Under the sun, there is nothing new until two major Chinese beauty brands went to “Dr. Wen.”
On the last day of May, Fang Yuyou from Proya, Guo Zhenyu from BTN, and the head of Douyin’s e-commerce beauty and personal care department, rare appearances in the same company—Xiamen Heyu Corporate Management Group Co., Ltd. (referred to as “Heyu Group” below)—which happens to be the creator of the popular “white-label brand” Dr. Wen this year.
In China, a “white-label brand” refers to a self-owned brand product within a distribution system. These products are usually produced by small and medium-sized manufacturers, and consumers have low brand awareness of them. However, they are known for their strong functionality, practicality, and high cost-effectiveness. White-label brand products are of relatively high quality (with high production costs) but lack marketing budget, resulting in affordable prices. In recent years, white-label brand brands in the Chinese beauty market have emerged rapidly, attracting significant attention from consumers and industry professionals, such as Dr. Wen, ANA, HGIYA, and Hailanduo.
So, what kind of market signal is being released with the convergence of the two giants in the Chinese beauty industry and the Heyu Group, a platform for online business growth in the beauty market? What did they discuss among themselves?
New media marketing and brand building as key topics
According to CHAILEEDO, Dr. Wen, a brand under Heyu Group, has experienced a significant surge in sales on the Douyin platform this year. The GMV (Gross Merchandise Volume) of Dr. Wen exceeded 100 million yuan each month from January to May, with the first quarter alone reaching a GMV of 440 million yuan. Its remarkable growth of 581.8% has made it one of the fastest-growing skincare brands in the online channel.
The impressive sales performance has transformed Dr. Wen from an unknown white-label brand on Douyin into a new force in the skincare market that has garnered attention from the cosmetics industry. It has also attracted the interest of numerous companies in the field.
According to the official WeChat account of “Heyu Group,” on May 31st, Fang Yuyou, the co-founder and CEO of Proya Group, Guo Zhenyu, Chairman and President of BTN, and Guan Xinran, the head of Douyin’s e-commerce beauty and personal care department, led their core management teams to visit Heyu Group for exchange and exploration.
There are a few noteworthy details about this exchange. Firstly, although Fang Yuyou and Guo Zhenyu visited on the same day, their visit times were “subtly” scheduled in the morning and afternoon respectively. In addition, the visits from Proya and BTN were not directly initiated by Heyu Group but were recommended and invited separately by ByteDance and Jingxin (Xiamen) Brand Management Co., Ltd.
The high-profile lineup indicates the importance that Proya, BTN, and Douyin e-commerce attach to this exchange. Apart from the key figures of the two major beauty conglomerates, Fang Yuyou and Guo Zhenyu, Proya also had Vice General Manager Hou Yameng and former director Cao Liangguo, both of whom have been involved in Proya’s e-commerce business and made rare appearances in recent years.
The BTN “visiting group” also had a strong lineup, including Vice President Zhang Mei, who is responsible for BTN’s large-scale operations, Li Meng, General Manager of Douyin and Kuaishou, Meiling Ling, the promotion director, as well as executives from Yuezjiang (Guangzhou) Investment Co., Ltd., which was invested and controlled by BTN last year, such as Li Hongda and Yang Yang. In addition, several key personnel from Douyin’s e-commerce beauty and personal care business also participated in the exchange.
So, what did this substantial beauty “visiting group” discuss during their visit to Heyu Group?
CHAILEEDO observed that the main topics of discussion focused on new media marketing and brand building, resembling an exchange between established brands and beauty “white-label brands.”
During the exchange, Heyu Group shared its successful experiences and insights in rapidly creating hit products through new media, short video content production, and live streaming operations. The Proya and BTN teams, on the other hand, shared their successful practices in brand building and product development.
The Proya team expressed that new media marketing is not just about promoting products but also about conveying brand concepts and values. BTN also emphasized that brand building is a comprehensive process that involves various aspects such as product research and development, packaging design, and market promotion.
Furthermore, Proya and ByteDance highly praised Heyu Group’s strength and innovation in the field of new media and expressed their anticipation for deeper cooperation in more areas in the future, igniting speculation about their collaboration.
Public information shows that Heyu Group was established in 2012 and its core business includes e-commerce operations, software development, and e-commerce services. It currently owns over ten self-owned brands, including KAZOO, Dr. Wen, and BUV, and has provided services to more than ten brands with sales exceeding 100 million yuan. The cumulative sales of its products have exceeded one billion units.
“Any brand will go through the process of being unknown to becoming well-known.”
In fact, after Dr. Wen gained popularity on the Douyin platform, it also sparked great interest in Heyu Group’s brand operation strategy from the outside world.
According to reports from multiple media outlets, Dr. Wen’s rise to fame is attributed to the extreme cost reduction of products and the radical approach of burning money. For example, by opening numerous platform accounts and rapidly updating with a large amount of content, they achieved rapid product popularity through a “people-oriented strategy.” Public information shows that Heyu Group has a team of hundreds of operators and has set up dozens of shooting rooms with different themes, including home, office, and business scenes, for producing short video content and livestreaming, enabling continuous 24-hour livestreams.
Some analysts believe that the massive amount of content is supported by the extensive content team and high advertising expenses of the beauty “white-label brand.” Industry insiders have also openly stated to the media that “advertising expenses can account for 60% or even 70% of certain product category sales, combined with single-digit gross profit margins, the net profit earned is basically the advertising rebate from Douyin.”
CHAILEEDO noticed that Dr. Wen’s skincare flagship store on Douyin has posted over 2,700 new works in the past 30 days, far exceeding many top beauty brands on Douyin. At the same time, Dr. Wen’s flagship product, the B5 Soothing Salicylic Acid Mask, priced at 49.9 yuan for two packs, has sold over 5.5 million units in Dr. Wen’s skincare flagship store on Douyin alone, contributing to approximately 275 million yuan in Gross Merchandise Volume (GMV). However, many consumers have criticized the product as a “tax on intelligence” and have experienced breakouts after use. Several beauty bloggers have also raised questions about the consistency between the ingredients of Dr. Wen’s mask and its advertising claims.
Recently, the aggressive approach of beauty “white-label brands,” represented by Dr. Wen, and the lack of brand and product consciousness have sparked considerable controversy within the industry. Therefore, it came as a surprise to some industry insiders that the two leading Chinese beauty brands, Proya and BTN, visited Heyu Group. In light of this, CHAILEEDO interviewed nearly ten brand managers, operators, and Key Opinion Leaders (KOLs) to explore the market logic behind the visits to beauty “white-label brands” by domestic beauty giants and the boundaries between “white-label brands” and established brands.
Upon hearing about Proya and BTN visiting Heyu Group, an unnamed founder of a rising skincare brand expressed surprise and candidly said, “The ‘white-label brand’ approach lacks imagination and can be completely replicated, but whether it can truly drive innovation and bring new value and experiences to users remains a question mark.”
A well-known skincare blogger also shared a similar view, stating, “Heyu Group’s dominance on Douyin demonstrates the effectiveness of their traffic-oriented thinking and methods, but they completely abandon brand and product thinking in their operations. Visiting Dr. Wen at this time is like a desperate move.”
However, some industry insiders have a different perspective, acknowledging the unique aspects of “white-label brands” in terms of traffic acquisition and product popularity. They believe that the emphasis on content teams can provide inspiration to many beauty companies.
A former operator of a billion-dollar Chinese skincare brand referred to “white-label brands” as a “battle legion” during an interview with CHAILEEDO. They stated, “White-label brands are adept at finding untapped traffic sources and can quickly generate revenue within a short period.”
From the perspective of Zhang Guoliang, the founder of FAIRYHERB, “Since ‘white-label brands’ can survive and develop in the market, it has already proven their survival capabilities. This type of ability is undoubtedly worth studying and learning from, especially in terms of leveraging low-cost traffic.”
However, Zhang Guoliang also expressed, “If this approach contradicts our long-term values, we wouldn’t directly adopt it. We would instead focus on learning the ‘tricks.’ It tests a brand’s values and principles.”
Luoyun, the founder of Xianji Brand, also pointed out the difference between “white-label brands” and established brands, stating, “I think the difference lies in having a long-term mentality. It’s about whether you’re just taking advantage of a trend or genuinely striving to create good products and services.”
Cheng Yingqi, the founder of Bingquan Toothpaste, presented a different viewpoint, suggesting that the concept of “white-label brands” is a false proposition. He said, “Any brand will go through the process of being unknown to becoming well-known. It’s not appropriate to simply label new brands as ‘white-label brands.’ The visits by companies like Proya should be seen as a process of learning, interaction, and joint innovation among enterprises.”
It seems that the rise of “white-label brands” like Dr. Wen has sparked interest and controversy within the industry. Some industry insiders view these brands as lacking in brand and product consciousness, relying heavily on aggressive marketing and advertising expenses. However, others see the unique aspects of “white-label brands” in terms of traffic acquisition and quick revenue generation.
The visits by established beauty brands like Proya and BTN to Heyu Group can be seen as a process of learning, interaction, and joint innovation among enterprises. While some express surprise at these visits, others acknowledge the value of studying the survival capabilities and low-cost traffic strategies employed by “white-label brands.”
However, many industry professionals emphasize the importance of long-term thinking, creating good products and services, and staying true to brand values and principles. They believe that while there may be lessons to learn from the success of “white-label brands,” it is crucial to maintain a focus on innovation and providing value to consumers.
Overall, the market logic behind the visits to “white-label brands” by established beauty brands is a topic of discussion and debate within the industry, with different perspectives on the boundaries and implications of this trend.
The business logic behind the white-label brand and the growth opportunities in the emerging market
In fact, the recent visits of Proya, BTN, and Douyin e-commerce to Heyu Group will undoubtedly become clearer when placed in a larger market context. It all started in 2023 when several well-established Chinese beauty brands achieved astonishing growth on Douyin, with some brands even returning to the top tier of the Chinese beauty industry by leveraging Douyin. Behind their success, traces of the white-label brand strategy in the beauty industry have become increasingly apparent.
On one hand, in addition to marketing innovations and strategies, the rise of white-label brands in the beauty industry cannot be separated from the larger context of Douyin.
According to CHAILEEDO and Growth Black Box analysis, the growth explosion of various white-label brands such as Liji, Jiaorunquan, and VC became an important driving force behind the growth of beauty brands on Douyin last year. The well-established beauty brands that have reclaimed their dominance rely on the Douyin platform and primarily target third-tier and lower-tier urban women, emphasizing cost-effectiveness, which bears a striking resemblance to white-label brands. However, the difference lies in the fact that the well-established Chinese beauty brands have already established their product strength and brand value.
On the other hand, the rise of white-label brands reflects the immense potential of the emerging market, which drives Douyin e-commerce to increase its support for white-label beauty brands and low-priced products. According to LatePost reports, since May of last year, Douyin e-commerce has made a series of organizational adjustments, aiming to more efficiently introduce and support merchants with lower-priced goods and white-label brands. Additionally, this year, Douyin e-commerce has set “price power” as its highest priority task for 2024 and considers low prices as an important platform strategy.
In this context, several industry insiders have expressed their views, stating that “the visits of Proya, BTN to Heyu Group may have been inspired by the explosive growth of some beauty brands on Douyin last year. As a listed beauty company, achieving growth is an ongoing task, and the industry is currently facing the dilemma of sluggish growth and rising traffic costs. Therefore, seeking inspiration from Heyu Group is not only a requirement for their own development but also in line with the platform’s development trends.”
“For Douyin e-commerce, white-label brands undoubtedly make full use of the platform’s rules, achieving breakthrough performance while generating substantial revenue for the platform. In addition, compared to traditional beauty brands with strong influence, the cooperation between the platform and white-label brands undoubtedly offers greater flexibility. Furthermore, the white-label brand represents the huge potential of the emerging market, which brings significant growth prospects to the platform.” said a brand manager from Hangzhou.
Clearly, the visits of Proya, BTN, and Douyin e-commerce to Heyu Group undoubtedly have their own commercial motives. For Heyu Group, it faces the challenge of the transition from white-label brands to mature brands in the beauty industry. Learning from successful brands like Proya and BTN undoubtedly benefits the development of its own brands. Similarly, successful brands like Proya and BTN can understand the underlying logic behind the success of white-label brands and gain experience in innovative marketing strategies and adapting to platform trends.
It is worth mentioning that it came as a surprise that on June 1, immediately after the visit activities, Dr. Wen’s sales data on the Douyin platform began to decline rapidly. According to Feigua data, Dr. Wen’s sales on Douyin have not crossed 50 million since June, showing a significant year-on-year decline. At the same time, Dr. Wen’s skincare flagship store on Douyin experienced a sharp decline in key indicators such as the number of new works and likes, leading to rumors of being restricted by Douyin’s algorithm.
Overall, there are still many flaws in the white-label brand strategy in the beauty industry, and whether it can truly withstand the test of time and successfully build a brand remains to be validated by time and the market.
