YSG: Chinese Beauty Should Rely on R&D to Breakthrough
- Chaileedo Press
- Sep 23, 2022
- 2 min read
How to efficiently improve product capability and brand power will be a key factor in determining whether beauty brands can win in future competition.
YSG is the first Chinese beauty group to be listed on the US stock market, with a market capitalization of over $600 million. It owns brands such as Perfect Diary, Little Ondine, and Pink Bear, and completed the acquisition of two high-end skincare brands, France Galenic and EVE LOM in 2021. CHAILEEDO invited a related person in charge of YSG to talk about the future trends of China's cosmetics industry.
YSG said that in recent years, Chinese cosmetic brands have rapidly risen under China's mature supply chain, the combination of online and offline omnichannel advantages, and the "national trend", and initially have the ability to compete with international brands.
However, compared with international brands, YSG believes that local brands are still in the initial stage of technological R&D and conversion, which also restricts the sustainable development of Chinese brands. Therefore, in the future, huge investment in research and development, to improve product capability, and scientific research scale will become the biggest trend for Chinese beauty brands.
Data shows that YSG's R&D investment for the year 2021 soared 113.5% year on year to 142 million yuan ($20 million), accounting for 2.43% of revenue. The R&D expense ratio ranks top among the local beauty companies in China and is not inferior to the head international beauty groups. By the end of last year, YSG had 118 patents worldwide, a 71% YoY increase in the number of patents, including 39 invention patents.
As the main brand of YSG, Perfect Diary has maintained continuous growth for 3 years in a row and has been the No. 1 national brand in the color cosmetics category of the Tmall Double 11 shopping festival. Observing the development of YSG, it is undeniable that the early Perfect Diary did rise quickly with the traffic dividend and marketing methods, and was called "the light of national products".
In the face of increasingly expensive traffic, it believes that, with the development of the new e-commerce industry, in addition to the existing promotion platform, the new traffic platforms such as TikTok China have gradually become a new area for the promotion of the cosmetics industry. Currently, traffic shows a trend of decentralization. This has prompted beauty brands to increase the omnichannel and all-rounded arrangement of the online market, and online operations will become more refined.
YSG expressed that, entering the post-traffic dividend era, for beauty brands, how to efficiently improve product capability and brand power will be the key factor to determine whether they can win in future competition.
After the traffic mindset, cosmetic companies may need to turn to a product mindset and user mindset to better cope with the future of China's beauty market.
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