Wang Zhuo

Beauty Streams,China

A few years ago,the hype of “going to Japan to buy a toilet seat” caused a great clamor,triggering introspection,self-blame,awareness,self-improvement,and confidence in China’s home appliance industry.It is estimated that Chinese people will soon stop going to Japan or other countries to buy toilet lid or other electrical appliances on a large scale.However,the trend of “going abroad to buy cosmetics” will continue to be vigorous and enduring.Why? Because the introspection,selfblame,awareness,and self-improvement of China’s local cosmetics industry have not truly begun.In the face of the surging waves of international brands,Chinese local cosmetics companies and brands have not yet gained sufficient confidence concerning their approaches,theories,system,and culture.

The China Communist Party Central Committee has repeatedly issued calls to continue to deepen supply-side structural reform,and has put forward the guiding ideology and strategic deployment of“focusing on revitalizing the real economy,” sounding both the alarm and the rallying cry for the relatively backward cosmetics industry in China.

“Although the prominent contradictions and problems facing China’s economic operation involve cyclical and aggregate factors,the root cause is a major structural imbalance,leading to a poor economic cycle.We must find solutions from the supply side and structural reform so as to achieve the new dynamic equilibrium of the relationship between supply and demand.” While the judgment (diagnosis)of the Central Economic Work Conference in China is based on the general conclusions of all industries,it is also fully applicable to the Chinese cosmetics industry.China’s cosmetics industry is admittedly facing cyclical and aggregate contradictions and problems,but the more important root cause is the imbalance of the supply and demand structure.The supply structure does not fit the demand structure,resulting in an unsmooth market cycle among various channels,including department stores,supermarkets,cosmetics franchise stores,e-commerce and WeChat commerce platforms,etc.The new dynamic balance has not been formed between supply and demand.Regarding the supply-side structural reform,the overall conclusion of the Central Economic Work Conference states that “the ultimate goal is to meet demand,the main direction is to improve the quality of supply,and the fundamental approach is to deepen reform.” The fundamental reason for the popularity of overseas purchases in the cosmetics market in China is that domestic supply cannot meet domestic demand,so the ultimate goal of supply-side reform must be to meet demand.This requires Chinese cosmetics companies to study market changes in depth,understand actual and potential needs,improve productivity and competitiveness,and better meet the growing functional,emotional and self-expressive needs of Chinese consumers.Chinese cosmetics companies must focus on improving the quality of supply,and must strive to reduce ineffective supply,expand effective supply,focus on improving the quality of the entire supply system,and accelerate the improvement of the adaptability of the supply structure to the demand structure.The fundamental way to improve the supply side is to deepen reform,encourage innovation,strengthen the internal motivation of enterprises as market players,enhance insight and imagination,create brand added value,and to increase profitability,labor productivity,total factor productivity,and potential growth rate.

In the new situation,revitalizing the real economy is of great significance.First of all,“we must center our efforts on improving quality and core competitiveness,insist on innovation-driven development,and expand the supply of high-quality products and services.We must establish a strong quality-first awareness,carry out quality improvement actions,improve quality standards,and strengthen overall quality management.” Such requirement is also the top priority for the Chinese cosmetics industry.The quality of local cosmetics in China(including internal efficacy and external appearance)failing to meet the requirements and expectations of Chinese consumers is the main reason for the current outflow of cosmetics consumption.Chinese cosmetics companies must establish a broader concept of quality,comprehensively improve the quality of products,services and customer experience,pay attention to every aspect,every link,and every detail,so that Chinese consumers will take a fancy to,fall in love with,and become hooked on Chinese cosmetics.

To revitalize the real economy,we must also pay attention to “guiding enterprises to form their own unique comparative advantages,carry forward the ‘craftsman spirit,’ strengthen brand construction,cultivate more ‘century-old stores,’ and enhance product competitiveness.” As an integral part of China’s real economy,Chinese cosmetics companies must also promote the spirit of craftsman.The author defined the “craftsman spirit” as the spirit of “professionalism plus dedication” in the book Craftsman Spirit in the Age of Appearance.To quote the corporate slogan of Shanghai Jahwa from 1994 to 2014,this means “to be exquisite and elegant(professionalism),heart and soul (dedication).”Tongrentang’s pharmaceutical philosophy of “despite the complexity of processing,we dare not save labor;despite costliness of the taste,we dare not reduce ingredients” is a perfect illustration of craftsman spirit and the company has sticked to such philosophy for over three hundred years.It is now the turn for more Chinese companies (including cosmetics companies)to respect and practice this concept.

Craftsman spirit is the source of product quality,so where is the source of craftsman spirit?We need to understand the craftsman spirit in a comprehensive and focused way.Carrying forward the spirit of craftsman is not only the responsibility of the craftsmen (technicians and production workers),but also the responsibility of scientists,engineers,designers and artisans,as well as the responsibility of company executives and entrepreneurs.To be precise,the craftsman is first and foremost the responsibility of the entrepreneur.In an enterprise where only the deputy-level leaders and below-level personnel work hard to learn the craftsman spirit while the top leader is indifferent,the craftsman spirit will not take root and will not last long.The spirit of craftsman must be the spirit of the first-in-command.Only by setting an example and acting as a role model can the flag of the spirit of the craftsman be firmly established.Secondly,entrepreneurs must establish beliefs together with employees,respect nature and love people,respect morals and virtues,and cultivate the soil and water on which the spirit of craftsman depends.The craftsmanship spirit is not only a “work by hand,” but also a “work by heart,” which is the result of respect,purity,and calmness of minds.The craftsman spirit is not only “smart work,” but also“hard work” and “honest work.” The craftsman spirit is not “reckless work,” but is full of intelligence and wisdom.As Cheng Zi puts it,“respect is a deep word;intelligence and wisdom,all come from this.”Just as a nation with awe and faith is more likely to have craftsman spirit,and a family with awe and faith is more likely to cultivate children with the spirit of craftsman,entrepreneurs and employees who have faith and awe are more capable to embody the spirit of craftsman in the process of developing products and serving customers.To carry forward the craftsman spirit,Chinese cosmetics companies must not just shout slogans,but must find “the source of running water.” Starting from the top of a company,they must respect nature and love people,value the good virtues,and must not forget the original intention of operating “a century-old brand,” be prepared for long-term and arduous struggle,and stay away from seeking quick success and instant benefits,and put an end to shoddy products.

The core and essence of “strengthening brand building,cultivating more ‘century-old brands,’ and enhancing product competitiveness” is the creation of added value for brands and products.The core reason for the weakness of Chinese cosmetics brands lies in the weak added value of the brands,not in the shortage of basic functional value.Chinese cosmetics can be applied to skin,just like Chinese mobile phones can make calls,Chinese watches can tell the time,Chinese cars can be driven,Chinese clothes can be worn,Chinese sporting goods can be used,and even the notorious toilet lid still can be used,the ballpoint pen that the Prime Minister has paid attention to can also write,but because of the lack of a certain added value,consumers’ willingness to choose these products stays very low.In the era of resource shortage,consumer goods are often used to meet the needs of survival.In today’s era of abundance,however,consumer goods must meet the needs of quality life or enjoyable life,and meet the unique demand of emotions and personality.From the evolution of daily chemicals to cosmetics,to the fashion industry,and to the appearance economy of today,the basic functions and values of the products have not changed much,and the changes mainly take place in the value-added part.The necessity,importance and urgency of the mission and task of Chinese cosmetics companies to enhance brand added value and build high value-added brands cannot be overemphasized.China now has good social and market demands,which can fully support the rise of a large number of high value-added cosmetics brands.In a sense,this opportunity is quite rare.If we cannot take this opportunity to create a large number of high value-added brands and form a splendid brand group,then the sky of China’s economy will still be densely covered with haze of danger,suffering and humiliation,and the situation that foreign companies and brands occupy the major market will continue to exist for a long time.The establishment of high value-added brands first stems from a unique market perspective.Chinese cosmetics companies must conceive products,improve designs and quality,and create experiences based on the current consumer characteristics and future consumer trends in the world and China.They must use real “understanding”and sincerely “petting” to please the consumer so as to stimulate and create potential consumer demand,reduce ineffective supply,increase effective supply,and avoid the long-lasting heavy burden of“destocking” and “de-capacity.”

There are two traditional Chinese sayings,“knowing the shame is close to courage,” and “feel the shame and then one can be courageous.” Our close neighbors,Japan and South Korea,have long been left behind the Western developed countries in their cosmetics industries.However,Japan and South Korea have worked hard in the cosmetics industry after World War II and the 1997 Asian Economic Crisis,and have suddenly emerged in the global and East Asian competition of the “Beauty War,” and rapidly established their famous national brands,“J(Japanese)-Beauty” and “K (Korean)-Beauty.” Under the pressure and encouragement of our neighbors,can our cosmetics industry accumulate,give full play to the scale effect and late-comer advantages,and efficiently promote the national brand beauty initiative (Chinese-Beauty,C-Beauty),rise from the beauty industry of East Asia and become independent In the beauty forest of the world? How should China’s cosmetics industry,which is taking the lead in revitalizing the real economy and deepening supply-side reform,shoulder this historical task?What are the specific tasks?

First of all,the level of technology needs to be improved.Most of the changes in face value in the future will come from advances in science and technology.The face value industry is likely to undergo a transition from a high-fashion industry to a high-tech industry.Technology will play a fundamental role,if not a decisive one.At present,the plagiarism tendency caused by lack of scientific and technological support within China’s cosmetics industry must stop immediately.This is the starting point and minimum requirement for supply-side reform.

Secondly,the degree of branding needs to be improved.At present,Chinese cosmetics companies are good at hype and tricks,but hype and tricks are not marketing,let alone branding.Brand is a kind of culture,which needs passion and time to cultivate.Chinese cosmetics brands should be shaped and promoted based on the consciousness and self-confidence of Chinese culture.The purpose of branding is to create and enhance customer experience,and to win and maintain customer trust;a brand must have a value-added creating system and creative ability;high-end brands need to be shaped from a global perspective.Chinese cosmetics brands will have no future if they do not strive to become high-end brands,and they will not become high-end brands if they do not think from a global perspective.

Thirdly,the degree of globalization needs to be improved.In the global cosmetics industry,most of the companies in developed countries (G7 plus Switzerland,South Korea and Israel) operate globally,integrating global resources and occupying the global market.Take our neighbor,South Korea,a rising star in the cosmetics industry,as an example.Its corporate executives often graduate from business schools in the United States,and most of their design talents have studied in Europe.Their production and management mainly follows the systems and processes of Japanese companies.The raw materials of their companies come from all over the world,and their market relies mainly not on domestic consumers but overseas.In the overseas market,China is their top priority.On the other hand,in China,most of the companies have no contact with the international market,except for purchasing some raw materials from abroad,and do not have the operating system and operational capabilities to integrate global resources and open up the global market.Although many cosmetics companies in China are not good at globalization,they are more accustomed to colonization.They have implemented a wide range of“colonization” policies for distributors and retailers within domestic channels,which is the collective weakness and common drawback of China’s consumer goods companies,including cosmetics companies.In this round of supply-side reform,Chinese cosmetics companies need to recognize their gaps with European,American,Japanese,and Korean companies,plan well,take actions,and seek steady progress in the globalization journey,and strive to achieve rapid and stable progress.

Finally,the degree of capitalization needs to be increased.The so-called capitalization is not as simple as investing and putting in money,but refers to an efficient system,mechanism and process that can turn corporate assets (especially intangible assets such as brands) into capital,systems and capabilities that can create high value and added value in China and the global market.Facing the future,Chinese cosmetics companies must step out of the superstition and worship of fixed assets such as land,factory buildings,office buildings,and housing,and step out of their ignorance,fear,rejection of,and blind obedience to capital;China’s capital institutions should not only pay attention to providing money for invested companies and brands,but must also take actions in terms of talent introduction,theoretical guidance and potential energy creation,and must provide positive energy rather than negative energy.

In the process of structural reform on the supply side of China’s economy,the level of technology of Chinese cosmetics companies determines the speed of their corporate development,the degree of branding determines the depth of corporate development,the degree of globalization determines the breadth of corporate development,and the degree of capitalization increase the height of corporate development.The combination of globalization,branding,capitalization and technology has paved the“Guangshen Gaosu” (the acronym for breadth,depth,height,and speed in Chinese) for the development of Chinese cosmetics enterprises,and is the main responsibility and key task of the Chinese cosmetics industry’s mission to revitalize the real economy and boost supply-side structural reform.If these tasks can achieve success,a new dynamic balance of supply and demand in the Chinese cosmetics industry can basically be formed,the trend of Chinese consumers buying cosmetics abroad can be effectively reversed,and Chinese cosmetics companies can first let the Chinese people fall in love with and be hooked on cosmetics that embody and highlight Chinese culture.Let us look forward to and jointly promote this beautiful Chinese dream!