Recently, the National Bureau of Statistics of China released the total retail sales data of consumer goods in October 2022. The total retail sales of cosmetics category was 30.9 billion yuan, a year-on-year decrease of 3.7%. In fact, since the beginning of this year, the market of cosmetics has been declining and reached its lowest growth in five years.
CHAILEEDO noticed that one innovative brand, Joocyee, stood out by bucking the trend and performed well under these downturn. In this year’s Chinese Double 11 Shopping Festival, it was listed in the top 5 of local color cosmetics brands for the first time. Established in 2019, Joocyee achieved a total revenue of more than 100 million yuan in the first year, with break-even profitability. Its revenue grew to 500 million yuan in 2021 and is still growing steadily in 2022, becoming one of the fastest growing brands in the Chinese color cosmetics market.
Meanwhile, Joocyee entered Japanese markets in early 2021 with great popularity. In November 2022, Joocyee has already been sold in more than 400 brick-and-mortar stores in Japan. According to Joocyee, its expected performance in 2022 will increase by more than 40% compared to its 2021 performance in the Japanese market.
Joocyee was established by Joy Group, which is a fast-growing unicorn company ($1.2Bilion USD valuation) in the China beauty sector. Joy Group has launched two prominent brands in China, Joocyee and Judydoll, with the latter being ranked as the TOP1 brand for eyeshadow, blush, eyeliner, and contour products in China.
With great honor, CHAILEEDO invited Allan Liu, the president of Joy Group, to share with us the experience of founding Joocyee and the brand’s thoughts on going global.
CHAILEEDO: Joy Group was founded in 2016, when international makeup brands were still occupying most market share, what is the background?
Allan Liu: We realized that Chinese consumers have their own unique pursuit of the design, color and formula of cosmetics products, and it is difficult for international makeup brands to make tailor-made products for Chinese consumers. Based on the idea of designing and creating products more suitable for Chinese consumers, we decided to establish the company, and launched our first brand Judydoll in 2017, and our second brand Joocyee in 2019.
CHAILEEDO: Joocyee was founded in 2019, when the Judydoll already had a relatively large reputation, why did you want to create Joocyee?
Allan Liu: Our first success was Judydoll, which is a mass-market positioning brand with a cute, colorful and playful brand image and whose customer profiles are mostly young girls. With this, we wanted to build a brand in the more premium masstige segment.
When studying the positioning of color cosmetics brands, we believe that the most important factor that distinguishes one brand from another is a brand’s aesthetics and emotional resonance. At that time the Chinese makeup market lacked such an aesthetic brand: an independent, chic, and romantic brand tailored to the urban woman. So, we decided to fill the market gap by building just such a brand – Joocyee.
CHAILEEDO: Joocyee became profitable after just one year on the market, how was that achieved?
Allan Liu: Our fast route to profitability was a direct result of our superior product’s popularity among the targeted customer segments, which resulted in a lot of word-of-mouth advertising. This in turn, meant that we could afford to rein in our marketing dollars while still realizing growth. In addition, as a digitally native company, we excelled at conducting digital marketing campaigns which resulted in high return on the marketing investments we did make.
CHAILEEDO: The most well-known label of Joocyee is “designer makeup”, how do you account for this?
Allan Liu: The concept of “designer makeup” combines two levels of expression of the brand: the pursuit of romantic aesthetics, and the exploration of tailored-made makeup for Chinese women.
Firstly, we believe that makeup is the carrier of life, art, and aesthetics, so we established a high aesthetic standard from our designers for our brand and products. The goal was to interpret romantic aesthetics from an oriental perspective by exploring the use of different themes in makeup.
Another interpretation of designer brands is that we have designed some products specifically for our targeted audience. Our design is about tailoring products that are practically useful for your target demographic, and we tailored a series of products specifically for Chinese women. We realize that the skin tone, skin type and facial bone structure of Chinese women is very different from that of European and American women – even the climate and environment vary greatly.
To help our customers better perceive their skin tone and skin type, Joocyee launched a WeChat and Tmall mini-program this year using advanced AI technology. This technology will intelligently recommend matching makeup products to consumers according to their dermatological characteristics. The program has received a considerable amount of attention and netted many more positive reviews than initially expected. As of November 2022, the program has reached more than 3.5 million visits.
CHAILEEDO: At present, there is a phenomenon that a lot of innovative beauty brands are not profitable. What should these brands do if they want to be profitable?
Allan Liu: I think a good and profitable brand should really focus on providing your customers with good products. If a brand can establish a worthwhile product for its consumers, it follows naturally that interest will spread via word-of-mouth and repeat purchases. This is one dimension of how we define healthy growth.
As a result, I advise that management teams spend more time on the product development phase in order to create world-class products, rather than concentrating too much of their focus on marketing.
CHAILEEDO: What is your view on brick-and-mortar stores?
Allan Liu: Without the pandemic, we do attach great importance to the brick-and-mortar stores among the colored cosmetic sector because I think these stores are a reflection of the differentiation of our brand from other brands. On one hand, the brick-and-mortar store is a contact point for customers. Especially for our category, consumers can enter an immersive environment through the stores, so they can know what your brand wants to express. Consumers can better understand whether the product is suitable for them after trying them in our physical locations.
CHAILEEDO: For international niche makeup brands, if they don’t do much research on Chinese consumers, is it hard to enter in or hard to succeed in China?
Allan Liu: I think for international niche brands if they have great characteristics in terms of brand style or endorsement, they can find a place in China. Chinese customers have many tribes, and each prefers distinctively products. If a brand want survive in China, there are some ability the brand should have: a unique brand story or brand aesthetics styles, a unique product formulations methods or ingredients etc,.
CHAILEEDO: The two makeup brands of Joy Group have also moved abroad, leading consumers to believe that the Joy Group is very optimistic about the international market. Why did Joocyee choose the Japanese market?
Allan Liu: I believe that the Joocyee brand aesthetics and products, which is suitable for a modern, chic and romantic urban Chinese woman, would also echo a lot (culturally speaking) with the urban female customers from Japan.
Modern oriental women have a kind of commonality. They have the traditional culture of inheritance and introspection, but also have the new era of independent and fashionable female characteristics. In this regard, Chinese and Japanese women are very similar, and it was on this belief that we made the decision to move our products to a “foreign” market.
If our group enters the American and European markets in the future, we will consider creating a new brand that is more in line with the European and American markets.
CHAILEEDO: What do you think is the key for Joocyee to gain recognition in Japanese markets? What are the differences between Chinese consumers and Japanese consumers?
Allan Liu: I think there are two aspects. On the one hand, Japanese consumers’ skin tone and aesthetics are closer to those in China, so Japanese consumers will like the packaging style that Chinese consumers like. The products of Joocyee are also very suitable for Japanese consumers’ skin types or skin tones.
The second aspect is that innovations in Chinese cosmetic products are very advanced and are now absolutely ahead of the world. These innovations in China during the last three or four years, I think, have been very amazing. Just like the lipsticks that used to have problems such as sticking cup and dryness, lipsticks that Chinese makeup brands made can now basically solved that issues. In another example, Judydoll Slim Liquid Eyeliner has adopted a tip of only 0.014mm, so even a novice can apply makeup very smoothly. We are confident that these, and other products, will surely be popular in Japan.
Due to the difference in lifestyle, culture and climate, there are minor differences between Chinese and Japanese customers. For instance, as a result of the fast-paced and long-hours working culture in China, China’s working women put a lot more focus on long-lasting foundation products, which are not so sought after by Japanese customers.
CHAILEEDO: At present, the number of makeup brands going abroad is much larger than that of skincare brands in China, what’s your view about this phenomenon?
Allan Liu: I do believe that both China’s color cosmetics and skin care brands will go global at similar paces very soon.
I think that perhaps colored cosmetics are easier to “start from 0 to 1”, because of the strong sense of color cosmetics, consumers can tell if the product is what they need at the first glance or from the first time they use it. So color cosmetics brands can often target their customers more quickly.
CHAILEEDO: What are the opportunities and challenges in the process of Chinese brands transitioning into global markets?
Allan Liu: The opportunity is that Chinese brands have already got a few best-selling products which are superior in design and quality in comparison to that of their peers global brands’ product offerings. This is thanks in no small part due to the progress in China’s designer community and the innovations in Chinese R&D and factories. We can take these great products global and offer them to our global customers.
The challenge is that Chinese companies still have a long way to go in order to build multi-brand and multi-regional organizations. To date, most Chinese companies are still single-brand companies operating in China only. When our businesses go global, our organization has to be able to support our global operations. Our commercial team in each country would have to be able to conduct very localized marketing and sales operations, and our supporting functions such as supply chain, regulations and HRs would need to be able to support the global expansions as well. These capability building would take a few years to build up, but we are confident that we will reach that level.
CHAILEEDO: What is the outlook of the Joy Group on its international plans in short term?
Allan Liu: We expect that global revenue of Joy Group will account for about 20% to 30% of the total revenue in 5 years. Our target markets are Japan, Korea, Indonesia, Vietnam and other Asian countries. We intend to continue hiring and building a strong local team in major Asian countries to support our long-term growth.