CHAILEEDO found that the revenue of China’s top 10 head beauty companies already accounts for 10.6% of the country’s total retail sales in the cosmetics category.
Recently, with the release of the first-half 2023 financial reports of Chicmax, the performance of Chinese beauty and cosmetics listed companies for the first half of 2023 has been fully revealed. Based on the publicly available data, CHAILEEDO has compiled a TOP 10 list of Chinese beauty and cosmetics companies for the first half of this year. Apart from Shanghai Jahwa remaining in the first place, there have been significant changes in the rankings of other listed companies.
Currently, the growth of the cosmetics retail market has slowed down, and the prevailing anxiety in the industry has not yet subsided. Therefore, the inclusion of companies in the list and changes in rankings also reflect to some extent the current landscape and trends in the cosmetics market. So, which beauty and cosmetics companies have taken the lead in the market in the first half of this year? And what growth secrets do they have?
10 companies have achieved half-year revenues exceeding 20 billion yuan
Looking at the financial data for the first half of this year, the leading beauty and cosmetics companies have firmly held their market positions. The overall rankings among the Top 10 have remained relatively stable. However, there have been some new changes among the unchanged.
Among the top 10 companies, three have entered the 8-billion-yuan level.
Based on the 2-billion-yuan mark, Chinese beauty and cosmetics companies can currently be divided into two tiers. Firstly, there is the over-2-billion tier led by Shanghai Jahwa, where Shanghai Jahwa and Proya rank first and second, with revenues of 3.629 billion yuan ($500.3 million) and 3.627 billion yuan ($500 million), respectively, with a difference of only about 2 million yuan ($275,700). Bloomage Biotech ranks third with a revenue of 3.076 billion yuan. The fourth and fifth places is BTN and S’Young, with revenues of 2.368 billion yuan ($326.4 million) and 2.29 billion yuan ($315.7 million), respectively. Several brokerage firms predict that based on the current growth rate, Shanghai Jahwa, Pechoin, and Bloomage Biotech are expected to break through the 8-billion-yuan mark in the next two years.
The second tier hovers between 1 billion and 2 billion yuan. Among them, revenue of Yatsen, Giant Biogene and Chicmax was over 1.5 billion yuan ($206.8 million) in the first half of the year, with 1.624 billion yuan ($223.9 million), 1.606 billion yuan ($221.4 million), and 1.587 billion yuan ($218.8 million), respectively. Fredad and Marubi have just surpassed the 1-billion-yuan mark, with revenues of 1.106 billion yuan ($152.3 million) and 1.059 billion yuan ($145.9 million), respectively.
In terms of performance, most companies have recorded revenue growth, indicating that the top companies have gradually emerged from the shadow of the pandemic. Specifically, in the first half of this year, Giant Biogene and Proya achieved the most rapid revenue growth, with growth rates of 63% and 38.12%, respectively. Shanghai Jahwa and Yatsen experienced a decline of 2.3% and 11.87%, respectively.
In terms of net profit attributable to shareholders, three companies are expected to surpass 1 billion yuan ($137.7 million) this year.
Specifically, although Yatsen still recorded losses, the extent of its losses has significantly narrowed, and it is not far from turning losses into profits. Among other companies, except for a 10.27% decline in Bloomage Biotech, the rest have achieved growth in net profit. Shanghai Jahwa even achieved a substantial growth of 90.9%. In addition, Proya, S’Young, Giant Biogene, and Chicmax all achieved growth rates exceeding 50%, with growth rates of 68.21%, 72.02%, 52.50%, and 60.78%, respectively.
It is worth mentioning that Uniasia, which has not yet disclosed its financial data for the first half of the year, has not been included in the list this time. According to the data previously announced by Uniasia, its revenue in 2022 was 2.09 billion yuan ($287.9 million), and its net profit attributable to shareholders reached 228 million yuan ($31.4 million). According to the data of listed/potentially listed companies last year, Uniasia has surpassed Freda and Marubi, ranking ninth.
In addition, Fuerjia, which just debuted on the Shenzhen Stock Exchange in August this year, has also become a strong competitor among the Top 10 Chinese beauty and cosmetics companies. According to its latest financial report, Fuerjia achieved revenue of 868 million yuan ($119.55 million) in the first half of this year, a year-on-year increase of 6.33%. Its net profit attributable to shareholders reached 353 million yuan ($48.62 million), surpassing Shanghai Jahwa, which currently ranks first in revenue and ranking fifth in net profit.
Of course, not only Fuerjia, but also JALA Group, Yige Group, and Joy Group, which are currently unlisted, are strong competitors among the top ten companies. Moreover, based on the data released by some companies earlier, many of them can already be included in the top ten list.
CHAILEEDO found that the total revenue of the ten companies on the list for the first half of the year has reached 21.972 billion yuan ($3.03 billion), with a year-on-year growth of 13%, outperforming the overall market. According to data from the National Bureau of Statistics, the total retail sales of cosmetics in the first half of this year were 207.1 billion yuan ($28.52 billion), with a year-on-year growth of 8.6%. Based on this calculation, the revenue of the top ten leading Chinese companies accounts for 10.6% of the total retail sales of cosmetics in China. It can be said that these leading cosmetics companies have embarked on a strong recovery path and have delivered impressive results.
The battle for No.1 has intensified
Overall, although there haven’t been significant changes of the top ten companies, the competition among leading Chinese brands in the beauty industry has become increasingly intense in the past three years. Only Shanghai Jahwa has maintained its position as the leader, while the rankings of other companies have been changing almost every year. It is worth mentioning that after the release of the performance results, Proya has shown momentum for the Top 1.
Through the half-year financial reports of top Chinese beauty companies over the past three years, CHAILEEDO found that Proya has shown the strongest growth. In the first half of 2021, Proya revenue was just close to 2 billion yuan ($275.5 million), but in the span of three years, it has nearly doubled its revenue and has caught up with the first-place position. Based on this, if Proya can maintain its growth rate in the second half of the year, it has the potential to become the leading Chinese beauty company this year.
Proya brand achieved revenue of 2.892 billion yuan ($398.3 million) in the first half of this year, with a year-on-year growth of 35.86%. If this growth rate continues, the parent company of Proya brand, Proya Cosmetics may become the first Chinese brand to surpass 6 billion yuan ($826.4 million) in revenue this year (based only on publicly disclosed brand performance).
Furthermore, BTN has risen from 7th place in 2021 to 4th place this year, with its revenue in the first half of the year surpassing 2 billion yuan ($275.5 million), recording 2.368 billion yuan ($326.1 million). At the same time, revenue of Winona brand in the first half of the year has reached 2.26 billion yuan ($311.3 million). Looking at the overall growth rate of the parent company of Winona brand, BTN, in the first half of the year, it also has the potential to surpass the 5-billion-yuan mark this year.
From the publicly disclosed single-brand revenues, Winona and Proya have established a significant lead, while the revenues of other publicly disclosed brands have not exceeded 2 billion yuan ($275.5 million), still a considerable distance from the annual revenue of 5 billion yuan ($688.7 million).
As for the fall in rankings, Yatsen has dropped from 2nd place in 2021 to 6th place now, with its revenue falling from 2.97 billion yuan ($409.1 million) in the first half of 2021 to 1.624 billion yuan ($223.7 million). However, compared to the declining revenue, Yatsen has been optimizing its profit structure in the past two years, with its net profit attributable to shareholders narrowing from a loss of 700 million yuan ($96.41 million) in 2021 to 58 million yuan ($7.99 million) this year. Huang Jinfeng, the founder, chairman, and CEO of Yatsen, stated in the financial report that the company is undergoing business model adjustments and strengthening investments in brand building and research and development. The strategic transformation plan is generally on the right way. In addition, S’Young, Freda, Marubi, and Chicmax have all experienced a certain degree of decline in rankings.
Research and development upgrade, self-developed products become standard equipment
It is undeniable that the reason why the above-mentioned companies have become market leaders is closely related to their grasp of industry development trends in recent years. As we all know, since this year, there has been a wave of “Chinese ingredients” in the Chinese skincare field. On the one hand, this trend demonstrates the rise of Chinese beauty brands. On the other hand, it indicates that research and development have become increasingly essential for leading companies, both on the consumer side and the enterprise side. The era of light research and heavy marketing has long passed. To become a true leading enterprise, investment in research and development will undoubtedly be of paramount importance.
After analyzing the research and development investments of various companies in the first half of this year, CHAILEEDO found that, except for Yatsen, all others have shown a growth trend. Freda did not disclose the specific research and development expenses for its cosmetics segment, so it is not included in the comparison. Among them, Giant Biogene has achieved the highest growth rate in research and development investment, reaching 80.8%, ranking first among all companies. Proya and BTN rank second and third with growth rates of 49.87% and 33.58%, respectively. In addition, BTN ranks second on the list with a research and development expense of 109 million yuan ($15.01 million), while the Top 1 on the list is claimed by Bloomage Biotech, which has always been known for its strong research and development.
Looking at the research and development achievements of major domestic companies in the first half of this year, there are two key areas of growth. First, the establishment of research and development centers/factories or joint laboratories, and second, the deployment of independent intellectual property cosmetics ingredients.
Firstly, the trend of research and development centers and expansion. In fact, even during the period when the pandemic was more severe in previous years, leading companies have consistently increased their investment in research and development. With the gradual fading of the impact of the epidemic, large-scale research and development expansion has begun.
In April of this year, S’Young issued convertible corporate bonds to unspecified objects, raising a total of 695 million yuan ($95.72 million), mainly used for the construction of S’Young Intelligent Manufacturing Industrial Park and continued investment in research and development. In July of this year, Proya Shanghai Research and Development Center also made new progress and may soon settle in Minhang District Shanghai. At the beginning of this month, Yatsen announced the opening of its first factory, Yatsen Biotechnology, in Conghua District, Guangzhou. The factory, jointly built by Yatsen and COSMAX, has invested over 600 million yuan ($82.64 million) and integrates research and development, manufacturing, and quality control.
In terms of industry-academia-research collaboration, Bloomage Biotech announced the establishment of the “Bloomage Biotech-Shandong University Stem Cells and Skin Tissue Regeneration Research Center” and continued cooperation with research institutions such as Jiangnan University and the China National Institute of Metrology to carry out four national key research and development programs and two Shandong provincial key research and development programs.
In June of this year, the “Ruijin Hospital-Yatsen Medical Skincare Joint Laboratory” was unveiled. The laboratory has an initial investment of over tens of millions of yuan, and Yatsen will collaborate with Ruijin Hospital to conduct research and development of skincare products based on dermatology science.
At the same time, under the trend of Chinese ingredients, independent intellectual property ingredients have become a key focus. In just the first half of this year, S’Young and BTN both announced the registration of new cosmetic ingredients. S’Young newly registered ingredient is the chemical material “Sodium Pyrrolidone Quinone,” while BTN registered the plant ingredient “Ludwigia Adscendens Extract”.
In fact, since last year, BTN has established an innovative ingredient research and development center, focusing on the independent research and development of innovative ingredients. In its half-year financial report, BTN also stated that its innovative ingredient research and development center is further strengthening basic research, and its independent medical device research and development department is focusing on the research, production transformation, and registration declaration of Class II and Class III medical devices.
S’Young also stated in its financial report that based on previous research results, it is preparing for the registration of new top cosmetics ingredients to provide more efficient exclusive ingredients.
In the first half of this year, Chicmax and Shanghai Jiao Tong University jointly established the “Skincare Functional Ingredient Joint Research and Development Center,” which is expected to make new attempts in the fields of biomolecular design and plant molecular modification.
In addition, Bloomage Biotech, known for its strong research and development capabilities, has been actively developing independent intellectual property ingredients. They have obtained a number of invention patents and utility model patents for their skincare formulations and ingredients. These patents provide them with a competitive advantage in the market and allow them to offer unique products to consumers.
Beauty companies are in the path of expansion
The expansion of the group starts with research and development but ultimately finds its place in branding. Looking at any large beauty conglomerate in the world today, they are composed of multiple brands that contribute to their overall growth. Similarly, leading domestic companies in China, such as Proya and BTN, rely on their main brand for major performance growth. However, in recent years, with the acceleration of internationalization, the war for brand expansion among major conglomerates has begun, and each company is seeking a second growth curve.
In the first half of this year, many top cosmetics companies have initiated new attempts in the market by creating new brands. For example, BTN launched its first AI-powered skincare brand, Beforteen, aiming to explore new territories in “AI + acne treatment” and “technology + skincare.” Another strong competitor in the top ten, JALA Group, introduced the infant skincare brand “Jichu” for the first time this year, aiming to enter the infant skincare market.
Apart from new brands, direct external investments and CVC (Corporate Venture Capital) investments have also become important means of expansion for leading companies.
In just the first half of this year, BTN invested a total of 400 million yuan ($55.09 million) in two investment funds and also participated as a shareholder in Shanghai Ruishi Health Technology Co., Ltd., which is not directly related to cosmetics. This has sparked discussions in the investment circle about BTN’s venture capital fund strategy.
Similarly, in June of this year, Bloomage Biotech officially announced its CVC (Corporate Venture Capital) strategy and announced the establishment of the Fuyuan Synthetic Biology Fund in collaboration with Fuyuan Investment to further develop synthetic biology technology. Similarly, Marubi Corporation, which has established multiple investment funds in recent years, increased its capital by 60 million yuan ($8.26 million) in Qingdao Maoda Fund Company in the first half of this year to expand its investment in the beauty consumer industry-related sectors.
In addition, Proya equity fund, Yongwo Fund, has invested in two companies: Shanghai Weimu Medical Technology Co., Ltd., a high-end interventional medical device company based on innovative materials, and Wellness Top Biotech Co., Ltd., a biotechnology company.
It can be said that in the current slowdown of the cosmetics retail market, leading companies are seeking growth in their own ways. As of closing on August 30, Bloomage Biotech, BTN, Proya, and Giant Biogene are still among the top tier of market capitalization, with Bloomage Biotech leading with a market capitalization of 45.06 billion yuan ($6.2 billion).
Overall, the competition among leading companies has entered an intense phase. Without new growth engines, they will be surpassed by the continuous pursuit of the “rising stars.” This is the new change happening right now.
