Reporter Observation: New Consumer Entrepreneurs Can Consider Sinking Down

Daily chemical business is becoming a wave.

According to Euromonitor data, the compound growth rate of China's cosmetics industry will reach 9.7% from 2010 to 2020, and the market scale will exceed 519.9 billion yuan in 2020, and the growth rate will drop to 7.2% (the growth rate in 2019 will be 14.7%). According to Euromonitor forecast, 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 greater imagination lies in the space for growth. According to Euromonitor statistics, the market size of cosmetics industry in the United States, China, Japan and South Korea will be 90.9 billion, 75.4 billion, 35.1 billion and 12.6 billion US dollars respectively in 2020. By 2020, the per capita consumption of cosmetics in China is only 54 US dollars. The per capita consumption of cosmetics in the United States, Japan and South Korea is 5.1 times, 5.2 times and 4.5 times of China's, respectively.

But this is still a foreign dominated market, especially in high profit products. It is still Euromonitor data. The domestic high-end skin care products market is dominated by overseas brands, while local brands are driven by the mass market. China's skin care products high-end market concentration, CR10 more than 45% and still rising. Foreign brands are dominant in the high-end market relying on their strong brand power. Lancome, the number one brand, accounts for 10.9% and continues to increase. Estee Lauder, SK-II and La Mer are also in this trend. The only exception is Winona, accounting for 3.2% in 2020.

Behind it are powerful barriers to foreign investment. Taking L'Oreal as an example, it first started its strategic M & A in 1967, and in the past 50 years, it has acquired several famous brands including Lancome, Keyan, Maybelline and YSL.

Up to now, L'Oreal Group has formed four major business departments: mass beauty, high-end beauty, professional hair and active health beauty, with a huge brand matrix of dozens of sub brands, and each business department has world-class brands as its pillar.

For example, the main brand L'Oreal focuses on the mass skin care market, while Lancome pays more attention to the high-end market, while Maybelline and YSL aim at the mass market and the high-end cosmetics market respectively. This enabled L'Oreal to go through many crises and seize the consumption trend of high-end and strong efficiency in the Asia Pacific region, especially in China, and firmly control the position of the world's largest cosmetics group.

In R & D, L'Oreal also has great advantages. According to the financial report, in 2020, L'Oreal's R & D expenditure will be nearly 1.2 billion US dollars, and the number of global R & D personnel will reach about 4000 people, both of which are far higher than the other two world-class beauty giants. From the perspective of R & D cost rate, L'Oreal Group's cost rate remained stable above 3%, and did not decrease to below 3% in 2008 and 2020.

Global giants also bring sample advantages. Take anti-aging products as an example. In Europe, L'Oreal aims at middle-aged and elderly people with color spots, chloasma and wrinkles; But in China, it is aimed at young people with some fine lines and dark circles but less signs of aging skin.

This makes it hard for weak entrepreneurs to cut in. Their choice is to grow between giants and focus on segmentation. For example, rock and roll zoo launched hand cream, colorkey made lipstick, and mixed mouthwash.

Even they are enjoying the giant dividend. Sun Qimeng, co-founder of rock zoo, said 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.

However, the current entrepreneurs seem to focus more on the product itself, and lack of planning for the company and industry. Everything seems to be in a hurry.

A large number of entrepreneurs have no professional background, but feel that this is a good entrepreneurial project. In other words, it is a tool to realize wealth freedom, not a mission.

Their advantage lies in marketing, in line with the current social background. China's manufacturing dividend also makes the plan workable.

This is a situation that has been shaped by all the environment. Capital is eager to find projects, eager to cash, China's development is too fast, time and so on.

Objectively, it is difficult to say that this is a bad situation. Only enough subjects and funds can the industry move forward. Under this logic, we should even encourage this kind of behavior.

But it's always strange. In the work, it is very difficult to meet people who really have industrial ideals. It seems that most of them are in a hurry to expand and have no interest in basic research.

Compared with the century old international giants, what's the difference.

Another founder of head restaurant told me that he wanted to seek capital for more than ten years, but he was not in a hurry. He has already realized the freedom of wealth, and now it is the major investors who pursue him.

That could be a good sign.

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