Social Bella, an Indonesian e-commerce platform, and Konvy, a Thai beauty and personal care e-commerce platform, recently announced that they have raised $50 million and $10 million in funding, respectively. According to Deal Street Asia, Social Bella raised $50 million in its latest round of funding co-led by LVMH private equity firm L Catterton Asia and Singaporean investment house Temasek. The funding, which reportedly represents about one-third of Social Bella's initial planned capital raise, will come into the company in two tranches, details of which have not yet been disclosed. Social Bella provides products including cosmetics, skincare, hair care, fragrances and beauty tools to local customers in Indonesia. 2020 also saw the launch of Lilla by Sociolla, a mother and baby care brand, and Social Bella is currently the number one cosmetics website in Indonesia, according to claims. It is worth mentioning that in May 2021, Social Bella received a funding of $52.9 million led by L Catterton, which is also the first investment by L Catterton in Indonesia. Earlier in 2020, Social Bella also closed a $58 million Series E round backed by Temasek, Pavilion Capital and Jungle Ventures, which was subsequently used to expand its technology infrastructure and increase its share of the Indonesian beauty and personal care market. Konvy, a Thai beauty and personal care e-commerce platform, received $10 million in Series A funding from Singaporean venture capital firm Insignia Ventures Partners, marking Insignia's first investment in a Thai startup focused on its home market. The new funds will be used to accelerate the expansion of its omnichannel, international distribution business and staff. Founded in 2012, Konvy is one of Thailand's largest beauty and personal care e-commerce platforms and was founded by Chinese entrepreneur Leon Huang, who previously managed fashion e-commerce platforms. Konvy found that health and beauty purchases are a priority spending category for Thai consumers and that Thailand has high rates of e-commerce purchases and social media usage, meaning that the average Thai youth spends about two hours and 55 minutes per day on social media. As a result, Konvy's goal is to help local and international beauty brands capitalize on two major trends and reach more consumers. The platform currently boasts over 1,000 beauty brands from global and local Thai brands and 20,000+ SKUs, including well-known brands such as L'Oreal, Shiseido, Sulwhasoo, Eucerin and LA ROCHE-POSAY.

The Suzhou factory is the first factory invested by L'Oréal in China and has been expanded by three investments. It is now the largest factory in L'Oréal's Asia Pacific region, with a total annual production capacity of over 1 billion pieces. On October 11, L'Oréal Suzhou Intelligent Fulfillment Center Foundation Stone Laying Ceremony and L’Oreal Suzhou Plant Healthy Beauty Workshop Opening Ceremony were held. In June last year, L'Oréal China and Suzhou Industrial Park Management Committee signed a memorandum of cooperation to established L'Oréal Group's world's first self-built smart operation center. The center is planned covers an area of 90,000 square meters and is expected to be officially opened in the fourth quarter of 2023. L'Oréal said the center will be built according to LEED (Leadership in Energy and Environmental Design) Gold certification standards and will use environmentally friendly designs and materials to produce "green packages". Once in operation, the intelligent operation center will use the world's leading-edge automated intelligent high-speed sorting system and robotic equipment to shorten e-commerce parcel sorting time while ensuring the accuracy of D2C order sorting. The intelligent operation center will mainly support the online and offline product sales of L'Oreal China's mass cosmetics, active health cosmetics and professional hair products divisions. L'Oréal expects this intelligent operation center to triple L'Oréal China's annual D2C model parcel production by 2025. In addition, with the support of the Group's "Beauty Technology" transformation strategy, the center will also become an incubator for China and the Group's global markets, implementing innovative operational solutions to serve retailers and consumers, becoming an enabler for the realization of "good consumption". L’Oreal Suzhou Plant Healthy Beauty Workshop is the result of L'Oréal's construction to meet the growing and diversified needs of the Chinese market. The workshop has two floors and covers an area of 18000 square meters. Its design standard is higher than the CGMP standard for cosmetics production issued by the NMPA. The new clean workshop building design reduces heat loss through reflective coating and insulation board, and uses the magnetic levitation ice machine system to achieve the purpose of high efficiency and energy saving, which reflects L'Oreal's commitment to sustainable development. L'Oréal said that this series of investment initiatives once again demonstrates the L'Oréal Group's commitment to continued investment in China and its long-term confidence in the Chinese market. Fabrice MEGARBANE, President of L’Oréal North Asia and CEO of L’Oréal China, said L'Oréal will continue its commitment to bring Chinese consumers a higher quality, safer, more sustainable and more personalized consumer experience. Create an integrated intelligent operational layout of L'Oréal in China with Shanghai as the heart and Suzhou as the main artery in the Yangtze River Delta.

Dior beauty from LVMH performed well, where its classic products such as Sauvage, J'adore and Miss Dior still maintained high growth. On October 11, luxury goods group LVMH reported its results for the first three quarters of 2022. LVMH recorded revenues of 56.5 billion euros(about $54.8 billion) in the first nine months, up 28% year-on-year, with organic revenue growth of 20%. By geography, revenues in Europe, the United States and Japan have risen sharply since the beginning of the year, benefiting from strong demand from local customers and a recovery in international travel. While Asia, where China is located, recorded a lower level of growth in the first three quarters, although growth began to accelerate in the third quarter as some geographies eased restrictive measures. Specifically for the business segments, Perfumes and Cosmetics recorded revenues of 5.577 billion euros(about $5.4 billion) in the first three quarters, up 19% year-on-year and up 12% organically; revenues in the third quarter were 1.959 billion euros(about $1.9 billion), up 10% organically. Among them, Dior Beauty performed well and continued to consolidate its leading position in all markets, with classic products such as Sauvage, J'adore and Miss Dior still maintaining high growth, and the new Parfum d'Eau also achieving good market performance. At the same time, Dior Addict makeup and Prestige skincare series also contributed to the further rapid growth of the Dior brand. In addition, the Guerlain brand achieved good growth thanks to its Abeille Royale skincare line, the Aqua Allegorialine and the boutique fragrance l'Art et la Matiere line. Givenchy Beauty's main performance was driven by its fragrance product line. It is worth mentioning that during the reporting period, LVMH Beauty R&D Center and high-end apparel brand Stella McCartney collaborated to launch a new clean beauty and skincare brand, Stella, which focuses on the vegan and zero-cruelty concept with products such as cleansers, essences and hydrating creams, marking the apparel brand's return to the beauty sector after 19 years. In fact, more and more apparel brands have recently started to test the beauty market, such as French fashion brand BALMAN announcing its cooperation with Estee Lauder to launch a series of beauty products. Apparel brand MLB also launched its MLB beauty products in September. As an international luxury giant, LVMH certainly will not miss the business opportunity of cross-border beauty. Despite the fragrance and skincare business, LVMH's boutique retail business also saw rapid growth, with revenues of 10.095 billion euros(about $9.8 billion) in the first nine months, up 30% year-on-year and 20% organic growth. Sephora performed well with a strong rebound in-store activity with particularly strong growth in North America, France and the Middle East. However, the performance of luxury travel retail DFS remained weak due to the impact of the epidemic management policy in Asia.

During the Douyin 818 Discover Good Things Festival, Argentum is ranked third in the Luxury Beauty and Precious Care list and first in the Precious Women's Skin Care Recommendation list. Ushopal, an omnichannel brand partner from China, recently announced the acquisition of Argentum Apothecary, a British luxury skincare brand. According to the USHOPAL official account on Wechat, during the Douyin 818 Discover Good Things Festival, Argentum is ranked third in the Luxury Beauty and Precious Care list and first in the Precious Women's Skin Care Recommendation list. USHOPAL was founded in 2015 and completed a Series D round of funding of nearly $100 million in March last year. It has exclusive distribution rights for 11 international niche high-end beauty products in China. USHOPAL's main business is to help overseas brands enter the Chinese market through data operations and omnichannel integration. USHOPAL serves brands such as SUQQU, Anastasia, and Chantecaille. Argentum was co-founded in 2011 by Joy Isaacs and Dr. Gilbert Mouzin, a pioneering scientist in the field of global aesthetics. Dr. Gilbert Mouzin was the Executive Director of the Skin Care Research Center of the Pierre Fabre Group (parent company of the Avène brand) in France and Scientific Advisor for Skin Care and Pharmacology for the same period. In 2018, Argentum officially entered the Chinese market and opened Tmall overseas flagship store, official flagship store, douyin flagship store, and offline duty-free stores in turn. Last November, Argentum has received a round of equity investment from USHOPAL and handed over full responsibility for brand operations in Asia to USHOPAL. “It really has accelerated our growth in China enormously. They have been able to support in registering our products on the ground and growing sales in a sustainable and authentic way,” said Joy Isaacs, founder, and chief executive officer of Argentum Apothecary. According to USHOPAL insiders, Argentum spent 15 years to build a perfect product matrix including creams, oils, water, milk, perfumes, skin care devices, and nearly 100 SKUs, which will also be gradually brought into the Chinese market by USHOPAL Group. Through this acquisition, Argentum's experience in creating luxury beauty products, its accumulated technology and formula patents, global top ingredients, formula reserves, and supply network will further improve USHOPAL Group's high-end beauty branding, R&D, and supply chain capabilities. This is an important step for USHOPAL to go beyond China to the world and grow into the "Gen Z New Luxury Beauty Group". Since 2021, a portion of imported cosmetic brands have had poor sales in the Chinese market, including many brands that are popular in the international market such as Stila, GLAMGLOW, and Sarah Chapman. There is a natural cultural divide between such international brands and the Chinese market, and they may be caught in a difficult situation in terms of promotion and marketing. Through the acquisition, local Chinese companies can present more excellent brands to Chinese consumers with operational means that are more in line with the local market.

As early as the first half of this year, it was publicly reported in some Chinese media that "two brands of Estee Lauder Group, Clinique and Origins, are not selling as well as they should in the offline channel and are at risk of merging or even closing their counter." Recently, CHAILEEDO investigation found that the combined counter of Clinique and Origins has appeared in many shopping malls in China. Is this situation a normal brand strategy adjustment of Estee Lauder Group, or is it due to pressure on performance? Clinique and Origins combined counter The counter in the mall is one of the important product sales channels for brands and the most frequent place for direct contact with consumers. On September 23, a mall in Inner Mongolia, China, posted on its official Weibo account that "Clinique&Origins' new counter appeared." It can be seen from the video that Clinique and Origins have merged into one counter, with each brand accounting for half. CHAILEEDO contacted the mall for a phone interview, and the mall contact said, "The new Clinique & Origins counters are brand direct counters in the mall, just combined in one store, and the membership and points of the two brands are not common." There are also many Chinese consumers posting on social media platforms such as Xiaohongshu and Weibo that the new counters in some malls are currently half selling Clinique and half selling Origins. Meanwhile, CHAILEEDO found through a visit to Intime Department Store in Wuhan that Clinique and Origins on the 1st floor of the mall are still two separate counters at present. According to the staff on site, "Intime Mall here will not be merged. Here originally are two stores, both the old store should not move, but the future new counter is likely to be in the form of a collocation counter." It is worth noting that since the second half of the year, Estée Lauder Group has made changes to its brand clusters and personnel appointments. In July, Amber Garrison was named President of Origins Global Brands, reporting to Jane Hertzmark Hudis, Group Executive. In September, Michelle Freyre was promoted to President of Clinique and Origins Global Brands, reporting to Jane Hertzmark Hudis. CHAILEEDO noted that during the brand cluster adjustment of Estee Lauder Group, Clinique, Origins, LA MER, BOBBI BROWN, Tom Ford, MAC and other brands were led by Jane Hertzmark Hudis. In other words, the group management of Clinique and Origins has merged to some extent. May be related to poor market performance About the Clinique & Origins combined counter, a senior industry insider analysis that "this may be related to the weak performance of Estee Lauder Group." According to Estée Lauder Group's latest financial results, the company's full-year net sales for the fiscal year 2022 (July 1, 2021-June 30, 2022) were $17.74 billion, up 9% year-over-year, while net income was $2.408 billion, down 16% year-over-year. The decline was particularly pronounced in the fourth quarter of the fiscal year 2022 (April-June 2022). According to publicly available information, Estee Lauder Group achieved sales of $3.56 billion in the fourth quarter of fiscal 2022, down 10% year-on-year; net income was $50 million, a sharp decline of 95% year-on-year. On the other hand, from the brand side, Clinique achieved double-digit growth in both FY2021 (July 1, 2020 - June 30, 2021) and FY2022, according to Estee Lauder Group's FY2021 and FY2022 results reports. However, the specific market sales of the two brands Clinique and Origins were not disclosed in the Estee Lauder Group's public financial reports for FY 2021 and FY 2022. Many industry insiders told CHAILEEDO that the market performance of Clinique and Origins has been somewhat unsatisfactory in recent years. An industry insider with years of experience in cosmetics retailing bluntly said, "Clinique and Origins are gradually being marginalized." In terms of products, Origins' star product is only an Origins Mega-Mushroom Skin Relief Soothing Treatment Lotion, and Clinique's impression among most consumers is still a CLINIQUE 3-STEP VIRTUAL SET. The person in charge of a department store in the north told CHAILEEDO that their mall does not yet have a counter for Clinique and Origins. "I heard that the performance of these two brands is not very good, because the market response is not very good, our site will not consider introducing them for the time being." He said. "Reduce the cost" Furthermore, the merger of Clinique and Origins counters is also believed to be related to cost-cutting. Some industry insiders told CHAILEEDO, in the department store channel, because of the lack of goods and personnel, the brand merged counter situation is more common, but this is still mainly domestic brands, international brands are relatively rare. "Merging counters will greatly reduce the cost of personnel and goods, in the case of increasingly poor sales performance, and want to retain the brand, can only reduce the cost of operation." She said. An industry insider engaged in cosmetics brand management also said that the two brands belong to the same Estee Lauder group, saving staff expenses. In his opinion, "now the overall economic downturn, department store foot traffic is also declining, merging counters can allow the two brands to achieve complementarity and improve the probability of survival, which is also a response measure." If big beauty brands merge counters to reduce costs, in Innisfree, HERA, Maybelline and other imported beauty brands have withdrawn from offline, Clinique and Origins did not choose to withdraw from the physical channel, in a sense also reflects the importance of the department store channel for high-end brands is still irreplaceable. An imported beauty trader told CHAILEEDO that European and American brands, especially well-known international cosmetic groups, do not choose to withdraw from offline because of bad business and all turn to online channels. They actually don't like doing online business too much and think that there will be some disconnection in the interaction between brands and consumers online. Ma Xiaoyu, vice president, and general manager of L'Oreal China's premium cosmetics division, has also publicly stated that the roots of high-end beauty brands will always be offline. It is not difficult to see that the entity channel business is difficult not only for popular brands, high-end brands also face the same problem, but in any case, the entity store for the brand image role of irreplaceable.

Swiss fragrance and flavor giant Givaudan perfumes and beauty products posted sales of CHF 2.489 billion(about $2.5 billion) in the first three quarters, up 5.9% year-on-year. On October 11, Swiss fragrance and flavor giant Givaudan announced its results for the first three quarters of 2022. For the first nine months, Givaudan's total sales were CHF 5.458 billion(about $5.489 billion), up 6.1% year-on-year and 7.7% in Swiss francs. Specifically, Fragrance & Beauty sales in the first three quarters were CHF 2.489 million (about $2.503 million.), up 5.9% year-over-year. Growth in this segment was driven by the continued strong performance of fragrances and flavor ingredients and the continued return of good growth momentum in the consumer products business. In particular, sales of premium fragrances increased 14.8% year-over-year, sales of consumer products increased 2.2% year-over-year, and sales of fragrance ingredients and active beauty increased 10.2% year-over-year. In the third quarter, sales of fragrance and beauty products were CHF 843 million (about $847.7 million), up 7.1% year-over-year. By region, Europe Middle East had the highest sales of CHF 2.003 billion (about $2 billion), up 8.1% year-on-year, followed by North America with sales of CHF 1.478 billion (about $1.49 billion), up 6% year-on-year. The Asia Pacific including China, which despite the impact of the restriction of COVID-19 being implemented in China, ranked third in terms of total sales, with CHF 1,337 million (about $1.345 million), up 5.2% year-on-year. In terms of future expectations, Givaudan says it is targeting 4-5% organic sales growth and at least 12% free cash flow. In terms of longer-term goals, Givaudan is working to double its business by 2030, while achieving environmentally friendly forms of sourcing for all materials and services. Notably, Givaudan said its business has been on a positive trajectory through the first three quarters of 2022, with its operations and global supply chain both remaining at high levels. At the same time, Givaudan has raised prices across the board for its entire product line to cover rising costs. On Tuesday, the company said in a statement: "With higher input costs in 2022, the company is fully on track in implementing price increases in collaboration with its customers to fully compensate for the increases in input costs," Not only Givaudan, but another head ingredient maker, International Flavors and Fragrances IFF, also made an announcement in March that it would be implementing a broad price increase for all of its divisions. Such as Estee Lauder, Procter & Gamble and other head companies have said that they will increase the prices of their products. CHAILEEDO saw many consumers on Xiaohongshu reflecting that the prices of perfume products have been increasing in the past year such as Celine, Chanel, Dior, Byredo, Diptyque and so on. And the price increase of these big brand perfumes basically starts at a hundred dollars. Although the general environmental turmoil has brought about an inflated float in the price market, companies still believe that this is a short-term phenomenon and is manageable. The giants, including Givaudan, are also actively arranging measures to reverse the situation.

Under the impact of online channels and repeated epidemics, the growth of offline traffic has been hampered. Cosmetics physical stores have encountered an unprecedented crisis with store closures becoming the only option for most businesses. So far in 2022, increased international uncertainties and the frequent occurrence of the epidemic in China in many places have brought new challenges full of uncertainties to China's local economic development. In particular, offline entities have been hit even harder with a trend of store closures. As a result, several major international brands and Chinese head enterprises repositioned online channels, while cultivating internal strength, improving operational resilience, and showing the industry's defiant energy. The trend of offline store closures In the 3rd year of the epidemic, the retail industry is still having a tough time. Financing frequency of restaurants, cosmetics, mystery boxes, coffee, and other categories reduced, brand performance declined, and blockbuster beauty products are becoming less and less. Industry players who wildly invest gradually reduced. The trend of store closures intensified. According to incomplete statistics from the Network Retail Research Center from Linkshop, at least nearly 4,700 offline stores were closed in the first half of this year, including Wal-Mart, Carrefour, and other head brands with strong overall strength. Among them, only in the beauty industry, there are more than 600 offline stores closed. Customer flow is the cornerstone of the survival of offline cosmetics stores. But with the impact of online channels and repeated epidemics, the growth of offline customer flow has been hampered and cosmetics physical stores are experiencing an unprecedented crisis, making store closures the only option for most businesses. Not only Chinese branded chain stores and individual merchants, but also a large number of international cosmetic brands have either closed their stores or pulled out from the Chinese market so far in 2021. The shutdown trend swept from color cosmetics to skincare. For example, at the end of July, Maybelline New York stated that it would close most of its offline stores in the Chinese market. South Korean makeup brand HERA officially announced in February this year that it would close its offline counters and online WeChat mall in the Chinese market. L'Oreal Group's spa skincare brand Saint-Gervas Mont Blanc has shut down the brand's official flagship store on the Chinese leading e-commerce platform Tmall and is rumored to "pull out from the Chinese market", etc. It can be seen that the epidemic hit the offline retail industry, resulting in the overall operation of the offline channel was "hit hard", Europe, the United States, Japan, and South Korean brands were also affected without exception. At this time, it is natural for brands to tighten their offline investment. Put more on online and cultivate internal strength China remains a large market full of resilience and is the most important, or even the number one overseas market for beauty giants in Europe, America, Japan and Korea. As Shiseido said in its first-half earnings report, China jumped to the group's top market with $791 million. Therefore, short-term adjustments like the shutdown of offline stores by brands like Innisfree will not change the fact that international giants are increasing their focus on the Chinese market. On the contrary, there is still a steady stream of overseas brands and new products coming into China and debuting in the country. For example, L'Oreal introduced Prada Perfume and Beauty to the Chinese market. Aveda, a high-end toiletries brand of Estee Lauder, opened its first store in China. Amore Pacific acquired Tata Harper, and Jinpyo Lee, chief strategy officer of Amore Pacific, said, "With the support of Amore Pacific's R&D capabilities and infrastructure, we expect Tata Harper to achieve significant expansion in the Western European and Asian markets." Although it is laid out in North America, it is likely to be a major increment to China's performance as well. In recent years, high-end skin care has become an important engine driving the performance growth of cosmetics such as L'Oreal and Estee Lauder. This year, the beauty giants are also still gaining more profits through high premium large single products. It is understood that Estee Lauder Advanced Night Repair has been upgraded to the seventh generation. L'Oreal Paris unveiled its Revitalift Filler [HA] Pro-xylane Pro, etc.. Behind the many new products is the international giant's attention to research and development and is greatly improving the brand layout of the Chinese market, which is undoubtedly an effective path to enhance their own market "toughness", anti-risk ability, and further can also consolidate the brand influence and enhance market share. In addition to the introduction of new brands, cultivating blockbuster beauty product for new incremental, international beauty groups are also accelerating localization strategy to better fit the Chinese market in terms of channels, marketing and technology. Judging channels and marketing, the best illustration is the increased investment in live streaming. Estee Lauder, Lancome, L'Oreal Paris, Whoo, Freeplus, Avène have been successfully stationed in TikTok China. They have achieved remarkable results by means of Dabo(live streaming by KOLs) and brand’s own live streaming. They created a benign chain of interest e-commerce of "content-driven goods, goods feeding the brand", and continuously triggering the brand potential. In the face of challenges, expansion and tightening are just a tactic. A well-known Chinese beauty chain founder have said that: “closing some store that losing money is a very wise approach. When the winter comes, if not hibernate, but also desperately struggling, that may be frozen to death."

Recently, Unilever announced the business revenue after the business organization restructuring, which mentioned that China is the third largest market of Unilever. In the first half of 2022, its turnover of Health & Wellbeing was 5.726 billion euros. It is reported that Unilever officially reorganized its overall business into five business groups from July 1, namely Health & Wellbeing, Personal Care, Nutrition, Home Care and Ice Cream, to split all brand businesses with specific business content. Its overall revenue in the first half of 2022 was 29.623 billion euros. Unilever said the new business group portfolio will help it become more sensitive to consumer and channel trends while executing its strategy more strongly and consistently. Specifically, the Beauty & Wellness business focuses on hair care, skincare, premium care brands and vitamins, minerals and supplements, with key brands including Dove, Sunsilk, Clear, Vaseline, TRESemmé, Dermalogica and Liquid I.V. (electrolyte drink brand). Notably, Unilever mentioned Vaseline as one of the fastest growing brands in the business unit, with its Pro Derma range featuring ingredients such as hyaluronic acid and niacinamide, which now accounts for 20% of Vaseline's China business. In 2021, the Beauty & Wellness business will have a total turnover of €10.1 billion, with Asia Pacific/Africa accounting for 54% of the growth in 2021. In the first half of 2022, the business will have a turnover of €5,726 million. The Personal Care business is mainly involved in skin cleansing, deodorants, oral care and Elida Beauty Ltd. with major brands including Dove Dove, Rexona Schoenex, Lux Lux, Axe, Signal Geno, Lifebuoy Weibao and Closeup. In 2021, the Personal Care business unit will have a turnover of 11.7 billion euros, with Asia Pacific/Africa being the second largest region in the business, accounting for 40% of turnover, and the Americas accounting for 43% of turnover. It achieved 6.445 billion euros in revenue in the first half of 2022. Home Care business unit is mainly involved in laundry cleaning and care agents, home and hygiene, air health, etc. The main brands include Omo, Sunlight, Comfort, Surf, Cif, Domestos, etc. In 2021, the main turnover of Home Care is 10.6 billion euros, of which the Asia-Pacific/Africa region is the largest sales market of the business, accounting for 60% of overall sales. The Americas and Europe accounted for 21% and 19%, respectively. In the first half of 2022, the business turnover was 6.024 billion euros. Overall, Asia Pacific/Africa is the business area with the highest revenue share among most of Unilever's business units, and China is Unilever's third largest market, according to 2021 Unilever’s financial data. Moreover, China is the third-largest market for the Beauty & Wellness business and the second-largest market for the Home Care business.

In the era of normalization of the epidemic, new brands are facing more intricate and diversified problems. Double Eleven has been one of the major online shopping carnivals in China, and for the vast majority of brands, the holiday is good for brand product promotions. However, more of the outside world's focus remains on the big international, headline Chinese brands. Compared to them, new beauty brands may still receive many challenges in their development. Winter is coming for new brands Looking back at this year, the epidemic is normalized, the flow dividend is not there, the new consumer market has entered a period of adjustment, and the new Chinese beauty brands are traveling to the cold winter. Public information shows that sales in the cosmetics category of Tmall 618 in 2022 fell by nearly 20% compared to the same period last year. As the performance growth of some new beauty brands stalled, the capital circle's investment enthusiasm for them gradually faded. From the perspective of financing, the beauty market in the first half of the year can be described as sad and dismal. According to data from linkshop, there were 39 financing events in the beauty sector from January to June 2022, compared with 61 beauty financing events from January to June 2021, the number is almost half folded. Even if the capital circle is still interested in beauty, but the protagonist has changed from brands to upstream companies. On the one hand, the competition among new brands is intensifying, and on the other hand, the beauty market environment is not good. In the era of normalization of the epidemic, new brands are facing more intricate and diversified problems. Some industry insiders believe that the emerging beauty brands in China have a high degree of homogenization. They remain similar in terms of product features, user positioning, and marketing strategies, which makes it difficult to build brand power. Users tend to buy at e-commerce festivals or when there are discounts, and once the promotional activities stop, sales are at a standstill. How do new brands break out? The moment of the beauty industry turnaround does not seem to have arrived. Chinese beauty brands are currently facing the problem of increasingly expensive customer acquisition costs, with a large online voice but difficult to form repeat purchases. The future of Chinese beauty brands will certainly seek more ways to stabilize customer flow or improve sales. What else can new brands rely on if they want to continue the race on the beauty track? As we all know, international brands quickly find their status, in addition to stable funding and R & D system, omnichannel layout capabilities and other factors, the long-term accumulation of brand equity is the most important cornerstone. For the survival of the new beauty brands encountered difficulties, the brand foundation is not stable is also the key factor of "higher failure rate". For many new brands, the large beauty category is often already occupied by traditional big brands. Therefore, it is a practical path to enter from the small beauty category, and easier to make product innovation and create a blue ocean market, but will inevitably face increased competition. "For new local color cosmetics brands, having the opportunity to segment track demand while still maintaining their strategic stamina, it is impossible to ask a product to solve all consumer pain points after it is launched in the market." Huang Jing, chief operating officer of the up-and-coming color cosmetics brand Into you, said that the choice of products to do iterative product upgrades through the consumer feedback mechanism after the launch of the market, with newer products to complement the needs of previous consumers, thereby expanding the consumer base of the entire brand. Some industry insiders believe that some products of the new brand can be distinguished from the existing homogeneous competition of consumer products in the market, and can themselves produce more differentiation in the whole composition, formula, efficacy and even use scenarios, in order to lead the whole industry market trend.

Tianjin Medical completed its first outer investment in a cosmetics company, which also means it officially entered the cosmetics sector. Recently, Tianjin Medical released the second phase of its 2022 ultra-short-term financing note prospectus, which mentions details of its acquisition of Yumeijing. According to public information, Yumeijing was formerly known as Tianjin No. 2 Daily Chemical Factory, with a history dating back to 1979. Today, the brand Yumeijing is a long-established Chinese brand among China's children's skincare products. Its product line extends from children's skincare and baby skincare series. It covers skincare series such as lotions, creams, facial creams and sunscreens, as well as personal care products such as shampoos, body washes, soaps and body lotions. Tianjin Medical is a large state-owned Chinese integrated pharmaceutical group, formerly known as Tianjin Pharmaceutical Administration, which was established in 1979. The company consists of five main industrial segments: green Chinese Traditional Medicine, chemical raw materials, chemical preparations and biologics, specialty medical devices and modern commercial logistics. In April this year, Tianjin Medical made a resolution on a proposal to acquire a controlling stake in Yumeijing Group. In May, the website of the Anti-Monopoly Bureau of the State Administration of Market Regulation announced the acquisition of a stake in Tianjin Yumeijing Group Co. In the end, Tianjin Medical paid a total of 1.391 billion yuan (about $195 million) for the equity acquisition through self-financing, ultimately holding 93.8691% of Yumeijing's equity. On June 30, Tianjin Medical became a shareholder of Yumeijin through the completion of business registration change procedures. Recently, Tianjin Medical released the second phase of its 2022 ultra-short-term financing note prospectus, which mentions details of its acquisition of Yumeijing. According to public information, Yumeijing was formerly known as Tianjin No. 2 Daily Chemical Factory, with a history dating back to 1979. Today, the brand Yumeijing is a long-established Chinese brand among China's children's skincare products. Its product line extends from children's skincare and baby skincare series. It covers skincare series such as lotions, creams, facial creams and sunscreens, as well as personal care products such as shampoos, body washes, soaps and body lotions. Tianjin Medical is a large state-owned Chinese integrated pharmaceutical group, formerly known as Tianjin Pharmaceutical Administration, which was established in 1979. The company consists of five main industrial segments: green Chinese Traditional Medicine, chemical raw materials, chemical preparations and biologics, specialty medical devices and modern commercial logistics. In April this year, Tianjin Medical made a resolution on a proposal to acquire a controlling stake in Yumeijing Group. In May, the website of the Anti-Monopoly Bureau of the State Administration of Market Regulation announced the acquisition of a stake in Tianjin Yumeijing Group Co. In the end, Tianjin Medical paid a total of 1.391 billion yuan (about $195 million) for the equity acquisition through self-financing, ultimately holding 93.8691% of Yumeijing's equity. On June 30, Tianjin Medical became a shareholder of Yumeijin through the completion of business registration change procedures.

In recent years, the collagen sector in China has gradually become popular among international beauty giants as well as local Chinese companies. Recently, the high-end skincare brand SH has completed strategic financing with tens of millions RMB with the investor being the listed company RuoYuChen and Chao Capital acting as the exclusive financial advisor for this round of financing. Established in 2021, SH is a mid-to-high-end skincare brand based on high-end synthetic biotechnology with humanized collagen as its core ingredient. Collagen Market CAGR 38.8% CHAILEEDO noticed that the current skincare industry has upgraded from natural skincare based on plant extracts in the past to biotech skincare based on cellular technology. Due to this trend, collagen has become one of the hot terms in the cosmetic industry in recent years. According to Duan Zhigang, senior vice president of Giant Biogene, in the 5th Conference on China’s Cosmetics Trends held by CHAILEEDO, collagen is a particularly important type of protein in animals, including mammals, which can rejuvenate the skin and make it firm and elastic. According to Grand View Research, the global collagen market size rose from $12.66 billion to $15.36 billion from 2016 to 2019, with a CAGR of 6.7%. The collagen market size in China rose from $790 million to $980 million, with a CAGR of 7.8%, 1.1% higher than the global figure for the same period. According to Grand View Research, the collagen market in China is expected to grow at a CAGR of 6.6% to reach $1.58 billion by 2027, accounting for approximately 7% of the global market, a CAGR 1.2% higher than the global level for the same period. The government in China also provided rich support. In early August, the Pharmaceutical Industry Standard of the People's Republic of China YY/T 1849-2022 Recombinant Collagen was officially released and implemented. The standard was promulgated and implemented by the National Medical Products Administration, which represents the recognition of recombinant collagen in medical and skincare applications by the government. It will also promote a healthier and more orderly development of the recombinant collagen market. International/Local Beauty Giants Efforts in Collagen Industry Just in August, international beauty giant Shiseido announced a nearly 100 million yuan investment in the recombinant collagen-based biomaterials company Trautec, the first investment by Shiseido's first innovation fund in China, Ziyue Fund. Founded in 2015, the company's main business is also the development and production of recombinant collagen-based biomaterials. For this investment, Shiseido China said, "Shiseido China aims to advance the layout of new biomaterials for beauty and plans to explore the cooperation space of functional skincare products by combining the advantages of product development, ingredients supply and channel resources of both parties. At the same time, the investment of Ziyue Fund will help Trautec further consolidate its leading edge during the critical period of recombinant collagen development." Shiseido's move has apparently aimed directly at upstream technology companies as well as creative companies to enhance the overall competitive strength of the brand by applying the core technologies of these companies to existing brands. In May of this year, China's leading recombinant collagen company Giant Biogene launched its application for listing in Hong Kong. Its prospectus showed that the company's revenues from 2019 to 2021 would reach 957 million yuan(about $134.6 million), 1.191 billion yuan(about $168 million) and 1.553 billion yuan(about $218 million), respectively, with adjusted net margins of 60.1%, 56.5% and 53.9%. According to Frost & Sullivan, Giant Biogene is one of the world's largest producers of recombinant collagen. According to the company, Collgene and Kefumei are the third and fourth best-selling brands in the professional skincare products industry in China in 2021, respectively. Several other Chinese collagen-focused companies have also applied to go public together this year, with Trauer applying to list on the Beijing Stock Exchange in January, Voolga updating its prospectus in June to continue its IPO, and Jinbo Bio application to go public being accepted by the Beijing Stock Exchange. These companies operating collagen ingredients and products have applied for listing also reflects that collagen has become a territory that beauty companies are competing for. Can collagen be comparable to hyaluronic acid? It is worth noting that besides Shiseido, hyaluronic acid giant Bloomage Biotech has also started to enter the collagen industry, announcing in April that it had acquired 51% of the biotechnology company YEK, which has been deeply involved in collagen-based medical end products for many years. According to Bloomage Biotech, after establishing a leading position in hyaluronic acid, collagen may bring more possibilities for Bloomage Biotech's existing medical terminal, functional skincare products and functional food business. In terms of retail sales, the overall size of China's professional skincare market will be 56.6 billion yuan(about $8 billion) in 2021. From the perspective of ingredients, the market size of collagen professional skin care is 13.5 billion yuan, accounting for about 23.9%; the market size of hyaluronic acid professional care products is 19.3 billion yuan(about $2.7 billion), accounting for about 34.1%. From the perspective of demand, collagen and hyaluronic acid are both used for filling skin depressions, but collagen injection has unique advantages, for example, it can replenish collagen lost by the human body and stimulate its own collagen production. The injectable effect is more closely fitting than hyaluronic acid and less likely to cause Tyndall's phenomenon. The collagen market is still in its infancy from the perspective of cost-effectiveness, and medical institutions are selling hyaluronic acid + collagen compound, with the defects of the two components complementing each other, and collagen injection still needs market education to improve in the long run. Overall, although the industrialization of collagen in China is not yet mature, the market still attracts international giants as well as leading local Chinese companies to enter the market compared to the already competitive hyaluronic acid market. Coupled with China's national support, collagen may be able to achieve greater potential in the future.

On October 9, the Chinese Academy of International Trade and Economic Cooperation (CAITEC) issued the White Paper of Development of high-quality collagen industry in China. The White Paper introduces the sources, classifications, and efficacy of collagen, and analyzes the Chinese and international market subjects and growth directions. It focuses on the development positioning, technology research and development, brand building, qualification, and sales arrangement of key Chinese collagen companies such as Suzhou Jiliding, Guangzhou Trauer, Shanxi Jinbo, Shaanxi GIANT BIOGENE, Taiwan SUNMAX BIO, and Guangzhou JY-RAN Bio, and analyzes the problems, risks, challenges, and prospects facing the development of China's collagen industry. Collagen peptide supplementation can activate immune cells, maintain beauty, repair damaged skin, and assist in weight loss. Collagen peptides have been deeply applied in cosmetics, medical and aesthetic fields. After years of industrial development and market cultivation, the market size growth rate of collagen peptides in China is significantly higher than that of the world. Grand View Research data shows that the global collagen market size reached $15.356 billion in 2019, and $17.258 billion in 2022, and is expected to reach $22.622 billion in 2027, with a CAGR of 5.42%. Since 2005, China's collagen industry has been growing rapidly. In addition to the original collagen producers, food and pharmaceutical companies have been optimistic about the market prospects and have crossover the market. According to Grand View Research report, the collagen market size in China is $983 million in 2019, accounting for about 6.40% of the global market. And by 2027, the market size of collagen in China is expected to achieve $1.576 billion, accounting for about 6.96% of the global market. The White Paper suggests that the collagen industry should take the path of high-quality development, deepen cooperation between industry, academy, research, and government, improve production processes and product added value, and extend product chains and upgrade products. Also, Strengthen the audition from the source and pay attention to the standard setting and normalized application of collagen. The initiative is for enterprises to try to keep more high-end products in the country and promote Chinese consumption upgrades. The White Paper calls on industry enterprises, management departments, and consumers to pay attention to the high-quality development of China's collagen industry and to cultivate and promote well-known brands of Chinese collagen. It is worth mentioning that on October 9, China's collagen leader Biogene just passed the hearing of the Hong Kong Stock Exchange and is just one step away from going public. PS: The CAITEC is one of the first CHINA TOP THINK TANKS construction units established by the central government in 2015, providing advisory reports and decision-making recommendations in the field of economic diplomacy and business development for the central party and central decision-making departments, providing research evaluation and analysis consultation for the promulgation and implementation of policies of the central party and the State Council, and providing strategic planning and implementation plans for local decision-making departments in opening up and innovative development.