LING use Pu-erh tea as its ingredients. After 6 years of research and development, CHA LING officially debuted in 2016 in Le Pommache, which is positioned as high-end, including 3 major categories fragrance, skincare and body care. As for the closure of CHALING in China, some commentators from one of Chinese We media said that for most Chinese consumers, Chinese culture or herbal medicine is not the main reason driving to make a purchase decision. It is worth noting that recently, LVMH, the parent company of CHALING, had the slowest revenue growth in the third quarter in its beauty and fragrance division, recording only 10% to 1.959 billion euros (about $2 billion). And the Asian market of LVMH covering China grew sales by 2%, with the sales share slipping to 32%. Some time ago, the same group's high-end beauty KENZO announced that its official flagship store on Tmall will be closed on December 30, 2022. The announcement said that after the closure, KENZO will continue to serve consumers in the Sephora channel in China. This may indicate that LVMH is shrinking its beauty business in China. However, LVMH is still confident about the future. Chief Financial Officer of LVMH Jean-Jacques Guiony has said that the luxury industry is not immune to recessions and shocks. But from experience, brands that are strong enough tend to emerge from adversity and even become stronger.

On December 8, Unilever announced that Unilever China Hefei Logistics Park had won the LEED Zero Energy and Zero Carbon certification issued by the U.S. Green Building Council (USGBC), which is the first LEED Zero Carbon and Zero Energy dual certification logistics project in Asia. It is reported that LEED Zero was formally proposed at the International Green Building Conference in November 2018. As a supplement to Leadership in Energy and Environmental Design, LEED Zero provides a new framework for LEED projects with global ambitions to achieve the goal of net zero, including LEED zero water consumption certification, LEED zero energy consumption certification, LEED zero carbon certification and LEED zero waste certification. At present, about 182 countries and regions in the world have participated in LEED certification, and only seven countries, including China, Brazil, the United States and India, have LEED Zero projects. Unilever China Hefei Logistics Park covers an area of more than 120000 square meters, with a monthly order throughput of 111000 tons, and plays a very important role in Unilever China's supply chain layout. LEED Zero Energy certification requires that the project must achieve energy balance in the past year. The balance is based on the amount of energy consumed and generated by the project, and the total energy consumption must be less than the on-site/off-site renewable energy. LEED Zero Carbon certification requires that the total carbon production in the past year is less than the total carbon offset. Unilever said that in the future, it will continue to explore a sustainable business model in line with its business development, integrate sustainability into every link of production, operation, construction, and development, provide consumers with sustainable and high-quality products, and strive to make sustainable life within reach. "Unilever China is critical to Unilever's success, and we have explicitly and repeatedly called out China as a strategic priority," said Alan Jope, CEO of Unilever. Source: Unilever