As one of the world’s top ten beauty giants, how does Beiersdorf view the Chinese market? What are the future development plans? In this regard, Qeyes interviewed Xue Wei, Managing Director of Beiersdorf Northeast Asia.
Promoting Digital Construction and Innovation Transformation
New face is showed in each year’s China International Import Expo. This year, at the oversized interactive booth in Hall 6.1 of the Consumer Goods Pavilion, Beiersdorf made its debut at the Expo with more than a dozen of its brands. In the past year or so, the beauty giant has been making moves such as transforming and upgrading its brands, establishing the second largest global R&D center in China and strategically partnering with Tmall’s New Product Innovation Center. Meanwhile, Beiersdorf welcomed a new helmsman in April 2020 – Xue Wei. After a series of transformations and upgrades, Beiersdorf achieved high growth in the first half of 2021 and has been higher than the performance before the pandemic
As one of the world’s top ten beauty giants, how does Beiersdorf view the Chinese market? What are the future development plans? In this regard, Qeyes interviewed Xue Wei, Managing Director of Beiersdorf Northeast Asia.
Rooted in China, long-term optimism in the Chinese market
Beiersdorf was founded in 1882 in Hamburg, Germany. The company mainly develops, produces and sells high-quality skin care products, band-aids and adhesive tapes, etc. Its products are sold in more than 100 countries and it is one of the top ten cosmetic groups in the world.
The debut of Beiersdorf in the Expo is also considered to be a “renewed relationship” with National Exhibition and Convention Center(Shanghai). Xue Wei introduced that Beiersdorf has been associated with China for 100 years and has been expanding its business in China. During which time one of the company’s former factory reserve sites is now National Exhibition and Convention Center(Shanghai). The National Exhibition and Convention Center(Shanghai) was located in Da Hongqiao 10 years ago, Beiersdorf signed a contract to move to Qingpu Industrial Park in order to support the construction of National Exhibition and Convention Center. After 10 years, Beiersdorf, as an exhibitor, set foot on this land again with its brands. It is a return and a new departure.
At the Expo, Beiersdorf brought more than ten core brands, including the well-known brands NIVEA, Eucerin, Coppertone and tesa, as well as the new brands Florena, Chaul and Hansaplast, which were recently introduced to China. It is worth mentioning that Nivea LUMINOUS630, the black technology of Beiersdorf, is a breakthrough spot whitening patented ingredient proven by Beiersdorf for 10 years from more than 50,000 ingredients, which can effectively whiten skin and make skin tone clear and bright without irritation. In addition, Skinly, a cutting-edge skin testing device that was first exhibited in China and the world, and VR Journey, the Group’s original black technology, also came to the booth to meet Chinese consumers for the first time.
Participating in the Expo is a new starting for Beiersdorf. Xue Wei said that the Expo is a good window to showcase. Through this platform, Beiersdorf is able to show Chinese consumers the Group’s latest research results in research and skincare and let consumers understand the Group’s product matrix, corporate mission, as well as the development and process in sustainable development and other aspects.
The debut of the Expo is a strong proof of Beiersdorf’s continuous optimism in the Chinese market. Another important action was the official launch of the Beiersdorf Global Innovation Center on November 7. This is the second largest global R&D center of Beiersdorf Group besides its headquarters in Germany with a total investment of about 70 million yuan. The Innovation Center will support new product development in the Northeast Asian market with a focus on the Chinese market as well as in emerging markets and will gradually realize the need to support global R&D in certain categories.
“In the past few years, Beiersdorf keep a slow and steady wins the race in the Chinese market. In the first half of last year, Beiersdorf in China achieved relatively stable growth,” said Xue Wei. In Beiersdorf’s global strategic program C.A.R.E. + , the Chinese market is one of the Group’s focus areas. The headquarter of Beiersdorf Group values the long-term development in China. The group that insists on high quality and high standard of scientific research and skin care will have a great future in the Chinese market. At the same time, the Group hopes to become a link between China and Germany to promote the spirit of “One Belt & Road” and bring more of the company’s accumulation, innovation and sustainable development in the field of research and skin care to the Chinese market. Taken advantage of the first year of the new cosmetic regulations, the group defines a bright future of health and quality for consumers and the environment together with the industry.
Paying more attention to e-commerce and grasping opportunity to launch new product
According to Beiersdorf Group’s first-half financial report, the company has fully recovered from the impact of the COVID-19. Its organic sales increased by 16.2% year-on-year to reach 30 billion yuan in the first half of the year including a particularly impressive performance in the second quarter. Its organic sales increased by 28.3% year-on-year in a single quarter. Consumer segment sales grew 13.6 percent to $23.8 billion.
“The high growth in the first half of the year was mainly due to the better results achieved by each brand,” said Xue Wei.
Among them, organic sales of NIVEA grew 9.1% year-on-year with strong sales growth in its body and facial skin care products, which even well ahead of 2019. The scientific skincare brand, Eucerin, saw organic sales increase by 22.1% year-on-year due to increased consumer demand for repair and efficacy products after the pandemic. La Prairie, the Group’s premium brand, opened a flagship store in Tmall this year and continued to make efforts in digitalization and e-commerce with sales up 41%.
Scientific innovation has contributed to the high growth rate. NIVEA Luminous Spotclear Intensive Treatment Serum has achieved remarkable results since its global launch: sales figures have reached record highs. It ranked number one in facial serum in Europe eight months after its launch and the series’ GMV through cross-border e-commerce platforms increased 240% during the Double 11(Chinese Shopping Carnival) compared to another campaign on June 18 in the same year.
In addition to deepening the existing brands, Beiersdorf also continues to enrich the brand matrix and introduce new brands, such as Florena (botanical skin care) and Chaul (enzyme skin care). Xue Wei said that Florena is currently operating through cross-border e-commerce. Among them, Florena is a plant extract brand from Italy and its core product is skin care oil. In the past two years, oils are becoming more and more segmented in skin care. Many consumers want to try some new products. At the same time, the ingredients of Fortuna’s products are extracted from plants, which is a characteristic of the brand and a major trend in the development of cosmetics. That means more brands will develop in the direction of natural ingredients in the future.
The success of several brands is rooted in the brands’ emphasis on research and consumer insights but also in Beiersdorf’s increased focus on e-commerce and its ability to manage the pace of new launches.
According to Beiersdorf’s second quarter results, a quarter of the growth in the Consumer Goods business and a third of the growth in the Research & Skincare business unit came from e-commerce. In order to realize the full potential of the digital transformation, Beiersdorf will also continue to invest more in digital projects.
On the other hand, the brand Nivea of Beiersdorf Group and other brands are accelerating their new product development strategies. On September 23 this year, the Group also signed a strategic cooperation with Tmall New Product Innovation Center to promote new product development and innovation in the skincare sector which focuses on uncovering new products that are relevant to Chinese consumers’ needs.
However, Xue Wei said that the current e-commerce is in a stage of revolution and e-commerce now also tends to be fragmented and visible. Consumers may be seeded in any e-commerce and social platform. In response, there is a need to improve the quality of the speed of promoting new products. When building products, a clear positioning and insight into the consumer is the first need. Before the product is launched, we need to dialogue with consumers to understand whether the product can solve the consumer’s pain points and what specific problems can our products. Careful insight, patient polishing and returning to the product itself are the right ways to build a good product.
Digitalization and innovation are the core drivers of transformation
“Digitalization and innovation” are the two core elements of Beiersdorf’s transformation. During the conversation, Xue Wei kept mentioning that these two elements are the key to the next transformation of the Group. Beiersdorf’s second quarter financial report also mentioned that reaching consumers through digital channels will be one of the core priorities to accelerate the digital transformation of Beiersdorf’s successful business model.
Xue Wei said that digital transformation is manifested both internally and externally.
Internally, the use of big data will enable faster decision-making. Currently, Beiersdorf has established three major centers in Shanghai, namely Innovation Center, Marketing Center, and Manufacturing Center, which is a flexible supply chain that accelerates the production efficiency and decision-making link of the whole chain making BTOC, MTOC, and CTOM all possible.
On the external aspect, Beiersdorf has had many success stories of using digitalization to build brands. Through digitalization, it has helped NIVEA to increase its brand personality, transform to a younger age, and build a complete brand matrix so that it can better serve consumers.
Xue Wei believes that there is still potential for the company to digitize further. For example, how to reach consumers more quickly through digital, how to have more segmented understanding of consumers, how to understand the needs of consumers in different environments of skin care, etc.
Xue Wei said that in China or other regions, consumers will eventually return to the products themselves no matter what changes in the competitive environment. In terms of R&D innovation, Beiersdorf will continue to create more and better products to meet consumers’ needs. This is Beiersdorf’s biggest advantage in the competition and it is also the DNA of Beiersdorf.
Beiersdorf pioneered modern skin care by inventing the patented “water-in-oil” technology 139 years ago. Today, Beiersdorf, the first company to conduct research on human tyrosinase, synthesized the enzyme for the first time in the laboratory to test the real effects of tyrosinase inhibitors. It spent 10 years to find the 630th active ingredient from over 50,000 whitening ingredients. The most powerful whitening and spot-reducing ingredient ever developed by the NIVEA brand of Beiersdorf Group supported by 17 patents: LUMINOUS 630.
In addition, Beiersdorf’s investment in R&D in China has been increasing in recent years. For example, the Group has built an innovation center in Shanghai that is second only to its headquarters in Hamburg, Germany. It aims to bring more innovative products to Chinese consumers through rigorous experimental data and the support of Germany’s cutting-edge research strength. This year, Beiersdorf has reached an in-depth cooperation with Tmall New Product Innovation Center to increase the investment in R&D and consumer insights to make innovative and youthful products to meet consumers’ needs for efficacy and for healthy skin. These also fully confirm that research and skincare is one of Beiersdorf’s core. Thus, innovation will be another core of Beiersdorf in addition to digitalization.
Moreover, green and low-carbon products are also one of Beiersdorf’s next priorities. Beiersdorf will minimize the low-carbon footprint of its brands worldwide. NIVEA will be the first “climate-neutral” global skincare brand by the end of 2022. During the Expo, Beiersdorf showcased its first green, low-carbon product line, NIVEA Naturally Good Body Lotions – formulated with more than 98% natural ingredients, while effectively moisturizing skin for 48 hours to leave it smooth, nourished and healthy. At the same time, the packaging uses 50% less plastic than the original standard packaging. This packaging innovation is a major milestone in achieving Beiersdorf’s global commitment to “plastic reduction”. We hope this will serve as a change for the company to continue to contribute to China’s “double carbon goal” in sustainability and to bring innovation closer to consumers.
As for the next point of strength in the Chinese market, Xue Wei said, will focus on the creation of brand matrix. Whether it is high-end skin care brands, or functional skin care brands, there is room for breakthrough in their own category. At the same time, this year is the first year of new regulations, regulations have a positive effect on the long-term benign development of the cosmetics industry, which is also a major benefit to Beiersdorf that focuses on scientific research. As a leader in modern skin care, Beiersdorf Group will also take advantage of China’s trend of opening up to all and continue to deepen and increase its presence in the world’s second largest skin care market so as to bring more innovative and high-quality skin care experiences to Chinese consumers.
