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At the 2021 International Cosmetics Technology Conference under CBE SUPPLY, China Beauty Expo, in cooperation with YAT and beautydata.ai for two consecutive years, unveil the 2021 Mei-yi Science and Technology White Paper.
Combining the overall brand and supply chain coverage by CBE SUPPLY, as well as the data analytical capabilities of its partners YAT and beautydata.ai, the White Paper is a comprehensive and in-depth analysis of beauty brands and supply chain market in China.
The 2021 release provides forward-looking insights into the long-term development of the beauty industry as well as future trends and opportunities under the new circumstances. This report will help all partners in the beauty, skin care, and personal care industry to find better positioning and seize opportunities.
To help better understand the 2021 Mei-yi Science and Technology White Paper: Insights into the Sustainable Innovation of Enterprises, the editor have chosen to use charts and graphs.
#01 China's beauty consumer market & brand observation
1. Beauty sector in China continues to lead by consumption
In the first quarter of 2021, China’s cosmetics retail sales growth rate exceeded 40% year-on-year, exceeding the general retail sales growth.
Domestic consumption direction is decided by the preferences of China's new middle class and the young. In 2020, China's domestic consumption of luxury goods soars by 48% to 346 Billion RMB, with online sales of luxury goods accounting for 23%.
Since 2018, final consumption has become the largest contribution to economic growth. In the first quarter of 2021, the final consumption accounted for 63.4% of the GDP growth. The potential of domestic demand cannot be underestimated.
2. China's beauty consumer market is maturing
Through survey conducted, it can be seen that urban white-collars, students, and civil servants are the three main sources of beauty makeup consumption.
The main age range of the respondents are 18-40 years old, with 18-25 years old, 26-30 years old, and 31-40 years old, being the highest proportion of the population.
The survey found that most consumers have developed the habit of using cosmetics in the mornings and evenings.
Though skin problems are complex and diverse, the demands for functional cosmetics have not changed due to the pandemic. The top three factors that consumers pay close attention to when choosing products and brands are efficacy, ingredient, and sensation. With brands also understanding these three factors, it can be acknowledged that the beauty consumption market in China is maturing.
With national pride at an all-time high, domestic brand has been empowered with waves of new growth. The survey found that 62.7% of consumers do not care about brand nationality, and 31.1% of consumers think that foreign brands are better than local brands.
When asked about the reason, the two main reasons are large R&D investment and strong technical strength.
3. With surplus of new brands post 2010, breakout relies on true innovation
Emerging brands have not been so spectacular. According to the statistics, among the brands surveyed, brands of 1-5 years accounted for the highest proportion.
Most brands have less than 50 employees. From a regional perspective, Shanghai is an ideal choice for brands to settle down.
With brands & consumers agreeing on the top three elements when selecting products, being efficacy, ingredient, and sensation, indicating the industry competition is escalating all-around.
Therefore, it is believed that the era when brands can reach into the consumers' hearts only by claiming efficacy is gone forever! Gone are the days when a single brand can build an empire with a certain effective ingredient.
4. With booming number of brands, all seeking suppliers with continuous innovation
Skin care and makeup brands have shown explosive growth, with tens of thousands of brands competing for the hundred-billion-dollar market. According to the survey, the supply chain service brands seek for are listed based on their priority:
1. Innovative formula.
2. Innovative packaging design.
3. Innovative raw materials.
Meanwhile, the main problem faced by brand management are incomplete market information, high price, poor quality and delayed delivery time.
#02 Decoding the sustainable innovation of enterprises
According to statistics, an enterprise’s innovation capability is related to more than 100 variables such as human capital investment, R&D investment, infrastructure investment, intangible assets, and tangible asset output. For the beauty sector, what are the components of sustainable innovation? When choosing OEM/ODM enterprises, which indicators can be used to quickly identify enterprises with fresh innovation? How can OEM/ODM enterprises improve their innovation based on their own capabilities?
To this end, the Mei-yi Science and Technology White Paper launched a continuous innovation index model, which monitors 2 primary category indicators, 7 secondary category indicators, 33 tertiary category indicators, and 132 quaternary category indicators.
The innovation of OEM/ODM enterprises is ranked from high to low, in the forms of L5 leadership, L4 optimization, L3 integration, L2 specification and L1 planning, which provides methodology for Chinese beauty brands and OEM/ODM to continuously improve their innovation ability.
#03 Insights into enterprise sustainable innovation
1. Innovation investment will determine the success rate and speed of technology from lab to the market
The correlation between innovation investment and continuous innovation index is 63%.
The R&D is a necessary link for a technology to go from lab to market. We divide the process into 10 stages, and the R&D investment determines whether a technology can successfully go through these 10 stages and the length of time it requires.
2. Only when technological innovation is applied to the society, then can its value be realized
The commercialization ability of a factory, that is, the ability to transform patents into popular products, has a positive correlation of 94% with the continuous innovation ability of OEM/ODM companies, ranking first.
#04Technology Development Trend of the Beauty Industry
1. Supply chain enterprises carries more international vision
Europe, United States and Japan have a solid foundation in the beauty industry, strong in scientific research, but relatively weak in manufacturing.
In terms of basic research, universities in Europe, US and Japan have accumulated more advanced technology patents with mature technology transfer processes. Bawei, Colori, Ausmetics, etc. have established cooperation with foreign laboratories to transform patent results.
2. Innovation is not about the rise of a "single product", but the ability of continuous innovation
The value of technology patents can only be realized if they are applied to the society. Enterprises like Intercos, NOX BELLCOW, Easycare, Kolmar, Meichuang, Bio Truly, Yachun, BioFunction and SIRIO all utilized self-developed new raw materials to provide continuous innovation for brands.
3. Incremental products have large market potential
Automation is the muscle while digitization act as the mind. OEM/ODM companies have begun to use digital tools to reserve patents and transform patents. In the categories of beauty tools, cleansing, makeup remover, and makeup, patented or excellent product cases accounted for a relatively small proportion, but the sales side performed really well, and innovative patented products achieved good market performance.
At the same time, the industry has already given enough attention to scalp care, fragrance beads and other sub-categories, with the consumer market in the incubation period. With the rise of consumer market segments, OEM/ODM companies that reserve patents in advance will reap the first wave of market dividends.