Yesterday evening (October 25th), China’s leading cosmetics company Shanghai Jahwa released its financial report for the first three quarters of 2023. The report revealed that Shanghai Jahwa achieved operating revenue of 5.091 billion yuan ($695.7 million), a year-on-year decline of 4.91% for the January to September period.
It is worth mentioning that just two days ago, another China’s leading cosmetics company Proya also released its financial report for the first three quarters of 2023, recording operating revenue of 5.249 billion yuan ($717.3 million), surpassing Shanghai Jahwa for the first time.
This signifies a change in leadership among Chinese listed cosmetic companies.
Shanghai Jahwa adjusted its organizational structure
Looking at the financial data from Shanghai Jahwa alone, the company’s performance for the first nine months of this year can be considered commendable.
According to the financial report, although its operating revenue declined by 4.91% to 5.091 billion yuan ($695.7 million) during the first nine months of this year, the net profit attributable to shareholders of the listed company increased by 25.83% year-on-year, reaching 394 million yuan ($53.84 million).
Shanghai Jahwa also highlighted the outstanding performance of its interest-based e-commerce business during this period, achieving significant growth of nearly 200%. The offline new retail business also experienced rapid growth of approximately 23%, demonstrating the effectiveness of optimization and adjustments.
Based on the data, Shanghai Jahwa experienced double-digit declines in revenue and net profit in the third quarter of this year. The company explained that the decline was due to “pressure on offline channels, which account for a significant proportion, resulting from a weak retail environment.” However, at the same time, the company increased marketing investment in the third quarter based on predictions of a stable future economy and consumer recovery. The financial data shows that the company’s sales expenses for the first three quarters of this year reached 2.211 billion yuan ($302.1 million), representing a certain growth compared to 2.123 billion yuan ($290.1 million) during the same period last year.
The increase in marketing investment also had a positive impact on the brand. It is understood that Dr. Yu and VIVE achieved double-digit growth in the third quarter of this year.
It is worth mentioning that alongside the release of the financial report, the board of directors of Shanghai Jahwa also approved a proposal for the company’s organizational structure adjustment. According to the announcement, in order to further improve operational quality, activate organizational efficiency, and accelerate business growth, Shanghai Jahwa’s domestic business organization will be adjusted to three major divisions: Beauty and Skincare & Maternity Care Division, Personal Care and Home Care Division, and Overseas Division. The divisions will serve as decision-making bodies and will be responsible for performance results.
The change in leadership among Chinese cosmetic companies
For a long time, Shanghai Jahwa has been the largest Chinese domestic beauty and cosmetics listed company in terms of revenue. With over a century of history and an annual revenue of over 7 billion yuan, it has been regarded as the “big brother” of the Chinese cosmetics industry.
However, at that time, the difference in operating revenue between Shanghai Jahwa and Proya was only 2 million yuan ($273,300). Due to this, many industry insiders predicted that the top spot among Chinese domestic beauty and cosmetics companies would soon change hands.
Recently, according to Proya’s third-quarter report, the company achieved a total operating revenue of 5.249 billion yuan ($717.3 million) for the first three quarters of this year. Today, with the release of Shanghai Jahwa’s financial report for the first three quarters, its operating revenue of 5.091 billion yuan ($695.7 million) fell short of Proya’s. It officially marked the change in leadership among Chinese cosmetic companies.
Unlike Shanghai Jahwa’s proactive internal organizational restructuring measures to seek performance growth, Proya has achieved remarkable performance growth in recent years through multiple transformations in its main brand, Proya, in terms of products, marketing, and channels.
CHAILEEDO has analyzed Proya’s financial data for the first three quarters of the past five years and found that the operating revenue for 2019-2023 January to September was 2.08 billion yuan ($284.2 million), 2.291 billion yuan ($313.1 million), 3.012 billion yuan ($411.6 million), 3.962 billion yuan ($541.4 million), and 5.249 billion yuan ($717.3 million), with year-on-year growth rates of 33.35%, 10.14%, 31.48%, 31.53%, and 32.47% respectively.
In other words, Proya’s operating revenue has maintained double-digit growth for the past five years.
It is worth noting that the Chinese Double 11 Shopping Festival, which has become the most important promotion event in the beauty industry in recent years, also becomes a crucial point for companies’ annual performance in the fourth quarter.
According to the brand performance report released by Tmall Beauty for the first day of Double 11 pre-sales, Proya surpassed numerous international beauty brands and secured the top spot. Similarly, its makeup products Timage also performed well, ranking first in the category.
With the performance in the first three quarters of the past five years or the outstanding achievements on the first day of the Double 11 promotion, it can be foreseen that Proya may maintain a high-growth trend in the fourth quarter of this year. The “throne” of being the number one Chinese domestic beauty brand can be considered firmly secured.