YSG and Shanghai Zhenchen Joint Venture Files for Cancellation
- Chaileedo Press
- Jul 17, 2023
- 3 min read
It is reported that Yatsen (YSG) was made transformation since 2022. The skincare segment is now the focus of YSG strategic transformation. It has become the second growth curve of the company's development.
On July 16, Qichacha.com news, Shanghai Yatsen Cosmetics Co. (hereinafter as YSG Shanghai) is in the process of a simple deregistration announcement.
(Credit: from Qichacha.com)
It is shown that the company was founded on January 14, 2021, with a registered capital of RMB 100 million, and its business scope includes cosmetic production, import and export of goods, import and export of technology, and so on.
The shareholding chart shows that the company was previously jointly held by Shanghai Zhenchen Cosmetics Co. (Shanghai Zhenchen) and Guangzhou Yatsen Holding Limited (YSG).
(Credit: from Qichacha.com)
Public information shows that YSG was founded in 2016. In 2017, YSG launched its first beauty brand - Perfect Diary. In November 2020,YSG went listing to the U.S., becoming the first Chinese beauty enterprise in the U.S. stock.
Shanghai Zhenchen, a joint venture with YSG, was founded in 2015 and is a professional OEM and ODM manufacturer specializing in the research and development of formulas for lipstick, powder, eye shadow, mascara and other types of makeup, as well as the development of packaging materials and production and processing. It is said that Jenchen is the invisible boss of the local color cosmetics OEM.
It is reported that Shanghai Zhenchen is the main OEM/ODM of Perfect Diary.
In the first few years of Perfect Diary's found, its sales were overwhelming. It is reported that during Chinese Double 11 Shopping Festival in 2019, Perfect Diary become the first Chinese beauty brands that ranked on the list of cosmetics category on Tmall. During the Chinese Double 11 Shopping Festival in 2020, its cumulative sales reaching 600 million yuan ranked top in the list of cosmetics categories successively. During Chinese 618 Shopping Festival in 2021, Perfect Diary became the Top 1 cosmetics on JD.com and Vipshop and Top 2 Chinese beauty brands on Tmall and others.
However, during the Chinese 618 Shopping Festival this year, Perfect Diary was not on the list of Top 20 brands of cosmetics on Tmall. This may be related to the new five-year strategic transformation plan.
In April 2022, its founder, chairman and CEO David Huang announced the new five-year strategic transformation plan, saying that it will stand at the starting point of the new five years. The team will continue executing our new five-year strategic plan with a focus on building a healthy brand portfolio and capitalizing on rising opportunities as the consumer industry recovers.
Today, its skincare segment is the focus of the strategic transformation of YSG and has become the second growth curve of the company's development.
In the first quarter of this year's financial report, YSG skincare segment achieved revenue of 245 million yuan ($34.2 million), up 34.2% year-on-year. It remained at the level of more than 30% of total revenue for four consecutive quarters. Among them, the three major brands of high-end skincare brand Galenic, efficacy skincare brand DR.WU, and luxury skincare brand EVE LOM combined revenue in the first quarter increased by 59% year-on-year.
At the same time, YSG cosmetics segment continued to contract. In 2022, the annual total revenue fell 36.5% year-on-year to 3.71 billion yuan ($517.2 million), net profit continued the loss trend, net loss of 815 million yuan ($113.6 million) of attributable net loss, the cumulative net loss in the past three years reached 5.044 billion yuan ($703.2 million).
In this regard, YSG annual report disclosed that the main reason for the decline in revenue was the decline in net revenue from the color cosmetics brand, which was partially offset by the increase in net revenue from the skin care brand.
As of December 31, 2022, the Company operated a total of 158 Perfect Diary offline stores, closing 128 stores compared to the end of 2021.
In the first quarter of 2023, the cosmetics net revenue of YSG declined 29.1% year-on-year to $508 million.
David Huang said it will continue to develop its skincare brand in 2023. Yang Donghao, CFO of Yixian E-commerce, believes that the cosmetics industry has lower profit margins compared to the skincare industry, and expects that the company's skincare brand will contribute at least more than 50% of its revenue.
And YSG Shanghai and Shanghai Zhenchen spent 100 million yuan ($14 million) to set up the ODM/OEM of Perfect Diary is now facing a write-off, which may also be a further step in the group's transformation.
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