Since Proya went public in 2017, Proya’s co-founder and CEO, Fang Yuyou, did not appear in the list of new non-independent director candidates for the first time.
Recently, CHAILEEDO noticed that alongside the disclosure of this year’s first-half financial report, Proya also announced the list of new non-independent director candidates for the board of directors. The 55-year-old co-founder and CEO of Proya, Fang Yuyou, was absent for the first time, and the new face that appeared was Jin Yanhua, the Deputy General Manager of Proya.
It is worth mentioning that since the beginning of this year, rumors about Fang Yuyou “leaving” Proya have been circulating widely. The changes in the list of new non-independent director candidates at Proya this time seem to have accelerated this rumor. In response, CHAILEEDO immediately sought verification from Proya and Fang Yuyou himself. However, as of the deadline for this report, neither Proya nor Fang Yuyou has provided a response.
Various signs indicate that Proya, the largest Chinese cosmetics giant in China, may be on the verge of unprecedented major changes.
For years of frequent reduction in shareholding, changes in Proya’s board of directors
This year, rumors such as “Mr. Fang may be leaving the company soon” and “Proya’s CEO may be leaving” have been circulating on platforms like Xiaohongshu, directly pointing to Proya’s co-founder and CEO departing from Proya.
However, CHAILEEDO noted that according to a recent announcement by Proya titled “Announcement of the 19th Meeting Resolution of the Third Session of the Board of Directors of Proya Cosmetics Co., Ltd.” (hereinafter referred to as the “Announcement”), Fang Yuyou is not among the candidates for non-independent directors for the fourth session of the company’s board of directors.
According to the “Announcement,” considering the expiration of the term of the third session of the board of directors of the company (Proya), in accordance with the relevant provisions of the Company Law, the Articles of Association, and after the qualification review by the Nomination Committee of the board of directors, the board of directors of the company nominated Hou Juncheng, Hou Yameng, and Jin Yanhua as candidates for non-independent directors of the fourth session of the company’s board of directors for a term of three years. However, the above proposal is still subject to approval at the Proya shareholders’ meeting.
At the same time, CHAILEEDO, in reviewing Proya’s announcements since its listing, found that since 2015, Fang Yuyou has always served as a director of Proya. His absence from the list of candidates for non-independent directors for the first time this time is noteworthy.
Regarding the aforementioned rumors, CHAILEEDO sought verification from both Proya and Fang Yuyou himself promptly. However, as of the deadline for this report, neither Proya nor Fang Yuyou has responded.
In fact, the rumors about Fang Yuyou leaving Proya are not baseless. According to Proya’s announcements, since 2020, Fang Yuyou has frequently reduced his shareholding. For example, in the first quarter of 2023 alone, Fang Yuyou reduced his holdings seven times, and currently, his stake in Proya has decreased from an initial 24.43% at the time of listing to 15.03%, with total cashed out amounts reaching tens of billions. Such frequent reductions in holdings have raised doubts in the public regarding the relationship between Fang Yuyou and Proya.
It is worth mentioning that Proya’s related announcements also revealed that in June of last year, due to a dispute over equity transfer between Bao Julan and Fang Yuyou and Fang Yu, Fang Yuyou’s 17.04 million shares of Proya were judicially frozen, accounting for 28.5806% of his holdings.
Looking at the list of candidates for non-independent directors of the fourth session of the board of directors of Proya as disclosed in the “Announcement,” a new face, Jin Yanhua, the Deputy General Manager of Proya, appeared for the first time. According to the “Announcement,” Jin Yanhua was born in 1962 and served as the General Manager of the Huzhou Factory at Proya and its predecessor from 2007 to August 2012. From August 2012 to the present, she has been the General Manager of the Supply Chain Management Center at Proya; and from April 2018 to the present, she has been the Deputy General Manager of Proya.
Another point worth noting is that after serving as directors of Proya in the previous term, both Hou Juncheng and Hou Yameng have been selected again as candidates for non-independent directors of the fourth session of the board of directors. According to the “Announcement,” Hou Yameng has been employed in the e-commerce department of Proya Cosmetics Co., Ltd. since 2014. From September 2021 to the present, she has been a director and Deputy General Manager of the company, and concurrently serves as an executive director and General Manager of Hainan Mengya Enterprise Consulting Co., Ltd., an executive director and General Manager of Hangzhou Caitang Cosmetics Co., Ltd., and a director of PROYA BEAUTY MALAYSIA SDN. BHD.
Public information shows that the 36-year-old Hou Yameng is the child of Proya’s controlling shareholder and actual controller Hou Juncheng and Fang Aiqin. As of the date of this “Announcement,” Hou Yameng does not hold any Proya shares.
How did Fang Yuyou achieve PROYA, the top 1 for Chinese cosmetics company
Regarding the rumors of Fang Yuyou’s imminent departure, many industry insiders express surprise and confusion. Some industry insiders believe, “Fang Yuyou can be said to be the ‘great contributor’ to Proya’s rise to the top of Chinese cosmetics.” “Now is the best time for Proya’s development, so it is hard to understand leaving at this time.”
Looking back on Fang Yuyou’s history of cosmetics entrepreneurship, one must mention a phone call in 1995. At that time, the cousin of Lan Gui Ren’s agent in Xi’an told Fang Yuyou over the phone, “Brother, come out quickly. There is a high profit margin in cosmetics.” This became the opportunity for Fang Yuyou to enter the cosmetics industry.
In the same year, knowing very little about cosmetics, Fang Yuyou, with tens of thousands of yuan raised from various sources, with the “guidance” of his brother-in-law Hou Jun, started a cosmetics business in Hebei. He first obtained the TJOY Hebei agency rights and subsequently represented 23 brands such as MININURSE and REVLON over the next 8 years. At this point, Fang Yuyou and his “Laoyuan Cosmetics” resounded throughout the cosmetics market in Hebei.
Fast forward to 2003, facing the strong position of foreign brands in the Chinese market, Fang Yuyou and Hou Jun decided to create their own brand, thus giving birth to Proya. In the early days of its founding, Fang Yuyou transplanted the mall marketing model to cosmetics specialty stores. In just four years, Proya expanded to over 3,000 outlets, with retail sales reaching 2 billion in 2008. In 2013, Proya’s retail sales reached 4 billion, entering the top tier of Chinese cosmetics brands.
In terms of brand positioning, from the main marine replenishment concept to bubble masks, then to niacinamide, and now the morning Vitamin C and evening Vitamin A, every transformation of Proya bears the deep imprint of Fang Yuyou.
For example, in 2020, Proya launched the Ruby Series and Dual Resistance Series, creating the morning Vitamin C and evening Vitamin A combination, which became the most critical step for Proya’s soaring in recent years. This strategy originated from an “inspiration” that Fang Yuyou had during discussions with the Spanish raw material supplier Lipotec during his inspection in Europe.
Industry insiders have stated that the low-key Hou Jun plays the role of a “ballast stone,” currently focusing more on the construction of the beauty town, while Fang Yuyou acts as the commander on the front line, leading Proya to conquer one “city” after another.
Regarding Proya’s current success, Fang Yuyou once said in a public speech, “The reason why Proya has achieved what it has today is that we have done well in technology, product, and marketing.”
In fact, through exchanges with several industry insiders familiar with Proya and Fang Yuyou, CHAILEEDO found that Proya’s success is largely attributed to the ability to seize opportunities quickly, which is rare in the industry. This may be related to Fang Yuyou’s personal traits of being good at learning, having an open mind, and knowing how to persevere.
A well-known brand founder who has known Fang Yuyou for many years is particularly impressed by Fang Yuyou’s progressive and open-minded attitude. They told CHAILEEDO that they were very surprised when they unexpectedly met the recently exited “Old Fang” late at night, “He (Fang Yuyou) said, ‘I am with young people every day, so I know what young people want.'”
In 2023, Fang Yuyou, with the achievement of leading Proya to the top spot among Chinese cosmetics, was selected for the Forbes 2023 Best CEO list for China, ranking 45th.
Beyond the 10 billion target: Proya’s major transformation
Recently, Proya released its financial report for the first half of this year, achieving a revenue of 5.01 billion yuan in the first half of the year, a year-on-year increase of 37.90%, with a net profit attributable to shareholders of listed companies of 702 million yuan, a year-on-year increase of 40.48%. Despite a year-on-year increase in sales expenses of 760 million yuan, it can still be considered an outstanding performance. Judging by Proya’s current momentum, it is expected to become the first cosmetics company in China to surpass 10 billion in revenue for the full year.
CHAILEEDO noted that alongside the financial report, Proya also issued several important announcements, making adjustments to various aspects such as the investment project period of raised funds and the repurchase price of restricted stock incentive plans.
Of particular note is the “Announcement of Proya Cosmetics Co., Ltd. on Repurchasing and Canceling Part of Restricted Stocks.” In this announcement, Proya stated that in accordance with the provisions of the “2022 Restricted Stock Incentive Plan (Draft),” 18 incentive recipients have left the company due to personal reasons and no longer meet the incentive conditions. Therefore, the company will repurchase and cancel 482,650 shares of restricted stock that were granted but have not been released from restrictions for the above incentive recipients.
According to CHAILEEDO’s findings, the list of incentive recipients announced in July 2022 shows a total of 99 middle managers and core personnel.
In fact, the departure of 18 incentive recipients due to personal reasons is a true reflection of the significant personnel changes at Proya this year. In July of this year, CHAILEEDO learned from insiders that Proya’s Chief Scientific Officer (CSO), Wei Xiaolan, had resigned. Prior to this, Proya’s CMO Ye Wei and Chief R&D Officer Jiang Ligang had resigned in January and August 2022, respectively.
Nevertheless, Proya continues to actively pursue transformation. In April of this year, Proya’s digital consulting project was officially launched. Strategic consulting firm Slite, a subsidiary of Strategy&;, has partnered with this project to assist with Proya’s digital transformation. Proya’s Deputy General Manager Hou Yameng stated, “Digitalization is key to driving Proya’s business capabilities and market performance upgrade.”
Looking back on over two decades of growth history, Proya has become one of the very few Chinese cosmetics companies that have traversed cycles and maintained high-speed growth through offline CS channels and the e-commerce era.
Today, as a key figure in China’s beauty industry, the future direction of Fang Yuyou has attracted significant attention. Whether he will step down from the position of director at Proya remains to be officially announced at Proya’s first extraordinary shareholders’ meeting in 2024. CHAILEEDO will continue to monitor and track this development closely.
