In the spring of 2020, a sudden epidemic caused great changes in consumers’ habits and lifestyles, and various new demands from users turned to force enterprises to make an imminent transformation.
Under the epidemic situation, all walks of life have "passively" reshaped all kinds of "new normals". At the same time, technology and digitalization have helped the industry to "actively" empower all links in the industrial chain and help enterprises transform and adapt to these new normals. Bain’s latest report shows that the COVID-19 epidemic has greatly accelerated the digital transformation of the global retail industry. With its leading digital maturity, the Asia-Pacific region has not only promoted the development of the whole industry, but also pointed out the direction of digital transformation for other regions.
How to develop the internal circular economy in China is determined not only by the current global economic environment, but also by the economic growth mode of China. Under the strategic basis of expanding domestic demand, "internal circulation" will lead all walks of life to upgrade the quality of consumption.
Under the influence of market diversity and other factors, how can brands win the "new normal" in the post-epidemic era? Recently, the "China Smart Creation Promotion Plan" initiated and hosted by 21st century business herald, a leader of digital think tank financial media, led a delegation to visit Ruxin’s Fengxian production base in Ruxin China, and held a roundtable forum on smart technology empowering beauty industry in Ruxin Greater China Innovation Headquarters Park to discuss with relevant industry experts the internal logic of technology empowering beauty industry in the post-epidemic era, so as to find new demands, new consumption and new opportunities for the beauty industry in the future.
The new trend in the post-epidemic era: the dimension of beauty is becoming more and more comprehensive
China market is becoming the development booster of global enterprises. Ruxin Group has also made great progress in the vast China market. Thanks to China’s stable market, bright prospects and open business environment, China has grown into the world’s largest market for Ruxin, a foreign-funded enterprise, since it entered China for 17 years.
For example, Fengxian District, the Oriental Beauty Valley where Nuxin is located, is the capital of cosmetics industry in China.
According to Gu Weixing, director of the Investment Promotion Office of Fengxian District People’s Government, the international beauty and health giants have paid more and more attention to the China market and China consumers since 2016. "Cosmetic enterprises in Fengxian account for more than one-third of the total number of cosmetic enterprises in Shanghai. Putting it all over the world, China’s achievements in the prevention and control of this epidemic will inevitably increase the confidence of international brands in the China market and further enhance their vision of increasing investment in China. " Especially in recent years, with the domestic consumer demand, brand building and industrial scale jumping far beyond the imagination of international big names, "the annual growth is double digits, at least more than 30%, which not only shocked them, but also made them feel a sense of crisis and eager to participate in this market. Shiseido has settled in Oriental Beauty Valley this year, and more international brands such as L ‘Oré al and Chanel are also in close talks with us. Oriental Meigu has gradually become the bridgehead for China brands to "go out" and foreign brands to "come in". "
Jin Jian, executive president of Shanghai Daily Chemicals Industry Association, said that the main income of China cosmetics industry exceeded 70 billion in 2019, and it is expected to reach more than 100 billion by 2025. "Shanghai is the forefront of China’s cosmetics industry. In 2019, the output value of Shanghai’s cosmetics industry was about 40 billion, and its exports exceeded 3 billion. About 80% is commissioned processing. There are about 60 headquarters of multinational companies in Shanghai, and there are also many research centers of domestic and foreign enterprises. "
After the outbreak, many new demands, new models and new categories have emerged in the cosmetics industry. Jin Jian believes that first, cutting-edge products and products with new functions have become new trends. "For example, online celebrity likes beauty products with goods, and consumers pursue more innovative, functional and cheaper cosmetics, including the rapid development of intelligent beauty instruments." Second, it shows the deviation of consumption behavior. "From most offline channels, such as specialty stores, department stores and supermarkets, it gradually turns to online sales, and the proportion of online sales has reached more than 70%." Third, the proportion of local brands has gradually increased, and there has been a new national trend in beauty products. "Fourth, after the epidemic, the cosmetics industry is also more inclined to the big health industry. Beauty and health are reflected in all aspects, not just the face."
Behind this, there is also the soil for the rise of smart beauty instruments. Gong Wei, an observation partner of Meiye, said, "The core factor of the rise of home beauty instruments is that the China market is very large and consumers have demand. Second, young people’s consumption concepts are constantly changing. Customers born after 1990 may not want to lie in the beauty salon for two or three hours. "Young consumers have gradually become important users and growth points of household skin care products and household beauty instruments."
Gong Wei thinks, "From the perspective of beauty service industry stores, the equipment is getting smaller and smaller, and home beauty instruments seem to have taken away some consumers. But in fact, we find that consumers are gradually maturing. Whether it is going to the store, home beauty instruments or skin care products, the relationship between the three is the integration and competition, which just reflects that consumers’ demand for beauty is becoming more and more comprehensive, which is a very good trend. "
Jin Liyin, deputy director and professor of the Marketing Department of Fudan University School of Management, believes that the structure of the cosmetics market has changed from concentration to diversification. In recent years, domestic niche brands have risen rapidly. "Consumers no longer fix their choices on traditional big brands, but are willing to try more diversified brands, from the external value of the brand to the internal value conversion. Enterprises need to do in-depth segmentation in order to master diversified needs. In addition, the boundaries of cosmetics industry are constantly expanding, and many new technologies are integrated with cosmetics, resulting in the concept of solutions. To satisfy consumers, it is more important for cosmetics companies to expand their horizons. It may be a more important trend to do more industrial integration and broadening. "
Digital empowerment manufacturing: improving quality and efficiency
These new demands are observed, such as the continuous expansion of investment in China market. In 2014, Ruxin invested 500 million yuan to complete Ruxin Greater China Innovation Headquarters. In 2019, the second phase project of Greater China Innovation Headquarters Park with a total investment of 360 million in Fengxian District of Shanghai has also broken ground.
Preview of the effect of the second phase project of Ruxin Greater China Innovation Headquarters Park
After the resumption of work, a total of 1,200 38-meter piles were driven on May 6, and the foundation construction has been basically completed. Now, the rough outline of warehouses, workshops and office buildings can be clearly seen from the bird’s eye view of the project site. It is expected that the project will be handed over in mid-October next year and the factory will be relocated and mass-produced in January 2023.
For example, President China solemnly said, "This is a challenging time node goal, and we will also work together to overcome difficulties in order to achieve the goal: if the new future is in China."
According to the Bain report, if retail enterprises want to maintain rapid development in the rapidly changing Asia-Pacific market, it is urgent to choose correct development strategies and give priority to the following six areas: remolding value proposition, winning in digital interaction, from heavy assets to heavy operation, doing a good job in terminal distribution and supply chain flexibility, clarifying ecosystem goals, and digital upgrading.
Ruxin also responded to these aspects in time. By constantly improving the strength of scientific research, such as introducing science and technology into products and services, we will continue to lead the development direction of domestic industries while serving China consumers.
During the visit, Qi Xingdong, vice president of supply manufacturing in New Greater China, said, "Taking the domestic cycle as the main body means that expanding domestic demand will become the development focus of China for a long time, and it also means that more policies and resources will be inclined to expand domestic demand in the future. At the same time, by taking advantage of China’s huge market advantage and tapping the potential of domestic demand, we can promote the integration of domestic market and foreign market. If you are familiar with the China market and China consumers, you are full of confidence in the future of the China market. "
At the 3rd China International Import Expo(CIIE) to be held in November this year, Nu Skin will make its debut, and use this international stage to showcase the latest and high-quality intelligent skin care black technology products.
For example, Sheng Ziren, vice president of marketing in New China, said, "Our company began to enter the field of beauty instruments 19 years ago, and the self-cultivation beauty instruments have been updated to the third generation. At the end of this year, we will produce new products. At present, in the Chinese mainland market, the performance of beauty instrument series products accounts for more than 40%. "
According to reports, the newly launched ageLOC Boost porcelain polishing machine this year is the first product adhering to the latest research and development concept of the trinity of scientific research, technology and sources, and will also be exhibited in China International Import Expo(CIIE).
"This product incorporates innovative variable pulse micro-current technology, uses safe raw materials to stimulate skin vitality and bid farewell to skin inertia, which is a new milestone in NU SKIN’s research and development history. In addition, we cooperated with a world-renowned award-winning design company to develop the shape of Boost porcelain polishing machine. The concept of ergonomics was cited in the design, and the keyless and magnetic induction charging were integrated to maintain the texture and make consumers more comfortable and convenient to use. Really achieved the perfect combination of new technology and new aesthetics. " Sheng Ziren introduced.
In addition, there is another beauty instrument ageLOC Me, which is at the forefront of personalized skin care technology. This is an instrument from personal tailor, which can choose different skin care products according to different skin types and skin problems of everyone. What is more challenging is that even the same person chooses different skin care products in different seasons and different geographical environments. Sheng Ziren said, "We have invested more than 40 million US dollars to develop this product. More than 100 engineers and technicians have developed machines for five years, and combined with intelligent skin care instrument terminals, more than 2,000 formulations and skin test apps, they provide customers with exclusive maintenance products."
During the day’s visit, Ju Hong, director of the new personal care products Fengxian production base, said that the new product research and development will present two characteristics: "intelligent creation" and "digitalization". The second phase project of Greater China Innovation Headquarters Park, which represents Ruxin’s top-level intellectual manufacturing level in the world, will be built according to the standard of Industry 4.0, adopting the latest technology and intelligent management system, and implementing quality management throughout the whole production process, including product whole-process traceability anti-counterfeiting platform, automatic storage system, seamless production and logistics links, etc. "It is estimated that the production capacity can be doubled after completion, which can better meet the demand generated by the expansion of domestic demand."
In the first quarter of this year, over 80% of Ruxin’s revenue came from the company’s digital construction. In the future, it will continue to strengthen the company’s digital construction through strategic investment in technical infrastructure and digital tools, and feed back its business with technical digitalization.
The second phase of the project will build 12 new product production lines to realize the combination of automation, intelligent manufacturing and flexible manufacturing. After the completion of the project, Ruru’s production automation level will be improved, production efficiency and product quality will be improved, and the labor cost will be further reduced. By reducing the interference of human factors in the production process, product quality, safety and production efficiency will be improved, Ruru’s position in the cosmetics market will be improved, and the competitiveness of enterprises will be enhanced.
For example, the Fengxian District Government of Shanghai where Nu Nu is located is also very supportive of its new projects. For example, the second phase of Nu Nu Greater China Innovation Headquarters Park is a key project in Shanghai. On the site selection, the Fengxian District Government gives strong support to Nu Skin, which is convenient for enterprises and neighboring industries to have closer exchanges in technology and industrial chain, and it is more favorable to attract outstanding talents by relying on regional advantages.
Grasping the New Demand of "Post Wave": Individualization and Diversification
For example, one of the highlights of the new factory project is flexible manufacturing, which means that it can better meet the needs of young consumers. Ju Hong said, "At the initial stage of the project design, we have fully realized that the future consumers are a very personalized generation, and they like to be different, personalized and customized. We have designed a total of 12 production lines. In the future, through the cooperation of multiple production lines, we can flexibly schedule products to meet different types of packaged products and realize flexible manufacturing. Customer-oriented, with demand for fixed production. "
Nowadays, Generation Z (post-95 and post-00) has started to enter the university or the workplace, and its consumption power is constantly improving. Together with the "millennials", it has become the main force of consumption. According to McKinsey’s latest Research on Generation Z Consumers in Asia-Pacific Region, Generation Z wants brands to be personalized and customized, which can make them different, so brands can’t be satisfied with their past success. In order to maintain the first-line position in the market, brands need to give full play to their traditional advantages and invest in rapid and sustainable innovation.
These young people live in the digital world, and their study, shopping and entertainment are inseparable from the digital environment. They are the real "net-born generation". Being picky and accustomed to meeting their own requirements, Generation Z likes to study products before shopping, especially willing to compare prices. In China, the proportion is 50%. Generation Z also has more requirements for services and functions, such as personalization, customization, exclusive or limited products, and joint models.
How to win these "back waves" in the post-epidemic era?
Ruxin’s answer is to continue to strengthen the pace of "brand rejuvenation" on the demand side, aim at young consumer groups, and make innovations and changes from product lines to pricing. In order to keep interactive communication with young consumers, we should optimize the consumption experience of young people in both marketing activities and product design, and make the whole link process of understanding, planting grass, buying and experiencing accurate, direct and fast.
Jin Liyin believes that the cosmetics industry is a fully competitive industry with a high degree of product homogeneity. "It is an industry with commanding heights in marketing. Many companies have done a good job in manufacturing technology and product research and development. Who can gain insight into consumer demand in time, iterate quickly, and improve brand power, who may win."
It is worth noting that when describing consumer portraits, first, the segmentation needs of different age groups are different, and second, from the functional point of view, the needs must be related to the scene. Third, the market cannot be simply and extensively divided into first-,second-and third-tier cities. "The demand crowd cannot be solidified. It was hard for us to imagine that men also used skin care and cosmetics. Enterprises should look at this very fast-changing market in China with a more open and divergent thinking. " Jin Liyin said that products like beauty and technology, "to improve consumers’ cognition and acceptance, leading brands should do some market education. When enterprises research and develop products, they are more from a technical point of view. When facing consumers, it is necessary to go technical and start from the perspective of solving problems. "
How to win with products? An excellent product either needs technical barriers or depends on scale effect to win. "The beauty industry is an industry with a relatively high degree of homogenization. From this perspective, good products must have differentiated value."
In addition, the Bain report believes that the attack of COVID-19 has accelerated the trend of "pursuing cost performance" that emerged in 2019, and the online trend has also accelerated. Bruno, a global partner of Bain Company, said, "Consumers have no choice but to rely on online shopping because of the epidemic. Even after the opening of offline stores, many people continue to choose online shopping."
The live e-commerce that was still unknown three years ago achieved a blowout in 2019, which more than tripled. At present, it accounts for 4% of online retail sales and 1% of total retail sales. The online shopping festival is in the ascendant, and the channels are further transferred to online, which makes the promotion rate of various categories increase significantly in 2019: personal care products, home care products and maternal and child categories are particularly obvious. In 2019, the online promotion rate increased from 40% in the previous year to 43%, while the offline sales promotion rate was only 23% in the same period, far below the online level.
Deng Min, global partner of Bain Company, said, "Faced with the uncertainty of the future, brands need to upgrade and innovate themselves. Only by closely tracking and reassessing the market, industry environment and consumption behavior patterns in the post-epidemic era can we optimize and establish a product portfolio that meets consumer demands and reasonable pricing. "
Brands need to sort out product innovation plans, accelerate the launch of new products in the post-epidemic era, and at the same time lay out high-end and parity segmentation. In addition, brands should also follow the "4D" rule, focus on winning channels, attach importance to online, O2O and live broadcast, constantly build consumer trust, and root in the local market: Design for China consumers, realize China team’s decision in China, Deliver at China speed, and promote the digitalization of China business.
Challenges and opportunities of industrial chain: talent cultivation and technology empowerment
China’s beauty industry is on the road of independent industrialization, and at the same time, it faces certain challenges.
"From the perspective of the development of China’s cosmetics industry, the biggest bottleneck is the gap with international brands in research and development capabilities and scientific research talents." Jin Jian, for example, hyaluronic acid is a very mature product in the industry, but the cost, purity and purity of its raw materials will affect the function and price of hyaluronic acid. "On the other hand, cosmetics also need to be beautiful, packaged, convenient and practical."
From raw materials to hardware design, cosmetics need strong industrial chain support. "There are industrial defects, because the history of this industry in China is relatively short. Others have accumulated for 400 years. No matter how fast we move, it is impossible to finish the precipitation of others for 400 years in 30 years." Gong Wei said that during his inspection tour in France, the other party provided an official handbook. "There are 400 enterprises in it, and it’s like finding a treasure when we get the handbook. Divided into several categories, such as raw materials, flavors and fragrances, brand design, packaging design, etc., similar to corporate yellow pages. For example, a brand design company has a clear name, which year it was established, how many employees and how to contact them, so it can be directly docked. However, this aspect has not yet become a system in China. "
In addition to merchants, for consumers, new brands are emerging one after another, and there are more and more contents that need to be "learned". "For example, hyaluronic acid, consumers don’t know how to distinguish between good and bad. These more detailed science popularization needs not only the industry itself and associations to standardize, but also more mature concept science popularization for consumers. At the same time, it will be better for the government to start promoting it. "
How to cultivate this industrial chain? Gu Weixing said that most industries in China are in the process of continuous learning, moving towards independent research and development, creating independent brands, and exploring the path of internationalization. "Up to now, we have made some cutting-edge brands in China, breaking the original offline channels and expanding various new sales channels such as online marketing."
To improve the industrial chain, in addition to raw materials, research and development, and brands, "we still have a big gap in some core technologies, and we still have to rely on talents to catch up." For example, many brand products are good, but there is no good marketing and design, which gives people the feeling that they are just one level away. At this time, professionals in the field of industrial design are needed, and this aspect is still not perfect. Our government must connect with universities from the perspective of industry management to keep up with market demand. Play a role in industrial ecology, talents and functional agglomeration. "
In addition to cosmetics research and development, there is a shortage of talents in downstream service organizations. Gong Wei said that many talents in the domestic cosmetics industry were trained by international manufacturers in the early years. "But there are no professionals in this field in our beauty salon industry. The supply of talents in the medical and beauty industry is very small. There are only 15 doctors of plastic surgery who graduate from China every year, which can’t fully meet the needs of this market. "
From the perspective of industrial agglomeration, Oriental Beauty Valley has made its own way: at present, Oriental Beauty Valley has formed an industrial cluster covering biomedicine, beauty and skin care products, perfume, food, health care products and other categories. And eight centers, including R&D center, design center, testing center, exhibition center, marketing center, experience center, industry service center and expert guidance center, have been built. These eight centers serve all kinds of innovative enterprises in the beauty and health industry in the United States and provide personalized and professional services for enterprises in the whole industry chain of the beauty and health industry.
In terms of talent gathering, Dongfang Meigu Research Institute was established with Shanghai Universities of Applied Sciences, focusing on cosmetic science and technology research and development, and involving two professional directions of cosmetic art design and brand marketing management at the same time, providing the latest technical support platform and abundant talent resources for small and medium-sized cosmetic enterprises; In terms of supporting services, we will cooperate with Shanghai Entry-Exit Inspection and Quarantine Bureau to build one of the most advanced cosmetics testing laboratories in China to provide convenience for import and export enterprises. In terms of R&D and innovation, cooperation with the National Cosmetic Quality Supervision and Inspection Center has provided testing services for enterprises with higher efficiency and lower cost; In Fengxian District, the first service pilot window connected with the Trademark Review Cooperation Center in China has been set up.
From the manufacturing point of view, Sheng Ziren said, "The combination of beauty and technology is an inevitable trend. From the past, it relied on ingredients, and then on technology, machines, big data and artificial intelligence. In addition to finding market demand, another possibility is to create market demand, because many times excellent product consumers don’t know it. Now is the time to communicate in a language that consumers can understand. How to make consumers feel the benefits when good products come out is something that enterprises need to manage well. In terms of product quality assurance, Ruxin strictly follows the whole process quality management system of "6S Quality Measures" and strictly checks the standards from six aspects: topic selection, source, specification, standardization, safety and demonstration to fulfill its commitment to product quality. "
Industry tips:
Oriental Beauty Valley covers beautiful and big health industries such as cosmetics and biomedicine. From the perspective of cosmetics industry, in terms of quantity, the number of enterprises in Oriental Beauty Valley accounts for more than 1/4 (26%) in Shanghai, ranking among the top in the city, accounting for more than 40% of the sales of related enterprises in the city. It is a large-scale cosmetics gathering place in Shanghai.
Shanghai Daily Chemicals Industry Association is a municipal social organization established on December 9, 2005 with the approval of Shanghai Economic and Information Technology Commission and Shanghai Social Organization Administration. The association covers four major daily chemical industries, including cosmetics, flavors and fragrances, detergents and toothpaste.
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