Great Changes In Daily Chemical Consumption: 100 Billion Racetrack Bubbles Rise

One bubble making industry is growing rapidly in another.

When I met sun Qimeng and Jackson Ying, my first impression was that they were pretty good-looking, thin, clean and exquisite, and obviously had appearance management. They were co founders of rock zoo and colorkey Karachi. Rock zoo focuses on body care track, and its products include shampoo, hand cream and shower gel, etc., and is running to a scale of 1 billion yuan; Colorkey has become an important domestic beauty brand, with sales of more than 3 billion yuan. It has achieved profits and is going to Japan, South Korea, Southeast Asia and other international markets.

They are all new consumers of daily chemical products. From sun Qimeng's resume, you can feel the attraction of the track. Before starting his business, sun Qimeng worked in the financial industry as Chong Ying capital, and had internships in innovation workshops, McKinsey, Bain and other institutions.

This means that sun Qimeng is a man who can achieve relatively stable achievements. In an investment institution, the logic of its continuous training is to look at the long chain increment. Choosing to start a business proves that he must have found the possibility of higher returns than in the financial industry.

Yin Kuo, the founder of the company, is constantly exploring new market segments. The half goal is to make mouthwash into a rigid consumer product, launch new taste portable clothes, and lay out all channels. It has broken the single store sales record of tmall mouthwash, with more than 30000 offline outlets, which is in a period of rapid growth.

In addition to the industry, the other common point of the three people is that the project has won the Innovation workshop investment. This organization is vigorously entering the new consumer market, in fact, the consumer track has become the hottest direction in recent two years.

Daily chemical is the shining part. According to Euromonitor, the compound growth rate of China's cosmetics industry will reach 9.7% from 2010 to 2020, and the market size will exceed 519.9 billion yuan in 2020, and the growth rate will drop to 7.2% (14.7% in 2019) affected by the epidemic situation. According to Euromonitor, China's cosmetics industry will maintain a compound growth of 11% from 2021 to 2025. In addition, as Euromonitor does not include channels such as wechat and tax-free, it is estimated that the actual consumption scale of cosmetics in China will reach about 700 billion yuan.

The successful listing of Yixian e-commerce has become a strong ink. From the birth of its brand "perfect diary" to its successful listing in the United States, it took only four years.

On July 9, Yixian e-commerce closed at $8.635, up 3.41%. At the initial stage of listing, its share price reached $25.47.

"New situation"

For Yixian e-commerce share price slump, Innovation workshop partner Zhang Ying saw the risk, but optimistic.

"The market has also become calm. It was overvalued before, but now it returns to rationality." He told the 21st century economic reporter. Zhang Ying is still full of confidence in the consumption track, he saw a big change.

There are multiple factors driving this change. Since the reform and opening up, China's economy has experienced more than 40 years of rapid development, surpassing Japan as the world's second largest economy, with GDP exceeding 100 trillion yuan. In 2020, the per capita disposable income of Chinese residents will reach 3289 yuan, and the Consumption Willingness and consumption ability of residents will continue to grow.

With the world-class economic growth, the confidence of national culture is rising. China has successively held a series of major international exchange activities, such as the Olympic Games, the World Expo, and the China International Fair, to continuously enhance national confidence, which has promoted the rise of domestic products subjectively.

In fact, this change has a clear historical context. Since the 1990s, Chinese brands have experienced three waves. The first wave appeared in the 1990s, marked by the sales volume of domestic appliances surpassing foreign brands for the first time, "imitating foreign brands, large-scale manufacturing and low price" were the characteristics of domestic products at that time; The second wave occurred before and after the 2008 Beijing Olympic Games, marked by the wave of leaping shoes all over Europe, and the old three classic Chinese products "resilience, leap and plum blossom" are once again full of new vitality.

The third wave is that from 2015 to now, new retail and digitalization have given birth to the rise of new domestic products. Some enterprises have begun to upgrade their brands, seeking to break through and redefine new domestic products with more cost-effective and technical content.

Generation Z (born in 1995-2009) at the right time amplified the trend. Without considering the population reduction, the population size of generation Z is about 264 million, accounting for about 19% of China's total population. According to the data of the National Bureau of statistics, the birth rate of China's population during the birth period of generation Z has shown a downward trend year by year, with the annual new population decreasing from 20.63 million (1995) to 16.15 million (2009), with the corresponding birth rates of 17.12 ‰ and 11.95 ‰ respectively.

This group is characterized by high education, which is directly linked to consumption potential. The first group of generation Z entered the university around 2013, and the second group of generation Z (after 00) also entered the university around 2018. From 2013 to 2019, the average gross enrollment rate of higher education in China was 42.87%, while the average value of this index was only 17.70% from 1995 to 2013. From the perspective of geographical distribution, according to questmobile data, the TGI (target group index) of post-90s generation in first tier cities and new first tier cities are 102, which is higher than the proportion of natural population.

In addition, generation Z is more dependent on the Internet. According to questmobile statistics, in July 2020, the post-90s accounted for more than 80 mobile Internet users, becoming the first major force of mobile Internet. In December 2020, the post-90s mobile Internet users accounted for 32%.

This situation directly crosses all kinds of barriers below the line and brings more flat and large-scale marketing channels. According to the data disclosed by the companies themselves, in December 2020, the dau of tremolo series products exceeded 600 million, the Mau of quick hand products was about 500 million, and the Mau of microblog was about 500 million. According to questmobile data, in December 2020, the proportion of fast hand and post-90s and post-00s users both exceeded 48%.

At the same time, the focus channel is also being established. According to xiaohongshu's disclosure, in June 2020, the number of active users in xiaohongshu Mau exceeded 100 million, 56% of active users consumed beauty content, and the number of beauty creators increased by 192% year-on-year in 2019.

This not only brings more personalized marketing space, but also brings the possibility of product research and development, and the flexibility advantage of entrepreneurial projects is amplified. A number of new consumer entrepreneurs have said that shaking sound, quick hand and little red book are their main marketing battlefield. Jackson Ying also disclosed to the 21st century economic reporter that he would determine the product direction based on the Internet big data.

China's manufacturing dividend has become the basis of all this. After more than 70 years of development, China has become the only country in the world with all the industrial categories in the United Nations Industrial Classification, with the most complete and largest industrial system and complete supporting capacity in the world. Among the world's 500 major industrial products, China has more than 220 kinds of industrial products, and its output ranks first in the world.

In 2020, China's industrial added value will reach 31.3 trillion yuan, becoming the world's largest manufacturing country for 11 consecutive years, accounting for nearly 30% of the world's manufacturing industry, which is an important engine driving global industrial growth.

The manufacturing dividend superimposes a huge population of 1.4 billion at the demand side, which makes the closed loop between China's manufacturing supply chain and the consumer market, laying the foundation for the rise of new consumer brands.

The projects of the above-mentioned entrepreneurs all choose the OEM mode. Sun Qimeng does not deny that cooperation with start-up companies with R & D background of Unilever and P & G can reduce costs, shorten R & D time, and the quality is good.

Rock zoo mode is to discover user segmentation needs, research and development products, a great advantage lies in marketing.

"The point of the first shampoo is 1981 shampoo. Young people have a feeling that the hair of Hong Kong stars in the 1980s was all explosive, very soft. In the past, no one paid attention to fluffy hair, or even said the effect of fluffy hair. But last year, a large number of brands started to play. I was fluffy. I didn't wash my hair for three days, and my hair was fluffy. Our logic is that we want to find an understanding of young people in every product. " Sun Qimeng said.

At the other end, logistics has opened up the great development of e-commerce platform and completed the final closed-loop of new consumption and entrepreneurship. According to the data of the National Bureau of statistics, the national online retail sales in 2020 will be 11.7601 trillion yuan, with a year-on-year growth of 10.9%, and its proportion in the total retail sales of social consumer goods will rise from 20.7% in 2019 to 24.9%. In 2020, China's express business volume will reach 83.36 billion pieces, with a year-on-year increase of 31.2%.

"It's really putting pressure on us and it seems that the mechanism is not flexible enough." There are senior executives of the world's top 500 consumers.

Great changes in daily chemical consumption: 100 billion racetrack bubbles rise. Visual China

"Old problems"

For new consumer entrepreneurs, the prospect seems to be great, but soon the market cold water hit.

This is reflected in the sharp fall in the share price of Yixian e-commerce. The market's concern is that marketing costs continue to rise, but the growth rate slows down, and sustainability is in doubt.

According to the first quarter report, the revenue of Yixian e-commerce was 1.444 billion yuan, up 42.72% year on year; The net loss attributable to the parent company was 317 million yuan, with a year-on-year decrease of 327 million yuan; Non GAAP had a net loss of 233 million yuan due to its parent, with a year-on-year increase of 104 million yuan. Over the same period, the sales and marketing expense rate of Yixian e-commerce increased by 17.1% year-on-year.

Behind the scenes, the young e-commerce company Yixian has not yet formed a complete brand, corporate governance and supply chain system, and it is still fragile.

Corporate governance is the core issue for all enterprises. Taking Shanghai Jiahua, a domestic leading daily chemical company, as an example, during the period of 2014-2016, it was in a period of obvious internal friction, with the rapid development of the industry. However, Shanghai Jiahua, which has the advantages of brand and channel, has been on the decline.

Previously, pan Qiusheng, chairman of Shanghai Jiahua, admitted in an exclusive interview with the 21st century economic report that problems left over by history have hindered its further development in management and other issues. In the internal process, some processes of Shanghai Jiahua are broken and need to be dredged and simplified. At that time, Shanghai Jiahua had thousands of SKUs.

Today, pan Qiusheng chooses to adjust the brand playing method, comb the team structure, and improve the operation efficiency through "focusing" and "simplification", so as to achieve cost reduction and efficiency increase.

The history of the development of international giants can also bring reference to current entrepreneurs. Take P & G as an example. When it was founded in 1837, it was only a family business, and its main business was candles and soap. However, P & G seized the opportunity of the times, from the time of the US Civil War to the post-war prosperity cycle, through the World War II cycle and the wave of globalization.

On the marketing side, P & G has never dropped key nodes from the first batch of magazine advertisers to radio advertisers and the largest TV advertisers. At the channel end, Wal Mart is linked from the grocery store.

Behind it is the business mechanism of P & G. P & G's first turning point was the introduction of Ivory soap in 1880. Since then, it has made use of the technology transferred by colleges and universities to launch tide, which has become the turning point of its technology positioning. After various twists and turns, it has broken through the supply chain, penetrated into many fields, and adopted multi brand strategies, and finally became what it is today.

For P & G, the stable core is an important basis for its cycle crossing, which is inseparable from the coordination of macro, meso and micro environments. But at present, China's consumer entrepreneurship is more concentrated in the initial product end, and there is still a distance from sustainable companies.

It's hard to hear entrepreneurs talking about real long-term strategic planning. People grow in tiny crevices, and the system has not yet emerged.

Of course, this itself is also an opportunity. As strong as P & G, it is difficult to win in the Chinese market. From 2005 to 2009, P & G and L'Oreal in China's all Front War, the victory and defeat in each market segment gradually appeared, P & G retreated to the public care, while L'Oreal entered the cosmetics leader.

L'Oreal, which started from high-end and department stores, has stronger ability in brand building and high-end marketing, while P & G, which is more powerful in distribution, is one step behind in creating high-end brands. However, its strong channel power helps it to keep the mass daily chemical market.

With the continuous growth of China's economy and the explosive expansion of the cosmetics industry, L'Oreal's share has increased rapidly. According to China cosmetics (industry), L'Oreal achieved sales of 8.18 billion yuan in China in 2009, nearly 14 times higher than that in 2001, accounting for 11.7% of the total sales volume; P & G's sales volume in China is 13.232 billion yuan, accounting for 19% of the total market share.

However, with the rise of e-commerce, P & G's channels, products and marketing are unable to adapt to the changing trend, and P & G further lost its market share. In 2014, P & G announced to divest or withdraw from 90-100 non core brands with sales of less than 100 million US dollars; In 2017, P & G again announced that it would cut down more than 100 brands, eventually reducing its global brands to 65.

It is worth noting that P & G is still in an advantageous position in the whole category from a global perspective. In 2020, its revenue will reach 70.95 billion US dollars and L'Oreal will reach 31.96 billion US dollars. P & G covers many fields such as daily chemicals, pharmaceuticals and paper industry.

For new consumer entrepreneurs, great changes have come, how to form their own system in the tide is the key.

After all, the giants will not be absent forever.

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