In the Chinese skin care market of foreign brand Yunji Inc, why domestic brands can rise again is also a question worth thinking about.

Many years ago, the domestic skin care industry was still a time when foreign brands were rampant. In almost every beauty-loving girl, there were foreign brands, especially the previously popular Sk-II Immortal Water, which once dominated the list for a long time.

However, in recent years, with the rise of domestic products in China, many domestic brands have begun to appear in the eyes of consumers. National trend brands such as Hua Xizi and perfect diaries have sprung up, and some WeChat business brands have begun to set off a new wave in the name of domestic products.

Recently, "AOEO", YOKIA, "UNISKIN Youshi Yan" and other domestic skin care brands announced the completion of a new round of financing, including Sequoia Capital, Banyan Capital and other well-known institutions.

In addition, according to incomplete statistics, in 2020 alone, more than 20 domestic skin care companies received financing, with a cumulative financing scale of more than 1 billion yuan. Why can domestic skin care brands be favored by the capital market in recent years? Maybe we should start with the development history of domestic skin care products.

A brief History of skin Care: 80 years of rise and fall

Speaking of modern Chinese cosmetics, it has been more than one hundred years since its establishment, and its history can be traced back to the end of the Qing Dynasty.

Guangshengxing, China's first modern cosmetics company, was established in 1898. Shuangmei Snow Cream, which was launched at the beginning of the 20th century, has been popular in the world since its birth and quickly occupied China's cosmetics market.

From the perspective of time, the birth of Guangshengxing is in the same period of time with similar international well-known brands Ponzi and Xia Shilian, coupled with the advantage of local combat, so that Guangshengxing's skin care series has been in the first-tier market for a long time.

After nearly 25 years of development, in 1931, the first domestic skin care brand "hundred Finch antelope" was finally born. By 1945, the well-known antelope had risen to the first brand in the field of domestic skin care products in the midst of war.

With the reform and opening up and the gradual recovery of the domestic business environment, domestic skin care brands once again occupy a place in the domestic skin care market.

In the eighties and nineties of the 20th century, domestic skin care products such as Dabao, Little Nurse, Ding Jiayi, Meijiajing and Yu Meijing swarmed into the bureau, strengthening the market position of domestic skin care brands. In 2002, Dabao and Little Nurses ranked first and second place in China's skin care market, while Ding Jiayi, Yuxi and other national brands also ranked among the best.

However, with the deepening of the opening of the domestic market to the outside world, a number of foreign skin care giants represented by L'Or é al and Zishentang landed in China, with the blessing of their own advantages, coupled with the change of domestic consumption concepts, the domestic skin care field soon became the world of foreign brands.

L'Or é al acquired Little Nurse and Yuxi from 2003 to 2004, Dabao by Johnson & Johnson in 2008 and Ding Jiayi by Koty in 2011.

Although in 2008, gave the only remaining domestic brands a breath of time, but at that time "Korean makeup" popular trend, also gradually declined.

In 2012, Korean skin care styles such as "Yue Shi Feng Yin", "TFS" and "Skin Food" rose rapidly, and "Yue Shi Feng Yin" maintained an annual sales growth rate of more than 30% in the following years. Although the domestic skin care brand makes the corresponding countermeasure, but under the double attack of "Korean makeup" and foreign brand, it is only the end of the strain.

The turning point took place in 2016, with the rise of "new consumption" and the transformation of consumer groups, and the strong entry of "Generation Z" made domestic skin care brands that had been away for 20 years, seeing an opportunity to return to the stage of history.

Up to now, there are more than 10,000 domestic cosmetic factories in Guangzhou alone, and the established international factories represented by Kosmi and Yingtri have gradually begun to open up the OEM of domestic brands.

The story of domestic skin care brands continues, so why domestic brands can rise again in the Chinese skin care market of foreign brand Yunji Inc is also a question worth thinking about.

The national tide opens the way, and domestic products rise.

With the rapid development of China's economy, China's per capita income level is also increasing. By 2018, China's per capita GNI will reach 9732 US dollars, higher than the average level of middle-income countries, which has also led to the continuous upgrading of China's consumption structure.

Driven by a series of factors, such as the continuous improvement of residents' disposable income, the continuous improvement of people's external image requirements and awareness, as well as changes in the structure of the core consumer population, the domestic skin care industry has maintained steady growth.

Especially in the past two years, the demand of the domestic skin care market is growing rapidly, and the growth rate of the industry market is increasing continuously. According to Euromonitor, the domestic skincare market grew at an average annual compound growth rate of 9.8% from 2012 to 2019, far exceeding the 1.1% annual compound growth rate of the global skincare market in the same period. By 2020, the size of China's skincare market has reached 263 billion yuan.

The cutting-edge domestic brands represented by HFP, perfect Diary and Hua Xizi have come out in a short period of two years to achieve the scale that traditional brands can achieve in the past 10 years.

Looking back at the rise of domestic brands, it is directly related to the development of the "national tide".

In recent years, the "national tide" has quietly sprung up, blowing up a strong wave storm. Today, with the prevalence of the Internet, as long as you can think of the industry, you can basically find the word "national tide" on the Internet.

In 2018, the "national tide" broke out, and it was called the first year of the "national tide" in the market. In February of the same year, Li Ning Co. Ltd. walked on to New York Fashion week with Chinese style fashion. The word "China Li Ning Co. Ltd." began to scan the moments of friends, and the curtain of the national tide officially kicked off. this year, almost all kinds of industries are relying on the "national tide", and even Zhou's Black Duck and Luzhou laojiao have made "national tide" beauty makeup across the border.

In this year, Hua Xizi quickly became popular by virtue of "Oriental make-up", broke into Tmall 1 billion Club in just three years, and won the champion of Tmall's facial makeup category in 2020. Taobao's sales in March and April increased by more than 300 times compared with the same period last year.

In addition, with the acceleration of people's pace of life and work, consumers have a deeper understanding of skin care products, but also promote the vigorous development of domestic functional skin care brands.

In January, Xi Muyuan, known as the "Shiseido of the New era", received tens of millions of dollars in round B financing, the sixth round of financing in the year and a half since its establishment, after completing five rounds of financing.

This good news is to promote the popularity of the functional skin care track, but also attracted a large wave of brands. In September last year, Van Milin, a domestic "celebrity", officially "announced" that she had entered the functional skin care track.

As a matter of fact, capital's recognition of domestic brands is not only in the primary market, but also attracted the attention of investors in the secondary market. at present, there have been cases in which domestic brands such as perfect Diary and Bettany have been successfully listed in American stocks and A shares, but at present, there are no representative domestic brand concept stocks in the Hong Kong stock market, which also leaves some suspense in the blank area of skin care products in Hong Kong stocks.

As the heroes compete with each other, the concept of skin care in Hong Kong is becoming more and more popular.

However, the gratifying thing is that as the future potential of domestic skin care brands is gradually highlighted, some cosmetic concept stocks are also showing signs in the Hong Kong stock market, which also gives a certain boost to the Hong Kong stock market.

Under the influence of the dividend of "the rise of the national tide", Yatsen, the parent company of the perfect diary, made amazing achievements when it landed on the US stock market. It rose 75.24% on the first day of listing, up more than 100% at one point.

The A-share market, Bettany, which also belongs to the skincare track, has also been favored by the capital market, becoming the "functional skin care first share" listed on the gem. Since listing, Bettany has increased by 37.31%, and the market capitalization has once exceeded 120 billion yuan.

At present, the domestic make-up track still has great growth potential, compared with relatively mature foreign brands, the valuation of domestic make-up track players still has a lot of room.

However, the same type of skincare concept stock has not appeared in the Hong Kong stock market. although in 1919, Macau Bao Cosmetics submitted an application to the Hong Kong Stock Exchange for listing, it failed to be listed successfully due to some factors. although Bawang Group has a branch of the skincare series, it is not paid much attention in the market and is also immersed in the capital bubble.

However, this does not mean that there will not be related types of concept stocks in the Hong Kong stock market. Many players in the field of beauty make-up e-commerce, which also belong to the beauty make-up track, have rushed to the IPO battlefield. You, a domestic beauty makeup operator, can submit a prospectus to the Hong Kong Stock Exchange, attacking the "first share of beauty makeup e-commerce" of the Hong Kong Stock Exchange. In 2020 alone, within a year, Newsey Mystery received three rounds of financing, with the highest financing amount reaching 350 million yuan, making it the highest financing amount in the field of skin care products at that time. In addition, Bettany, who has been listed in A shares, is planning to issue overseas listed foreign shares and plans to be listed in Hong Kong, which is also enough to show that the capital market is optimistic about domestic brands.

But it is worth noting that with the development of the track, some of the problems of domestic brands are also exposed. Through interviews with some women born after 1995, the "Hong Kong Stock Research Society" learned that there are still some differences between the composition and effect of some domestic skin care products and publicity. This requires domestic skin care products and beauty brands to put forward higher standards of technology in the future development in order to achieve long-term development.

In any case, the Hong Kong stock market is relatively blank in the field of skin care products, and under the background that domestic brands are popular in the market, the first-mover advantage may also be effective in the secondary market.

Generally speaking, the favor of the capital market for skincare players also stems from the continuous rise of the Chinese skincare track. With the prominence of the value of the Hong Kong stock market and the lessons learned by similar track players, perhaps in the near future, the Hong Kong stock market will usher in the emergence of the first share of the skincare track. But for the players of domestic skin care products, what they face directly is the increasingly picky consumers, and the final competition is still technology and brand culture.