Recently, a Xiaohongshu account named SHUIYI (referred to as “Shuiyi” below) posted multiple articles about “store closure clearance sale”. The account also included a caption in the pinned video stating “30 days countdown to store closure”, indicating that the business is about to end.
It is understood that Shuiyi is a Chinese domestic cosmetics brand, which launched its first product, a self-developed puff, in July 2022, and then introduced its second flagship product, the “7-color multi-purpose lip and cheek balm”, in August of the same year.
Regarding the closure, CHAILEEDO immediately contacted the Shuiyi brand for verification. The person in charge of the Shuiyi brand told CHAILEEDO, “The brand has reached the stage of closure because there is no profit and it cannot continue.”
“We can’t continue because there’s no profit.“
Recently, Shuiyi posted multiple articles on its Xiaohongshu account with titles like “The end of niche Chinese domestic products – store closure clearance sale” and “Clearance sale countdown to single digits, farewell if fated to meet again.” In other posts, they mentioned, “Two products are simultaneously in clearance sale for store closure, and there will be no restocking! Farewell!”
Upon this, CHAILEEDO promptly reached out to the operators of the aforementioned Xiaohongshu account for verification. The operators replied, “We are closing the store, and once the products are sold out, that’s it. We expect to finish selling by March.” However, CHAILEEDO noted that Shuiyi’s Xiaohongshu store “Shuiyi’s Store” has already closed, and the brand’s products are now only available on Taobao.
As of the time of writing, Shuiyi’s Taobao store is still operating normally, with 26,515 followers. However, there are only 2 products left for sale in the store: the “Soft Sweet Potato Original Puff” priced at 9.61 yuan and the “Soft Sweet Potato Lip and Cheek Dual-Use Lip Mud Balm” priced at 15.43 yuan. The latter has already sold over 3000 units. The customer service of the Taobao store also confirmed to CHAILEEDO that “the brand is currently in the process of closing down and is indeed preparing to close the store.”
It is worth mentioning that both the Shuiyi Xiaohongshu account and the Shuiyi Taobao store are not registered under an authenticated corporate entity but under individual names. The customer service of the Shuiyi Taobao store informed CHAILEEDO, “Although not registered under an authenticated corporate entity, both the Shuiyi Xiaohongshu account and the Shuiyi Taobao store are officially operated by the brand.”
So, how did the Shuiyi brand end up in this situation?
The person in charge of the Shuiyi brand told CHAILEEDO, “We can’t continue because there’s no profit, and once the current inventory is sold out, we won’t produce anymore. Although sales have increased during the clearance period, allowing for some capital recovery, it’s just a drop in the ocean. It’s been tough in the cosmetics industry these past few years, and it’s highly unlikely that we’ll continue in the future.”
Furthermore, the same person believes that missing out on promotional opportunities is one of the reasons why the Shuiyi brand struggled to survive. “When the Shuiyi brand was just established, we didn’t seize the chance to promote it, so it has been lukewarm, and the products haven’t sold much.”
CHAILEEDO’s investigation revealed that Shuiyi’s social media operations were solely focused on the Xiaohongshu platform and had not been updated for a long time. It is known that the first post on Shuiyi’s Xiaohongshu official account was made on July 16, 2022, with hundreds of posts since then. However, the account remained inactive from September 2023 to November 2024, until it started posting multiple “store closure clearance sale” articles in mid-December 2024.
In summary, Shuiyi’s brand promotion on the Xiaohongshu platform suffered from prolonged inactivity, with the effective promotion period, excluding hiatus and clearance periods, lasting only 14 months.
Three-month GMV on Douyin is less than 5000 yuan
It is worth mentioning that the Shuiyi brand has not established a presence on Weibo, WeChat public platforms, or opened a social account on Douyin. The brand’s official promotional channels are solely limited to Xiaohongshu.
Regarding the focus on Xiaohongshu operations, an industry expert analyzed to CHAILEEDO, “Users on the Xiaohongshu platform have their own opinions and judgments, and are not easily persuaded. If emerging brands lack outstanding product features and sufficient financial investment, they are easily overlooked.”
According to public information from the China Trademark Office, the owner of the “SHUIYI” trademark in Class 3 daily chemical products is Guangzhou Zhuangkenai E-commerce Co., Ltd. (referred to as “Zhuangkenai E-commerce” below). The National Enterprise Credit Information Publicity System shows that Zhuangkenai E-commerce was established in January 2022, with Yao*wen as the legal representative. In relation to the store closure, CHAILEEDO attempted to contact Zhuangkenai E-commerce using the publicly available contact information from the business registration, but there was no response until the time of drafting.
It is understood that in July 2022, the Shuiyi brand officially began operations by posting its first graphic and text note on its Xiaohongshu account. Within two and a half years of establishment, the brand has introduced two product categories: puffs and lip mud, with an average order value ranging from 5 to 40 yuan. CHAILEEDO found through a cosmetics regulatory app that the Shuiyi brand has 7 registered cosmetics records, all belonging to different shades of its lip mud series. The registrant company is Yiwu Jinkeliyan Cosmetics Co., Ltd. (referred to as “Jinkeliyan”).
The person in charge at Jinkeliyan told CHAILEEDO that they are the production factory for the Shuiyi brand. “In the past few years, Shuiyi made several attempts in product categories, with one lip liner exported to Japan. However, they mainly focus on developing domestic online channels.”
CHAILEEDO’s investigation found that besides the official Taobao store, Douyin was also one of the main sales channels for the Shuiyi brand. According to Feigua data, the Shuiyi brand only generated GMV in the months of September to November 2022, with no sales data shown thereafter. During this period, the average selling price for Shuiyi products ranged from 10 to 50 yuan, with GMV ranging from 2500 to 5000 yuan, sales of 50 to 100 items, 79 orders, and only 1189 views. In terms of industry ranking, Shuiyi’s GMV on Douyin in 2022 ranked at 14473, with a market share of less than 0.1%.
It is known that the Shuiyi brand on Douyin primarily relied on product cards and KOLs for sales. From September to November 2022, there were 13 KOLs promoting the brand, mostly with a fan base ranging from 1000 to 10,000 potential customers, including some mid-tier KOLs with over 100,000 fans. However, only 3 KOLs generated GMV for the Shuiyi brand, with a total GMV of 500 to 750 yuan.
At least 5 Chinese domestic cosmetics brands have not survived beyond 3 years
“The current media environment is not very friendly to the development of emerging brands; operational and advertising costs are too high,” lamented a senior industry insider to CHAILEEDO. According to incomplete data compiled by CHAILEEDO, at least 5 Chinese domestic cosmetics brands established since 2023 have announced store closures.
So, why has it become increasingly difficult for emerging brands to survive? Several industry experts informed CHAILEEDO that the market has entered an era of saturation, where intense competition poses a significant challenge to the sustainable development of new brands.
On one hand, “rolling out lower prices” has spread throughout the entire cosmetics market. This phenomenon has intensified price wars between brands, leading companies to lower product prices to attract more consumers. However, this also presents a challenge of significantly reduced profit margins. Lin Lijun, the makeup research director at Guangdong Shangpinhui Cosmetics Co., Ltd., told CHAILEEDO, “Taking makeup as an example, the prices of such products continue to decline, leaving brands with almost no room for premium pricing.”
In fact, a low average order value tests a company’s operational capabilities. The aforementioned senior industry expert stated, “Competing on price means first having to compete against the ‘Xiamen Gang.’ However, the ‘Xiamen Gang’ excels in technology, is more sensitive to traffic, is more familiar with platform rules, and is highly efficient in product development. It’s very difficult for ordinary new brands to compete with them.”
On the other hand, intensifying competition in certain niche markets with low technological barriers makes it challenging to create differentiated value in products. Cheng Yingqi, the founder of the Bingquan brand, believes, “The current makeup market faces a serious problem of oversupply of brands and products, leading consumers to demand higher levels of differentiation in product and brand value. If products lack homogeneity and fail to offer personalized and differentiated value, it will be difficult to attract and retain consumer interest.”
“The solution lies in identifying truly attractive value propositions, rather than acting solely on intuition. Being visually appealing or entertaining is no longer sufficient to attract consumers; the key is to create value that enhances consumer stickiness,” Cheng Yingqi told CHAILEEDO.
“Brands can achieve differentiation in multiple aspects,” stated Qian Qi, Deputy General Manager of Hangzhou Meiyitian Brand Management Co., Ltd. “For example, in pricing tiers, packaging design, product content, color expressiveness, or base makeup effects. Of course, this also involves whether the brand truly understands its strengths—whether it lies in research and development, promotion, or design. When choosing a path of differentiation, brands must leverage their strengths and address their weaknesses.”
“Emerging brands must reevaluate their market positioning and operational strategies, seeking ways to provide unique value to consumers. Relying solely on aggressive advertising spending or low pricing strategies cannot guarantee long-term success. Brands must establish an irreplaceable position in the minds of consumers to achieve sustainable growth and competitive advantage,” the aforementioned senior industry expert informed CHAILEEDO.
