Win in efficacy, welcome the future. On September 22, The 5th CHAILEEDO Conference on China’s Cosmetic Trends hosted by CHAILEEDO was held in Hangzhou. Symrise is a leading global supplier of flavors and fragrances, cosmetic active ingredients and raw and functional ingredients. We invited Mr. Lao Shuquan, China Director of Symrise Cosmetic Ingredients Department, to discuss the market trend of efficacy products in China with us. Q: First of all, we would like to ask you how do you understand that efficacy and safety are a double-edged sword? A: Thank you for the invitation from CHAILEEDO. In the whole cosmetic industry,if we only talk about efficacy but not safety, the industry will become very chaotic.It is so chaotic that consumers have completely lost confidence in the industry.Why?If the safety is not done well,it will appear many unpredictable things. So I think safety should come before efficacy.Because the efficacy means that we need to let our consumers experience difference.then this difference must be sacrificed some factors. So we need to take safety as the basis of efficacy.You also mentioned the efficacy needs to be evaluated and measured,so how should this be implemented, what industry consensus is needed? The first one is to be very thorough in terms of mechanism.That is, at least we know the biological mechanism. So I think this is a prerequisite.If the mechanism is not clear,then I think there is no way to say that the efficacy. As for the measured, I think establishing mechanism of the evaluation of efficacy is the premise of the biological mechanism. Evaluation method should be established.So we see that the efficacy of the Chinese regulations are actually no test method.That is why there is a standards,but all because many of the efficacy of the current test method is not yet available.For evaluated and measured, I think that is a inevitable way to do good efficacy.Of course, there are many cosmetic efficacy evaluation institute in the market.But the measure institute is still blank.Our country now has many evaluation methods and there is no national standard. Q: We heard some industry views that the current record of new ingredients has been too much because they have no innovation. How do you see this view? A: I don't think we can say that there is too much of it.Because the difference between efficacy of new ingredients regulation sand the original regulatory system is still exist.That's why no new ingredients have been approved for so many years.Of course, the 377 from our company Symrise is one of them.But the number of new ingredients for the record is not much. Only seven or eight in the past ten years. After the change in regulations now,ingredients with same efficacy began to emerge.So I personally feel that there is no too much.Then as for the problem you mentioned no innovation and homogenization,I think at present there is indeed such a phenomenon.That is, the first, you can see different people record the same ingredients.Second, there are a lot of ingredients thatare not new molecular structure of 0 to 1, which means that it has no innovation.When we are now a lot of new ingredients are actually doing the filing. Our Symrise also don’t register any ingredients.So I think there is no problem that ingredients are too much.But if you want to do a good job, doing a differentiated may have a long road to go.But there is other thing.Because a lot of ingredients is filed, filing also means that no regulatory agency will regulate the ingredients.You just follow the regulatory requirements later maybe some regulatory will monitor.So in the absence of such a process,if we now have a lot of ingredients are filed,do not rule out the possibility that there will be some recording new ingredients have problem in the future. Q: We would like to know what kind of characteristics you think the development of efficacy skincare products in China has? A:I think the development of efficacy skincare products has several characteristics.The first is that the pace of the regulatory system will be slower,even slower than the pace of the launch of international cosmetics.Because of the legal requirement there are various changes in the evaluation and testing. So it will be slow. Second, the description of the efficacy will be very concentrated.What's the problem then?It is possible that some brands may not be able to compete in this area.So it is possible to concentrate. Another point is that I think in this efficacy skincare products because current regulations only defined several efficacy,more efficacy in the past then today,homogenization is more serious on this, which is what we call involution. In this case, if you want to be different,the composition can be focused on.Efficacy evaluation can also be different.Another point, I think China's efficacy skincare products may develop in the direction of customization. Q: Do you think there are opportunities and challenges for local Chinese ingredients suppliers? A: I think there are several good points for the local ingredients manufacturers in China.he first is that the market is big enough and there are enough consumers.So I think in the future, consumers will actually give priority to the choice of our local ingredients and our Chinese historical heritage.You mentioned that Symrise has considered the localization of raw materials,is this a chance for your company?This is what we are exactly doing. Why?Because first, we have been developing in China for many years. We now have a certain size,so we have to do it.Secondly, as you know,the pandemic and foreign military conflicts have led to energy and other problems.So we have to do localization.In terms of localization, we are not saying that we need to do it, but we have already reached a certain stage.For example, we have started to achieve localized supply,and later we will achieve localized R&D.

Seeing the Tmall Pre-sale Top 20 of color cosmetic brands of Chinese Double 11 Shopping Festival, international brands still occupy the vast majority of ranking, but Chinese domestic color cosmetics brands such as Blankme and Joocyee have risen in the rankings and performed prominently in this year. On October 24, the first day of the Tmall Double 11 pre-sale, according to the Tmall Pre-sale Top 20 of color cosmetic brands, M-A-C, 3CE and YSL Beauty and other international brands still occupy the forefront, while two domestic brands Florasis, Blank-me squeezed into the Top 10. Perfect Diary, which was once occupied the No. 1 Chinese color cosmetic brand, fell out of the pre-sale list for the first time. It can be seen that the Chinese domestic color cosmetic brands again changed a lot. Only 5 Chinese color cosmetics brands in the TOP 20 while Perfect Diary fell out On October 24, the pre-sale activities annual Chinese Double 11 Shopping Festival officially kicked off. For this year's beauty industry, after suffering the first nine months of decline in the trough, the urgent need to fuel through the shopping festival and boost year-end performance. Looking at the first day of pre-sale of color cosmetics sector in this year's Double 11, it is easy to find that international brands still occupy most of the rankings and their dominance is difficult to be shaken in a short period of time. But at the same time, Chinese domestic brands also show an upward trend in the list, ranking parity and the number on the list have been increased to a certain extent, especially the innovative brands such as Blank-Me and Joocyee are performing brightly, which are the new face of Chinese Double 11 color cosmetic section. The top three on the list were occupied by M-A-C, 3CE and YSL Beauty. As Estee Lauder's makeup sub-brand, M-AC's pre-sale performance has soared in the past two years. In the 2021 Double 11 first day pre-sale list, M-A-C only ranked 14th. But in this year's pre-sale list of Chinese 618 Shopping Festival and Chinese Double 11 Shopping Festival, M-A-C jumped to 2nd and 1st respectively, especially eye-catching among a number of international brands. Another major international brand Lancome is showing a downward trend from 2021 No. 2 to this year's No. 10. In its place is the Korean makeup brand 3CE, since on the first day of pre-sale list during last year's Chinese Double 11 Shopping Festival in 12th place, 3CE surpassed YSL Beauty, Make Up For Ever and other major brands, ranking No.2 in this year's pre-sale list. It should be noted that Lancome, 3CE, YSL are from the L'Oreal Group. When international brands are competing, the list of Chinese domestic cosmetic brands have also experienced a new round of reshuffling. Florasis, focusing on oriental makeup, soared its performance with a distinctive positioning and excellent product strength in the Chinese domestic color cosmetics, among the top position in the pre-sale list. On the first day of the total pre-sale list, Florasis is secondly after M-A-C, 3CE and other international brands, occupying the fourth place. Some other innovative Chinese color cosmetic brands also performed brightly. Among them, Blank-Me has entered the Top 10 of the Double 11 first-day pre-sale list for 2 consecutive years, while another brand, Jooycee, made the list for the first time in this year's Chinese 618 Shopping Festival and pre-sale Double 11 Shopping Festival. It is understood that Jooycee is a color cosmetic brand incubated by Shanghai Joy Group in 2019, with the same division as Judydoll. Currently Jooycee has launched product series such as amber, silk and others. The two brands with big changes in Chinese color cosmetics brands are Colorkey and Perfect Diary, especially Perfect Diary fell out of the list, not in the top 20. According to CBNData data, Perfect Diary stood out in the Tmall Double 11 sales performance since 2018 and has since fueled the top of the color cosmetics category during the Tmall Double 11 in 2019 and 2020. However, since falling out of the Top 10 of the color cosmetics pre-sales list during last year's Double 11, Perfect Diary's pre-sales performance ranking has dropped twice this year. And further back, before 2018, Chinese domestic color cosmetics brands such as Carslan, Marie Dalgar ranked top. In just a few years, the color cosmetics market ushered in a few times change. Li Jiaqi can increase the ranking? On September 20, Li Jiaqi, who had stopped live streaming for more than three months, officially resumed Taobao Live, which quickly attracted widespread attention in the industry. After a brief slump in this year's Chinese 618 Shopping Festival, Li Jiaqi's return also allowed the industry to regain confidence in this year's Double 11 Shopping Festival. As it turns out, driven by the super head influencer Li Jiaqi, the attention of this year's Double 11 has been generally enhanced. It is observed that the discount on products in Li Jiaqi live streaming has also been slightly enhanced this year. Compared to last year, an eye shadow from 3CE which was sold on Li Jiaqi’s live streaming was 179 yuan (about $24.7) per unit. This year, it was reduced to 161 yuan (about $22.2). A loss powder from Florasis was priced from 199 yuan (about $27.4) down to 149 yuan (about $20.5). It is worth noting that on the October 24 Li Jiaqi’s live streaming, color cosmetics are mostly from international brands such as Make Up For Ever, Lancôme, YSL Beauty, Givenchy, etc. There are very few Chinese domestic brands. Florasis is one of the few Chinese domestic brands that appeared in Li Jiaqi's live streaming. On the first day of Li Jiaqi's live streaming, Florasis premiered a new loose powder that it co-created with Li Jiaqi, as well as a sunscreen, air powder and eyebrow pencil. And compared to the just released color cosmetics pre-sale list, the Top 20 list of 19 brands have cooperated with Li Jiaqi, it can be shown that Li Jiaqi has strong ability to promote products. As the most rapidly developing e-commerce platform in recent years, TikTok China has gradually become one of the channels that brands focus on increasing. According to Feigua data, the GMV of the beauty category on TikTok China platform reached from 6.6 billion yuan (about $910 million) to 10.8 billion yuan (about $1.5 billion) in September 2022, which is about 31%-55% of the Ali-related platform. In addition, self-brand live streaming has also become a means for brands to dig deeper into the value of users, which is also the key for some new brands to stand out. Overall, the new competitive landscape of the color cosmetics sector has initially taken shape. How not to be overtaken by new players is these brands have to continue to make efforts.

In the first three quarters of this year, Chinese domestic retail sales in cosmetics were 277.4 billion yuan (about $38.2 billion), down 2.7% year-on-year. Against this backdrop of a weak cosmetics market, the performance of Winona's parent company, Botanee Group (BTN) achieved strong growth of 37.05%. On October 25, Botanee Group released its financial results for the third quarter of 2022. The financial report showed that Botanee Group's revenue in the first three quarters was 2.895 billion yuan (about $400 million), up 37.05% year-on-year. Its net profit attributable to shareholders of the listed company was 517 million yuan (about $71.2 million), up 45.62% year-on-year. In the third quarter, Botanee recorded revenue of 846 million yuan (about $116.5 million), up 20.65% year-on-year. Its net profit attributable to shareholders of the listed company was 122 million yuan (about $16.8 million), up 35.49% year-on-year. The financial report shows that its revenue still maintained a 37.05% growth in the first three quarters, mainly due to the further improvement of its products and brand awareness and faster growth in sales scale and sales revenue. Moreover, with the growth of Botanee Group's sales scale and sales revenue, its operating costs increased by 37.75% to 672 million yuan (about $92.5 million) in the first three quarters, including R&D expenses of 126 million yuan (about $17.4 million), a year-on-year soar of 84.66%. Botanee Group said that its R&D investment in the first three quarters matched with research direction and research progress. It is worth mentioning that according to Botanee Group's financial reports for 2020 and 2021, the sales contribution of Winona is over 98%. In recent years, relying on the expanding brand awareness of Winona, Botanee Group has only gradually become known to the public. According to a research report by Guolian Securities, before 2015, China's domestic dermatology-grade skin care market was dominated by international brands. The top three brands in terms of market share were Avène, Vichy, and LA ROCHE-POSAY, which were all from France, with a combined market share of 57.6% for the three brands, while Winona's market share was only 6.8%. By 2020, its market share of Winona has increased to 21.6%. The official data of Tmall shows that on the first day of pre-sale, Winona became the only Chinese beauty brand with a pre-sale turnover of over 1 billion yuan (about $138 million), of which "Winona Freeze-dried Mask" exceeded 400 million yuan (about $55 million) with sales of over 3.9 million boxes, taking the lead in the pre-sale list. In addition, the performance of each big single product under Winona is also outstanding. According to Tmall data, within 4 hours of the pre-sale, the ace product Winona Anti-Sensitive Moisturizing Tolerance-extreme Cream sold over 2 million units. Its new product Soothing Moisturizing Extra Care Essence sold over 600,000 units. Winona Sunblock Milk sold over 900,000 units, and Winona Rich Moisturizing Repair Cream sold over 270,000 bottles. As of press time, the real-time Botanee share price is 153.7 yuan, up 6.3%. Botanee enjoys a total market value of about 64.27 billion yuan (about $8.85 billion).

Thanks to the strong growth of Rellet and Dr.ALVA from Freada under Lushang Development, the operating revenue of the cosmetics segment in the first three quarters increased by 43.9% year-on-year. On the evening of October 27, Lushang Development announced its financial results for the third quarter of 2022. The report showed that the enterprise's revenue in the first three quarters was 8.529 billion yuan(about $1.2 billion), up 34.33% year-on-year. The net profit attributable to the parent company was 154 million yuan(about $21.3 million), down 69.44% year-on-year. The third quarter revenue was 3.694 billion yuan(about $511 million), down 61.89% year-on-year, but the net profit attributable to the parent company plunged 118.45%, a loss of 350 million yuan(about $48.4 million). Lushang Development is named Shandong Commercial Group Co. Ltd., which is a large state-owned enterprise established by Department of Commerce of Shandong Province at the end of 1992. The company is positioned as a leading integrated operator in the Chinese domestic health industry, and its subsidiary, Shandong Freda Pharmaceutical Group Co. Ltd. is involved in the field of cosmetics, including some cosmetic brands such as Rellet, Dr.ALVA and others. During the reporting period, in cosmetics, from January to September 2022, Lushang Development's cosmetics segment generated revenue was 1.429 billion yuan(about $198 million), with a gross margin of 58.56%, up 43.9% year-on-year. From January to September 2021, the operating revenue of Lushang Development's cosmetics segment was 993 million yuan(about $137.2 million). Among them, Rellet achieved a revenue of 540 million yuan(about $74.6 million) from January to September 2022, and Dr.ALVA achieved a revenue of 745 million yuan(about $103 million) from January to September 2022. It can be seen that the cosmetics segment has increased significantly this year. According to the financial report, in the last quarter, Shandong Freda Biological Co., Ltd. further strengthened its scientific research strength, officially opened the R&D innovation center, held the third skin microecology conference, and launched the industry's first skin microecology scientific skincare platform. It jointly launched its first co-branded gift box with the famous IP Minions. In terms of products, Rellet and Dr.ALVA of Freda were awarded the 2022 National Trendy Brand of the Year in China. and Rellet was awarded the 2022 Beauty V Award by the Chinese social media platform Weibo. Dr.ALVA won the Tmall Beauty Awards. It is worth noting that in recent years, Rellet is growing rapidly with its hyaluronic acid and rapidly expanding its market share. In 2021, Rellet's main product HA Moisturizing Spray won the Tmall Beauty Annual Lotion Awards. During that year's "Tmall Brand Day", it also won the "Super Lotion of the Year" award in the toner category. In addition, it ranked first in the toner category in terms of sales, repurchase rate and good review rate during the "Tmall Brand Day". In the first half of 2022, the product was upgraded in terms of ingredients, efficacy and packaging, and the Hyaluronic Acid Mist 2.0 upgrade product Rellet Hyaluronic Acid Deep Hydrating Spray was launched and 20,000 bottles were sold on the day of launch. In addition, Rellet's Hyaluronic Acid Rescue Mask sold over 600,000 boxes, making it the top 2 product of Rellet. In addition, according to the financial report of Lushang Development, the parent company of Freda, Rellet achieved an annual revenue of 646 million yuan(about $89.3 million) in 2021, an increase of 73.08% year-on-year. In the first half of 2022, Rellet achieved a sales revenue of 388 million yuan(about $53.6 million), an increase of 43.53% year-on-year, which is much higher than the market growth rate.

Win in efficacy, welcome the future. On September 22, The 5th CHAILEEDO Conference on China’s Cosmetic Trends hosted by CHAILEEDO was held in Hangzhou. JALA Group is a digitally driven biotech beauty company. We invited Zou Yue, General Manager of JALA R&D Center, to discuss the market trend of efficacy products in China with us. Q: First of all, we want to ask what are the characteristics of efficacy communication in China? A: Thanks to CHAILEEDO for the invitation, Efficacy communication is now about evidence.so the next one will probably be the evidence-centric. From this point of view, I think it is also closely related to the implementation of the new cosmetic regulations.Any claim has to be based on scientific evidence and test reports.So I think this is a very important dimension of the scientific and technological communication of efficacy.Any efficacy has to be based on evidence. Q: In your speech, you mentioned that the communication from the professional end to the mass communication, what’s your opinion about that? A: I think professional communication is a communication between research technicians in a certain field of technology and academy.Then these communications and dissemination are very beneficial in spreading out.There is a gap between the dissemination in the professional field and the dissemination to the public.This is because there are many technical terms that are difficult for the average consumer to understand.This is one of the problems we encountered in the process of spreading our Himalayan-derived super yeast Himalin.At first, we had to sort out the professional material.Then we did some of our own internal releases.We found that our own colleagues could understand it very well,but it would be more difficult for ordinary consumers or the marketing department to understand. Then when the middle one goes out and sells it. So in the middle of this, we did a lot of conversions.We did the transformation of consumer language, creative and some analogy transformation to facilitate the consumers to understand.At the same time, in the end, it comes back to the product itself.What we care about is the consumer's feeling of using the product,whether there is efficacy after a period of time,and whether the efficacy report has some existing reports and literature to support the efficacy.So this is a very important aspect of efficacy communication. Q: So that's it. When it comes to products, we would like to know what are the differences between Chinese and international efficacy skincare products? A: In terms of efficacy,We Chinese may have thinner barriers of skin for particularly high-efficiency barriers not as sturdy as Europeans. So it is not very resistant to those components of particularly high-efficiency chemical components. China may basically be the effect of repairing in China.as well as anti-aging and firming, has been a more important efficacy demand for consumers in these areas.So I think that may be different from Europe and the United States.Then this is because our Oriental skin and European and American skin is not the same.Thus the solution is not the same. JALA which is digitization-driven is actually a very potential business. Q: So I would like to ask What digitalization has brought to JALA's research and development empowerment? A: In the past year and a half,our most important work is to our ingredient information, formula information,safety independent information, efficacy information, as well as claims that all of these information technical information are launched.Thousands of formulations are released.So from this point of view, it is a very important project. The transformation of digitalization is for R&D.It greatly improved the work efficiency of our R&D center. At the same time, we have realized one-click confirmation of formula transferring to the factory area.That directly connected to SAP seamlessly. In that case, the information from marketing, R&D, supplier can be launched online.Under the control of the epidemic,the digital transformation project of the R&D center has brought important support to the operation of the company in the life and death dimension. Q: This sounds like a very important point. The last thing we want to ask is what is the trend of R&D in the Chinese cosmetics market? A: So the trend now is to focus on R&D.You can see that the founders of many brands today are talking about how to do R&D.So from this perspective,I think the future trend is precision.R&D projects and project management of certain sectors that can generate benefits will become very important.So the trend is very difficult to predict.But in the past successful case,we can draw some lessons to predict some future trends. But the competition of R&D will become very fierce,that is, the competition of enterprises, the competition of product marketing.In the end, it will be reflected in the competition of R&D strength and technology communication.The technological power of the product and the competition of the sense of technology brought by the brand to the consumer. So this competition will be very fierce.This will be a good thing for our Chinese cosmetics market. Because it is the average consumer who benefits.

On October 27, Proya released the Proya Third Quarter Report 2022. The operating revenue was 1.336 billion yuan ($184.6 million), up 22.07% year on year. The net profit attributable to shareholders of the listed company was 198 million yuan ($27.3 million), up 43.55% year on year. In the first half of the year, under the influence of many adverse market environments such as the epidemic situation in Shanghai and the rising price of raw materials, the performance growth of many domestic and foreign cosmetics enterprises was interrupted, and some leading enterprises even experienced negative growth. According to the data released by the National Bureau of Statistics, from January to September, the total retail sales of cosmetics were 277.4 billion yuan ($38.336 billion), down 2.7% year on year. According to CHAILEEDO analysis of the last five years Proya semi-annual reports, in addition to the epidemic situation fierce 2020, Proya has been maintaining a steady double-digit growth rate, the first half of this year's revenue growth rate is only small than last year, net profit growth has even approached the 2019 level. In recent years, Proya has performed well in the capital market. At the beginning of the listing, the market value of Proya was 3.068 billion yuan ($424 million). As of the closing of October 25, the stock price of Proya was 159.95 yuan/share (22.105 dollars/share), and the market value was 45.35 billion yuan ($6.26 billion). According to the semi annual financial report of Proya, the proportion of online channel revenue in the total revenue has increased from 53.09% in 2019 to 88.27% in 2022. In the first half of 2022, the online revenue was 2.309 billion yuan ($319.1 million), achieving a growth of 49.49%. The offline revenue was 307 million yuan ($42.4 million), down 16.31% year on year. According to the official data of Tmall, in this "Double 11" promotion pre-sale, Proya ranks fifth in the list of Tmall's cosmetics industry and beauty and skincare brands. According to CHAILEEDO's statistics, the Proya brand in Li Jiaqi's live broadcast room has achieved a GMV of 491 million yuan ($67.8 million). For a long time, there has been a voice in the market that Proya "pays more attention to marketing than R&D". According to the Proya Third Quarter Report 2022, the sales expense rate from January to September 2022 is 42.93%, while the R&D expense rate is 2.41%. There is still a big gap between the two investments. Compared with other domestic enterprises, the proportion of R&D investment in Proya is also slightly weak. The data shows that in the first three quarters of 2022, the R&D expenses of BOTANEE accounted for 4.4% of the operating income. In the first half of 2022, the R&D expenses of BLOOMAGE BIOTECH accounted for 6.11%.

The 5th China International Import Expo(CIIE) will be held in Shanghai from November 5 to 10. As an exhibitor for three consecutive years, Estée Lauder Company will also participate in 5th CIIE for the fourth time this year. And this time, Estée Lauder Company said that it will practice its commitment to beauty with action in this year’s CIIE. Looking back at Estee Lauder's history at the CIIE, in 2019, Estee Lauder Company made its debut at the CIIE with its brand Aveda, and recently officially entered mainland China with its first offline store opening in Shanghai in August. At the second CIIE, Estée Lauder Company's two luxury fragrance brands Kilian and Frederick Malle made their debut and opened their first store in China in Shanghai in June 2020. In last year's Fair, 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, TIGATINE, LE LABO and Too Faced, to the Consumer Products Pavilion. The Estee Lauder Company showcased a number of handheld skin testing instruments at last year's CIIE, such as the Vapometer Transepidermal Moisture Loss Tester, which deciphers the skin barrier function and helps consumers to better select skincare products. and strength of skin care products, etc. In August, Estée Lauder Company reported fiscal year 2022 figures, with net sales for the fiscal year ending June 30, 2022, up 9 percent to $17.74 billion and net income down 16.7 percent to $2.39 billion. Sales growth was driven by the Americas and Europe, Middle East and Africa ("EMEA") regions, with growth rates of 22% and 11% in the Americas and EMEA regions, respectively, and a 1% decline in Asia Pacific, as stated by Estée Lauder Company President and CEO Fabrizio Freda in a public statement The Asia-Pacific region has been under "significant pressure" from the epidemic. The company's skincare, cosmetics, fragrance and hair care divisions grew 4%, 11%, 30% and 11% respectively, driven by brands such as La Mer, M-A-C and Jo Malone London. The Estée Lauder Company remains confident in China despite the poor performance in 2022. Estée Lauder's President and CEO said just last year at the CIIE that Estée Lauder Company is honored to participate in the CIIE for the third consecutive year. This year marks the 75th anniversary of the Estée Lauder Company and nearly 30 years in China. China has always been one of our most important markets throughout its development, and its importance is growing every day. China is one of the most exciting high-end beauty markets in the world and our commitment to China is long and strong. China is the Estée Lauder Company's largest international market and is also critical to the global supply chain for product packaging and ingredient sourcing." Estée Lauder said that in the future, the Estée Lauder Group will also continue to introduce world-renowned brands and quality products to provide Chinese consumers with more choices.

Recently, L'Oreal has been questioned about the cancer risk of its products. Previously, P&G, Johnson & Johnson and other leading beauty groups were also involved in several hair products cancer fiascoes. L'Oreal, whose performance rose sharply in the first nine months of this year, has recently been in trouble. According to AFP, recently (October 21), a consumer who is a long-time L'Oreal hair straightener in the United States, filed a civil lawsuit against L'Oreal. The consumer claims that L'Oreal hair straightener products have increased her risk of developing uterine cancer and is therefore seeking compensation. Some analysts believe that if the lawsuit is unsuccessful, L'Oreal will pay a large amount of compensation to the consumer. The product "caused cancer"? According to media reports, the consumer is an African-American woman who was found to have uterine cancer and had her uterus removed after using "these dangerous products" for nearly 20 years, her attorney said in an announcement. In addition, the attorneys cited a recent large-scale study released by the National Institutes of Health on Oct. 17, 2022, which said that women who regularly use hair straighteners have double the risk of developing uterine cancer compared to non-users. Based on the above, on October 21, 2022, she filed a civil lawsuit against L'Oréal for damages. It is actually not uncommon for perm and dye products to be caught in a cancer-causing case. An industry source pointed out, "From the point of time of the lawsuit, this time L'Oreal was sued by consumers may have more to do with the results of a study released by the National Institutes of Health." CHAILEEDO learned that the study included 33,497 U.S. women aged 35 to 74. They participated in a study led by the National Institute of Environmental Health Sciences (NIEHS), part of the National Institutes of Health, which aimed to identify risk factors for breast cancer and other health problems. The women were followed for nearly 11 years, during which time 378 cases of uterine cancer were diagnosed. The study noted that several chemicals (such as parabens, BPA, metals and formaldehyde) found in hair-straightening products by researchers may increase the risk of uterine cancer. Among other things, "women who used hair straightening products frequently (more than 4 times in the past 1 year) were more than twice as likely to develop uterine cancer as women who did not use such products." In other words, the study concluded that women who used chemical hair straightening products had a higher risk of developing uterine cancer compared to women who did not use these products. Also according to public information, as of 2018, Johnson & Johnson was awarded nearly $4.7 billion by a local U.S. court to compensate 22 women in the sensational "Johnson & Johnson talcum powder" incident. According to an analysis, "If the lawsuit is lost, L'Oreal will pay huge amounts of compensation to consumers and will also face a series of lawsuits." It is worth mentioning that in the survey from the National Institutes of Health, the researchers did not collect information on the brands or ingredients of hair care products used by women. In other words, the results of this study do not directly prove that L'Oreal hair straightening products have cancer risks. On Oct. 24, L'Oreal China told CHAILEEDO on the matter, "All straight hair products sold by L'Oreal in China are in full compliance with relevant national regulations and have been evaluated for safety." "That problem has occurred many times." On the issue of L'Oreal being sued by consumers, a senior R&D engineer told CHAILEEDO, "From the standpoint of ingredients alone, parabens, bisphenol A, metals and formaldehyde do have a relatively high risk of causing cancer. But hair coloring and perming products are all wash-and-go products with a relatively short stay on the scalp, and the real carcinogenic risk is also related to the use method and the number of uses." At the same time, the engineer also said that for some of the key ingredients that work in hair perm products, there are no alternative ingredients available on the market, "such as aniline substances for hair coloring, it is difficult to be completely replaced." Timely popularization of science is particularly important An engineer said, formulas designed in strict accordance with cosmetic safety specifications do not need to worry about carcinogenic problems, which is also a worldwide safety consensus. In fact, not only L'Oreal but also the brands of head beauty groups such as P&G and Johnson & Johnson have been involved in several carcinogenic controversies of hair products. What's more, they have also been questioned by the public about the quality of their products, resulting in damage to their brand image. For example, in December 2021, P&G was also put in the limelight when Pantene and other products were exposed to the detection of benzene, a class I carcinogen. In response, P&G said in a related announcement that the amount of benzene detected from the products involved was not expected to have a negative impact on health and that no adverse events related to the recall had been reported as of the announcement. However, the product recall is still underway for prudential reasons. At the same time, P&G China also responded to the matter, saying that "all shampoo and hair care products manufactured and sold in the Chinese market comply with the relevant national regulatory standards and are of safe and reliable quality". Even so, many netizens did not accept it, saying, "I hope P&G will pay more attention to the safety of their products and production process in the future, so as not to betray the trust of consumers, after all, Class I carcinogens are indeed very scary." "I hope they research and develop products properly, and do it with care so that consumers can use the peace of mind, not to make money with poor things as materials." As for perm and hair-dye products, CHAILEEDO also found that China Pharmaceutical News (a trade newspaper directly under the National Medical Products Administration) has also repeatedly popularized science to the public, saying that cancer is a long process that needs to be accumulated. For products such as regular production of hair dyes, the risk is controllable as long as they are used correctly, and the risk of cancer from using such products is extremely small. However, at a time when consumers are paying more and more attention to life and health, the quality and safety of cosmetics, as products that come into direct contact with human skin, are naturally being taken more and more seriously by consumers. In this context, if a product quality issue is brought to the attention of public opinion, it will also dilute consumers' trust in their products. From the side, the brand also needs to further improve quality control, timely respond to consumer queries, do not let consumers have a "crisis of trust" in the brand.

The 5th China International Import Expo(CIIE) will be held in Shanghai from November 5 to 10. Unilever will participate in the CIIE this year as promised. As the fifth time to participate in the CIIE, Unilever will continue to practice the theme of sustainable development and become a force in the dual circulation” development pattern in China. According to Unilever's official public account on WeChat, 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 still continues the sustainable environmental concept from last year. This time, Unilever sets up a sustainable zone at the booth of the CIIE, where exhibitors can experience recycling waste bottles, aiming to build 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 venue to showcase the 100 years of promoting China's daily chemical industry. According to Unilever's first-half financial results, the group's total turnover reached 29.6 billion euros(about $29.8 billion) in the first half of the year, up 14.9% year-on-year, and operating profit was 4.5 billion euros(about $4.5 billion), up 1.7% year-on-year. The China market recorded a low-single-digit decline in overall sales in the first half of the year after a strong start due to the impact of epidemic control in several key cities in the second quarter. Even so, Unilever will continue to invest in China, where it said it wants to accelerate growth in the US, India, China and key growth markets. In the U.S. and India, Unilever grew 8.7% and 19.5%, respectively, while in China growth declined 9.3%. The announcement mentioned that in China, the third largest priority market, the decline was mainly caused by epidemic control, but Unilever's competitiveness remained strong. According to Unilever's official report, Unilever has invested a cumulative US$3 billion in China, with products and services reaching 130 million consumer households in China. Zeng Xiwen, Unilever's global vice president and president of China public affairs, pointed out that "China is a key market in Unilever's global strategy, China's internal circulation has accelerated the construction of consumer cities and mobilized domestic demand, while the development of enterprises is about to rely on consumption and the market, and the consumer market has vitality in order for enterprises to achieve better development." The Chinese market is growing rapidly in Unilever's global market ranking, and has become one of the top three important growth markets in the world.

Win in functionalities and fight the future. On September 22, the 5th China Cosmetics Trend Conference and China Cosmetics Efficacy Trend Exhibition hosted by CHAILEEDO were held in Hangzhou with the theme of "Winning in Functionalities". Giant Biogene is the leader of recombinant collagen in China, and the first company in the world to successfully develop and industrialize recombinant collagen skincare products. Today, we invited Mr. Duan Zhiguang, Senior Vice President of Giant Biogene, to discuss with us the market trend of functional products in China. Q: We are honored to invite Mr. Duan Zhiguang, Senior Vice President of Giant Biogene, to give us an analysis of the cosmetics market in China. First of all, we would like to know what will be the characteristics of the development of Chinese functional skincare products? A: The current functional skincare products are mainly based on mild formulas and bioactive ingredients as one of their selling points, which is a new concept presented to consumers. It can be seen from the public information that the CAGR of functional skincare products containing bioactive ingredients will reach 40% from 2021 to 2027, and the entire market will reach 200 billion by 2027. Q: What are the trends of recombinant collagen market in China? A: Recombinant collagen itself is a kind of bioactive material. With the strengthening of market education and consumers' recognition of this functional skincare product based on bioactive ingredients, the penetration rate of the entire market will increase gradually. Q: what are the gaps between Chinese cosmetic raw materials and international raw materials? A: From the perspective of technologies, the gap should be getting smaller and smaller, or we can say we have surpassed international in some fields, such as recombinant collagen, which was implemented in our country on August 1, 2022. Biopharmaceutical industry standard recombinant collagen, and we are currently drafting international standards, and the companies that draft international standards are also our domestic companies, which is equivalent to saying that we have been recognized by international counterparts. Has been in the forefront of the international. From the perspective of raw materials, these core raw materials, we will have more and more raw materials in the future, which will be at the forefront of the world. Although some of our basic raw materials have some gaps with some big international brands and some big manufacturers in the early days, in general the gap is getting smaller and smaller, and the progress is huge. Q: We have learned that Giant Biogene is the leader in our recombinant collagen market in China. What methods does Giant Biogene take to maintain its leadership? A: We, Giant Biogene, have experienced 22 years of development in the field of recombinant collagen. During these 22 years, we have built a synthetic biology technology platform that is difficult to replicate. There are four major technology systems under this technology platform. Including gene recombination, cell factory construction, fermentation, separation and purification, each link has unique leading technological advantages, so it is difficult for our competitors to copy them when they are stacked together. And we have 33 recombinant collagens, building a huge molecular library, we are far ahead of our competitors in quantity and variety, which allows us to always be in a relatively leading position in this industry. Q: We also learned that Giant Biogene has released the application of recombinant collagen in dermatology and skin care. What impact will this application have on the collagen market? A: First of all, a prerequisite for the release of this application is the release of our industry standard recombinant collagen. In the standard of recombinant collagen, we have formulated the quality standard and standardized detection method of this recombinant collagen. The release of this application is equivalent to the accumulation of experienced people in this industry, reaching a consensus, establishing a standardized method, bringing new technologies and new concepts, which together will bring our consumers More practical and effective information will give us an important reference for the application of recombinant collagen in the field of skincare and professional skincare in the future. Q: What do you think are the characteristics of consumers who currently use recombinant collagen? A: The characteristic is that their professional knowledge is enriched, and then they become more rational and professional, instead of superstitious big names, only believe in efficacy, and believe in our own scientific and technological strength.

Win in efficacy, welcome the future. On September 22, The 5th CHAILEEDO Conference on China’s Cosmetic Trends hosted by CHAILEEDO was held in Hangzhou. Qingsong Fund is an early stage venture capital firm focusing on new technology and new consumer sectors. We invited Mr. Dong Zhanbin, Partner of Qingsong Fund, to discuss the market trend of efficacy products in China with us. Q: We are honored to invite Mr. Dong Zhanbin, Partner of Qingsong Fund, to share with us the trends in the cosmetic industry today. First of all, I would like to ask you what changes have occurred in the investment environment this year compared to last year? A: I think one of the biggest feelings in this year's environment is the increase of uncertainty, because now in the context of China-US trade and the economic downturn should be said to all walks of life have undergone huge changes. As you can see, basically every industry is now taking survival as the highest ideal. There is a big difference with the previous pursuit of high growth. As for the capital, the fund in U.S. is actually in a wait-and-see state. Because the U.S. and China trade, including some restrictions on the U.S. market, fund in U.S. for the technology sector basically has a lot of restrictions. But for the original traditional consumer sector, it should be said that in previous years the valuation of this sector and relatively high. Now is the fund in dollar is restrict for technology. For the consumption, it is still in a hesitant state. So it has caused the valuation of the funds. The frequency of fund in dollars in relatively low this year. In this case, we can see the type of startups also has a great change. The original traditional big consumer can not be attracted funding from many institutions. Some investors even have withdrawn from this area. The feeling of the whole environment is uncertainty, which is very big. It should be said that whether it is investors and some business entrepreneurs, they are now the whole economic confidence is not enough. They may be waiting for some may be better policies introduced. I think this is a bigger problem this year compared to last year, that is, economic growth is limited. People's confidence is not enough. Period. Q:What aspects do you personally focus on when you invest in beauty brands? A: I should say that there is a macro logic based on our judgment of the people, or a judgment of the project. I think this is a general rule. To put it simply, for example, for people, we may focus on the basic ability of the founder. Whether he has good learning ability, execution ability, communication ability, including the founder's internal state, the motivation of the venture, the degree of dedication in the process of the venture, and his ambition. I think this is the most general concern for the founder. For this end of the project, which involves beauty, we may add some specific information related to the industry. As for beauty, we may choose some targeted market first, for example, for the mass users of some more rigid needs. For example, he is concerned about whitening and wrinkle removal or some other needs. It should be said that the user has pain points, which means that we do not need to educate the market because the share of the market is large enough. This is the market. Then we will pay attention to the degree of innovation of this product. Whether the product presents the application of a new technology or a specific function. I think these are very critical. If it is just a mix of some ingredients and do not have too much differentiation concept. I think it is difficult to success. The product should be differentiated. It is best to be disruptive of this innovation. I also think that the entrepreneurial emphasis on the threshold. Before that, cosmetics may be more to see the marketing capabilities. Now the product itself is also very concerned about the barriers, that is, there are technological barriers, or some others difficult to exceed the place. I think these are the points that are different from the general products in cosmetics Q: What do you think will be the characteristics of the next innovative Chinese beauty brands? A: As far as we can see now, I think there are several major changes.One is the stronger technological attributes. Under the current environment, investors actually have higher requirements for the selection of the goal. As for the barrier, I think more is reflected in the product's technological attributes. Now the whole investors are concerned about the technology sector, that is, we will see more called bio-engineering. Such technology like synthetic biology began to apply to this cosmetics, health products and even more field. So these directions are at the forefront of some of the more cutting-edge places. For the whole cosmetics sector, I think it will inject new vitality. So relatively speaking, the threshold of research and development will be much higher than before.This is the piece of technological properties. Secondly, I think there will be some high-end cosmetic brands in China. We can see that the previous cosmetic products may have started to break through online. But basically the price of the products are in the range of several hundred yuan. Prices are very overlapping, so it causes the market to be very competitive. But in this year's environment, the cost of online traffic is already very high and it looks very difficult to break through simply from online. So I think that on the basis of better ingredients, better ingredients and more effective ingredients, there will be some high-end products in China that may cost thousands of yuan per unit. This is a relatively blue ocean. Because these are basically occupied by some large brands in Europe and the United States. I think That may not necessarily appear in the next three to five years, but in the long run will certainly appear China's own high-end brands, this is the brand of high-end such a trend. The third point I think is actually the emphasis on natural plant ingredients. Because of the development of synthetic biotechnology, we may be able to find some better natural ingredients, because natural ingredients have already occupied the minds of Chinese people, that is, they do not need to educate the market, for example, we say that ginseng soap, which we all know has very good health effects, so that some similar extracts from natural plants, and even modified some plant I think the ingredients will be more and more recognized by people and bring a bigger market. Q: In the past two years, efficacy skincare has become a popular market, what do you think are the trends in the efficacy market? A: For the efficacy, I think the first point is that we should emphasize quick effect. Because in fact, we started to emphasize efficacy from the previous few years. If we ask users to use a product continuously in the next year, eventually it will have some effect. But this process is very painful or difficult for consumers to persist. So I now feel that the efficacy means that the users can see the effect in one month or three months after using the product. This requirement is actually not very high. Because in fact, from some clinical tests, many products may bring some significant changes at the stage of one month. But for the user, for example, the use of habits or different methods of use, this may not be exactly in accordance with the experimental conditions. It may be difficult for him to feel such a change in a short period of time, but if he does not feel such a change, in fact, he may have lost during the early period, which I think is very unfortunate. So from the efficacy to quick effect, I think this is a place to pay special attention to. It may be a good product. But if it can’t let the user see the changes within a month or three months, he will be lost. It is a great pity that it is lost. When it comes to the quick effect, I think there may be a second approach, which is to emphasize this private domain approach. It is to say that these effective users, through a more accurate community operation to activate them to, such as the formation of good habits. Many brands are helping users to do something like motivation so that you stick to the use their products several times a day. If you complete, you will also receive some rewards.This is actually an incentive for users to form a good habit, which I think is a relatively common change in operations. And then I think the innovative brands may now put more emphasis on the comprehensive strength of a team. In the past, under the situation of capital promotion, we may place more emphasis on some traffic-powered companies, which have money to invest in marketing and then growth can be guaranteed. But now that capital has become relatively cold. We hope that the team is more comprehensive and does not have an obvious shortcomings so that it may be able to survive the first investment of funds. It may become less dependent on the outside world. It will become relatively weak, so that comprehensive is what we hope to see is some white horse type of company, that is, the founder already has such experience as a large factory, the strength of research and development is also very strong, or the company finds a kind of special effects we say the ingredients. Then there is the marketing end, online and offline promotion is also very comprehensive. In the current environment, such team may still be able to win the favor of investors. But compared to the previous dark horse type of company, which may be particularly strong in one aspect and hope to rely on future funding to make up for it, this situation I think will become very rare.

Win in efficacy, welcome the future. On September 22, The 5th CHAILEEDO Conference on China’s Cosmetic Trends hosted by CHAILEEDO was held in Hangzhou. CENKONG is one of the leading OEM/ODM factories in China. We invited Zhu Hong, General Manager of CENKONG, to discuss the market trend of efficacy products in China with us. Q: We are very honored to invite Mr. Zhu Hong, General Manager of CENKON, to share with us about the trends in the Chinese cosmetics market. First we would like to discuss that as the efficacy skincare has become a hot topic in the last two years, what do you think are the trends in the efficacy market? A: Thanks to CHAILEEDO for the invitation, Actually, in the cosmetic field, everyone has always wanted to do something different including moisturizing, anti-wrinkle and repairing etc. These functions are actually a dream that our major and international beauty brands have been pursuing. In fact, the meaning of the existence of cosmetics is to improve the quality of life of people and let them stay young forever. This is a dream that we all pursue. Therefore, efficacy has always been a long-standing topic. But for the past two years what is the future trend of efficacy? In fact, there are several stages in the iteration of efficacy including the earliest we used mineral oil later it became an emulsification system and then became a plant extract. Now the latest version is the efficacy version 4.0.We are now into the era of biological fermentation, including biosynthesis. Q: Involution is the new normal in all walks of life. In what ways can cosmetics OEM/ODM break through? A: For OEMs, we have always followed a few standards. Doing a OEM/ODM is not just to do a product producer. You have to become a partner of your brand. In terms of this partner, it actually has many aspects. That is, a product is built on the basis of the compliance of the OEM/ODMs standard to represent your ability. The ability of the product is actually a kind of business ability. But a company's compliance ability is the most important foundation of a company. Then we can do a good job on the basis of compliance to reach the pass line. Let's talk about the whole product capability. No matter a company has black technology or unique skills it is necessary to assess the entire product's operational capabilities. This operational capability is different for each enterprise. So we CENKON have been working on the efficacy cosmetics. We have a long-term basic research team and an efficacy product implementation team. In that case, So we take this sector and this category as a focus of our development. I think that as long as we persist in the same category, we will have opportunities. Not all companies have to be big and comprehensive, but we want to be the top company in the category that we can afford or that we have specialties or that we are interested in. We make a TOP of our category .This is our overall business strategy. Q: At present, there are three major competition groups in the Chinese cosmetic OEM and ODM market, namely, the foreign, Taiwan and mainland China. How do you see the competition among the three groups? A: This question is interesting. Let's say, I think the international OEMs are like the air force, just like high spike from high set. Taiwan-funded OEMs belongs to the navy Taiwan's relationship with China is relatively close. They came here by swimming and by boat. So I think they are navy. These OEM companies in our mainland China, I think it's the Army. So these three services and three systems have their own different characteristics and their own different approaches. The strongest part of the Navy is the Marine Corps which can fight on land and at sea. The army's strength is the army's multi-terrain, multi-channel distribution, including the development of channels, products and customer. The OEMs in mainland China are more in line with understanding the Chinese market. I think such an analogy and understanding may be a little more intuitive and simple. Q: We would also like to ask what are the advantages of Chinese cosmetic OEMs compared to some international OEMs, such as those in Japan, Korea, Europe and America? A: In fact, the advantage is not great. For example, when the international OEMs we just mentioned, Taiwanese OEMs may not know much about China when they first entered the country. But with a few years of their deep cultivation of the market and slowly adapt to the localization, the advantages slowly highlighted. The advantage of a company is that you need to focus on the important nodes. In fact, if you do it slowly, your advantages will come out. If you are impetuous to do something you can not actually build anything advantageous. Advantage is to rely on capriciousness and endurance. You also have tirelessly to study and invest time, energy and financial resources. Then your advantage can be revealed. All advantages do not come in one day. Foreign companies neither. They are also slowly accumulated day by day. So that the advantage does not lie in your present, the advantage lies in your future. It depends on whether you can power up in the key nodes. Then you also need to keep your mind sober, and be persistent to do this thing. The industry is the same. Every business is the same. In fact, every person is the same. Actually, the reason is the same. The advantage we build is not just today's advantage, but your ability to maintain your advantage for a long time and your ability to move from no advantage to strong advantage in the long run.