On September 10th, Chinese popular livestreamer Li Jiaqi faced criticism from consumers when promoting Florasis eyebrow pencils during a livestream session. Consumers expressed dissatisfaction with the high price of 79 yuan per pencil. However, the internet celebrity, who gained fame for livestreaming sales, responded by saying, “Don’t make random comments. The eyebrow pencil has always been priced at 79 yuan. Chinese domestic products are not easy to produce. Sometimes we need to reflect on ourselves. Have our salaries increased over the years? Have we worked diligently?” These remarks quickly sparked heated discussions among internet users. The incident placed Florasis in the spotlight and continued to generate controversy for over half a month.
Is it expensive or not?
Looking back at this event that sparked heated discussions in the cosmetics industry, it all started with the debate over whether Florasis’ products are expensive or not.
In fact, for consumers, whether something is expensive or not is primarily a subjective perception based on the product itself. Li Jiaqi’s statement itself has some misconceptions. Consumers feel that Florasis’ eyebrow pencil is expensive, but it is not necessarily linked to their salary increase or decrease. Even if consumers’ salaries have increased, if they feel the product is not worth it, they will still consider it expensive. Conversely, even if consumers’ salaries have decreased, if they feel the product is worth purchasing, they will not consider it expensive. There is also a misconception among consumers, especially in the cosmetics industry, that the concept of “expensive” or “not expensive” cannot be solely measured by the weight of the product. Essentially, consumers feel that if a product lacks differentiated features that can attract them, it is not worth the extra money.
Returning to a basic economic theory, what determines the price of a consumer product? Value and utility are the two fundamental attributes of a commodity: value represents the undifferentiated human labor, both mental and physical, embodied in the commodity; utility refers to the attribute of a commodity that can satisfy people’s needs. In other words, value and utility form the basis for determining the price of a commodity. The intellectual effort expended in the production process, such as technology and research, as well as the differentiation of the product’s utility, are the main factors that affect the upper limit of the commodity’s price and determine the additional value that consumers are willing to pay for these products.
Ultimately, product prices are determined by the value that consumers can perceive. The value that consumers can perceive includes functionality, experience, and personalization.
Looking at Florasis’ products themselves, in terms of their functional value, they are not fundamentally different from other cosmetics and share the basic functionalities of makeup. In terms of functional products, cost-effectiveness can be a competitive advantage. Cost-effectiveness refers to a situation where the price is cheaper while the quality remains the same, or where the quality is better while the price remains unchanged. However, this model may not necessarily be applicable or successful in the cosmetics industry. When Florasis was launched, it positioned itself differently from other domestic cosmetic brands by focusing on injecting more cultural value into its products based on traditional Chinese culture, rather than solely emphasizing affordability and cost-effectiveness. As a result, the prices of Florasis products are relatively high.
In reality, most companies should not compete solely on price for the same product, but rather provide consumers with a sense of value that is more scarce—experiential value. In the cosmetics industry, the consumer experience is relatively similar across brands, and the core methodology for creating experiential value is to shift from a product perspective to a user perspective. When experiential value cannot be differentiated, a sense of value that is even more scarce—personalized value—needs to be emphasized.
In terms of personalization, Florasis has done quite well. From the beginning, Florasis positioned itself as a higher-end brand and aimed to achieve differentiation through its products. Florasis creatively incorporated many Chinese elements into its brand and products, such as bas-relief designs, traditional Chinese colors, and elements like Miao silver, Luoshenfu, and peonies, all of which highlight Florasis’ identity as “Oriental makeup.” These personalized product features set Florasis apart from other domestic cosmetic brands and quickly gained favor among consumers.
This approach taken by Florasis is undeniably correct, as evidenced by its initial success upon launch. Florasis was a cosmetic brand that quickly surpassed the 1 billion yuan mark in sales. Established in 2017, its sales on Tmall reached nearly 2 billion yuan in 2019.
Returning to the aspect of pricing, objectively speaking, Florasis products cannot be considered expensive since they cannot be measured solely based on weight. However, whether something is expensive is primarily a subjective perception for consumers. If consumers feel that a product is expensive, it means that they no longer perceive the value of Florasis’ products, which can be a significant blow to the brand. At that point, the issue of whether Florasis’ pricing is high or low becomes irrelevant.
Chinese domestic cosmetics brand surviving in a dilemma
In fact, for Chinese domestic cosmetics brands like Florasis, this marketing approach is also a result of helplessness.
The year 2017 was crucial for the development of the Chinese domestic cosmetics market. It was the year when Perfect Diary, known for its affordable and rapidly marketed products, was established, and Florasis was also founded in the same year.
Unlike Florasis, Perfect Diary focused on the functional value of its products, emphasizing cost-effectiveness. Within two years of its establishment, Perfect Diary achieved annual sales of over 2 billion yuan (approximately 310 million US dollars) in 2018. Its explosive popularity was attributed to its aggressive marketing strategy—offering products priced below 100 yuan (approximately 15 US dollars), quickly launching new products, and capitalizing on the traffic dividend. Taking advantage of its success, Perfect Diary’s parent company went public. On November 19, 2020, Yatsen Holding, the parent company of Perfect Diary, was listed on the New York Stock Exchange. The IPO issue price was $10.5 per share. By the end of the first trading day, Yatsen Holding’s stock had risen by 75.24%, resulting in a total market value exceeding 12.2 billion US dollars.
However, this focus solely on functionality without considering the experiential and personalized value of the products eventually led to Perfect Diary’s decline. From 2020 to 2022, Yatsen Holding experienced three consecutive years of losses, with a staggering loss of 2.688 billion yuan in 2020 and a further loss of 821.3 million yuan in 2022.
Market investors also became increasingly disappointed with Perfect Diary. In early 2021, after its IPO, the stock price reached a high of $25.47, with a peak market value of 14 billion US dollars. However, by early 2022, the stock price had plummeted to below one dollar. As of yesterday, Perfect Diary’s total market value was only 544 million US dollars, a decrease of 13.456 billion US dollars from its peak.
The experiences of Perfect Diary and Florasis demonstrate that in the fiercely competitive cosmetics market in China, neither the strategy of offering affordable products with good value nor the marketing approach focused on packaging, as in the case of Florasis, can guarantee success.
This situation reflects the dilemma faced by Chinese domestic cosmetics brands.
In fact, since the end of the last century, major beauty brands have begun to enter China when the Chinese cosmetics market was still in its infancy. At that time, foreign brands mainly relied on television advertising as their marketing strategy. As mobile internet had not yet emerged, television was the primary form of entertainment for the Chinese population, and television advertisements quickly made foreign brands familiar to Chinese consumers.
These brands quickly gained favor among Chinese consumers and captured a significant share of the Chinese cosmetics market. At that time, the main products in the Chinese cosmetics market were primarily focused on shampoo, including familiar brands like Head & Shoulders and Pantene.
However, in the 2010s, Chinese domestic cosmetics brands began to develop as the mobile internet emerged, leading to changes in marketing strategies. Traditional television advertising faced challenges, and mobile advertising dominated by smartphones became popular. While domestic brands were able to adapt to online marketing and retail promptly, the influence of mobile advertising still lagged behind television advertising, resulting in less brand recognition compared to international brands.
Meanwhile, as foreign brands had already established a stable market share in China, domestic brands had to heavily focus on marketing to gain market share, often neglecting product improvement. This approach became increasingly extreme with the rise of livestreaming sales. For example, Florasis’ deep association with livestreamer Li Jiaqi resulted in the brand heavily relying on its livestreaming traffic, lacking organic brand recognition. Consumer repurchasing behavior and interest in new products mainly revolved around the Li Jiaqi-led livestreaming pool. Consumers were more loyal to the livestreamer rather than the brand and its products. This dependency on Li Jiaqi’s influence gradually weakened consumer identification with the Florasis brand.
This has put domestic brands in an awkward position. Expanding the market inevitably requires increased marketing investment, but excessive marketing expenditure can weaken product quality and impact company profits. Weak product quality necessitates even more marketing investment, creating a vicious cycle. In recent years, this has led to the bankruptcy and closure of some previously well-known domestic cosmetic brands, such as Fomomy and Colorpedia.
Additionally, Chinese consumers have relatively high demands and expectations for domestic beauty brands. Due to intense market competition, consumers expect domestic brands to match or even surpass international brands in terms of product quality, safety, innovation, and brand image. They have little tolerance for any minor mistakes from domestic brands. Once there are quality issues or negative incidents, like the recent Florasis incident, consumer trust in domestic brands significantly declines, making consumers even more demanding and cautious.
With fierce external competition and demanding Chinese consumers, the development of domestic beauty brands can be incredibly challenging.
However, this does not justify any lackluster approach to product development by domestic brands. Domestic beauty brands need to increase investment in research and development, continuously introduce innovative and differentiated products, and deeply understand consumer needs and preferences to optimize product features and functions in the fiercely competitive market.
As for the overly demanding expectations of Chinese consumers towards domestic beauty brands, it is hoped that this scrutiny will drive domestic brands to continuously improve their research and development capabilities, quality control, and brand image to meet consumer expectations and gain a competitive advantage. Of course, consumers should also approach their choices with rational thinking, not following the crowd, and ensuring that rational voices are not drowned out by various noises.
Simultaneous progress in research & development and international expansion
After the Li Jiaqi incident, the focus shifted from the price of Florasis products to the consumer’s lack of trust in the Florasis brand, particularly regarding its product quality.
In reality, Florasis had already begun investing heavily in research and development (R&D) to enhance its product quality.
In 2022, Florasis’ R&D efforts accelerated. On March 4th, Florasis’ parent company announced a five-year plan called “Oriental Beauty R&D,” which involved an investment of 1 billion yuan over the next five years. The plan aimed to establish five R&D centers, including a Consumer Research Center, a Cosmetic Innovation Center, a Beauty Device R&D Center, an Industrial Design and CMF (Color, Material, Finish) R&D Center, and an Oriental Aesthetics and Spatial Innovation Center. Yige Group planned to increase investment and development in multiple research areas through these centers.
From the beginning, Florasis positioned itself as a brand of “Oriental Makeup” and gradually developed a unique “Oriental Beauty R&D System” that differed from Western cosmetic R&D systems.
To conduct consumer sensory behavior research more rigorously and scientifically, Yige’s Cosmetic Innovation Center also established China’s first holographic AI sensory behavior research system. With the consent of volunteers, this system combines various research methods, including brainwave analysis, language analysis, facial expression analysis, and eye-tracking, to capture users’ experiences with the products.
Moreover, the Oriental Beauty R&D System advocated by Florasis goes beyond incorporating Eastern characteristics into formulas or ingredients. It encompasses research on Eastern skin types and tones, traditional Chinese medicine theories, Eastern ingredients, formula development, technical systems, color systems, materials, craftsmanship, and modern applications. This comprehensive system aims to combine the inheritance and innovation of China’s outstanding traditional culture across multiple aspects such as ingredients, formulas, colors, makeup, techniques, and design.
In addition to R&D, Florasis has also made good progress in international expansion.
Florasis’ Oriental culture has resonated with Japan, another East Asian country, for quite some time. As early as March 2021, Florasis started selling its products on Japanese Amazon on March 1st. One of Florasis’ lipstick products, “Blooming Rouge Love Lock Lipstick,” which sells domestically for 219 yuan, was priced at 6,129 Japanese yen (equivalent to 371 yuan) on Japanese Amazon, slightly higher than the domestic price. However, this price did not dampen the enthusiasm of Japanese consumers, as Tongxinuo Lipstick entered the top three of the Japanese Amazon lipstick sales chart on its first day.
Furthermore, at the end of last month, Florasis was invited to establish a counter in Shinjuku Isetan, known as the “ceiling of Japanese offline retail,” marking another milestone in the journey of Chinese beauty brands going global.
On September 6th, Florasis announced its collaboration with Shinjuku Isetan in Tokyo and held related events. The Deputy Minister of the Chinese Embassy in Japan also participated in the event and delivered a speech. Florasis’ counter in Shinjuku Isetan is located in the cosmetic core area on the first floor of the department store, adjacent to many international brands. In the counter’s design, Florasis drew inspiration from elements of classical Chinese gardens, incorporating features such as lattice windows, Taihu stones, and Chinese landscape aesthetics.
Given Shinjuku Isetan’s important position in the Japanese consumer market and the high standards and strict requirements for brands to join, successfully establishing a presence in Shinjuku Isetan will undoubtedly have a positive impact on Florasis’ brand image. This move can not only promote brand development in the local market but also convey the brand’s culture to more overseas consumers, enhancing its global perspective and competitiveness.
In fact, as the first Chinese makeup brand to be invited to Shinjuku Isetan, Florasis fully demonstrates the charm of Chinese aesthetics and culture and the high recognition of its brand value by this top-tier Japanese retail channel. It can be said that Florasis’ successful entry into Shinjuku Isetan is not only an important milestone for the brand but also a significant milestone for Chinese brands going global.
In reality, for Florasis, the Li Jiaqi incident is both a crisis and an opportunity. Previously, consumers perceived Florasis as a product endorsed by Li Jiaqi, an internet celebrity. However, in reality, Florasis has been making changes in terms of R&D and international expansion. This incident may serve as an opportunity for Florasis to break free from the influence of Li Jiaqi and become a truly independent beauty brand that represents Chinese culture.