In 2018, a set of lipstick in the Forbidden City became a hot topic. It makes Chinese people realize that our taste in beauty products is not necessarily defined by international brands. Domestic beauty brands have opened a golden age in the domestic beauty market by promoting China’s aesthetics, and teaching young people in China the secret of "becoming beautiful" with more efficient and accurate channels and closer to consumers.
However, the business model that relies solely on "aesthetic dividend" to form competitiveness is fading.The next question is, how to take the road of sustainable business of domestic beauty products?
"Sustainability" is both a mystery and a mystery. All along, we all know that we should improve the sustainable development ability of domestic beauty companies, but few companies really realize this ability into the product value that consumers can really feel.
At the end of 2022, MSCI upgraded the ESG rating of Yixian E-commerce to Grade A, which was the first domestic beauty company to get an A in the MSCI ESG rating, and its sustainable development potential was recognized by the ESG community. Perhaps there is a road for domestic beauty to cross the cycle?
What is also rare is that Yixian E-commerce owns Perfect Diary, Little Odin, Pico Bear and Darfur Skin.(Chinese mainland business)There are many brands of cosmetics and skin care, such as France Colanli, EVE LOM, Yi ‘an State, etc.-the brands are diverse and the strategies are different, so what should the holding companies hold on to in terms of sustainability? This further tests Yixian Group’s essential understanding of sustainable development.
Yixian found the complementarity between the brand and the brand matrix while striving to improve ESG performance.
Looking for the link between products and nature, Yixian is persistent.
In 2022, the eye shadow disc jointly launched by Perfect Diary and chinese national geography was awarded the cross-border joint track award in "Top Ten National IP of 2021". The color design of eye shadow tray seeks inspiration from Danxia landform, plateau, salt lake and terraced fields in China, explores the modern expression of China beauty, and defines the new fashion attitude of domestic beauty cosmetics with the original and pure feeling of nature.
E-commerce in Yixian, which attaches so much importance to natural value, cannot ignore the sustainable trend in the field of consumption. The green values that products can carry are varied, and which values can really impress consumers and bring competitiveness to products is a process of continuous exploration by brands.
Since 2022, Yixian Group has made a more comprehensive exploration on the sustainable elements of products.
"Sustainable packaging" is one of the focuses of the Group. Cosmetics are a special kind of consumer goods, and the quality of its packaging is often greater than the quality of its contents. So they will produce a considerable amount of solid waste. In this regard, Yixian Group has adopted two strategies: on the one hand, it has simplified unnecessary packaging, especially oversized outer packaging boxes and plastics in packaging; On the other hand, it increases the sustainable materials and recyclability of product packaging.
Not surprisingly, among all packaging materials, plastic has the greatest negative impact on the environment.Yixian e-commerce has continuously reduced the use strength of plastics by replacing plastics with degradable materials and reducing some unnecessary plastic mulching measures. The overall use intensity of the group’s packaging materials has also increased from 0.08 in 2021.(ton/ten thousand yuan revenue), reduced to 0.04 in 2022.(ton/ten thousand yuan revenue).
Yixian first turned the high-end skin care brand into a brand with high-level green packaging. EVE LOM’s product packaging is 100% recyclable, and it has won The Green Dot logo, which has become the sustainable packaging benchmark in Yixian’s brand matrix.
MSCI believes that the sustainable packaging work of Yixian e-commerce has reached the leading level in the global industry. This has also helped Yixian significantly improve its MSCI ESG rating to a considerable extent.
Sustainable packaging will also urge cosmetic enterprises to change their own product aesthetics. At this point, Yixian can be said to have won at the starting line. The design of Yixian’s brand is permeated with the brand’s insight into product use and applicable people, which is intuitive and surprising.
Sustainable packaging can’t be without sustainable contents. Some raw materials of cosmetics will pollute or destroy the ecological environment. Beauty must be at the expense of the ecological environment-this is definitely what consumers don’t want to see.
Therefore, Yixian formulated and disclosed the Requirements for the Control of Raw Materials, explicitly prohibiting the use of raw materials that are carcinogenic, reproductive toxic, skin irritating and harmful to the environment, and strictly controlling the use of regulated raw materials to ensure the safety of products to the human body and the environment. At the same time, the group strictly abides by the "Regulations on the Management of Cosmetic Labeling" and fully displays the product ingredients to consumers.
"Sustainable raw materials" can also become the core tonality of the brand. For example, the core product of Wan Zi, a young skin care brand owned by Yixian, pursues botanical ingredients, without pigment, alcohol and preservatives, and makes "sustainability" a value that consumers really feel.
All consumer goods interpret what is "product responsibility" in their own ways, so that consumers can feel that their needs are fully respected while using the products.
For domestic beauty products, the topic of "responsible products" in ESG has a different meaning.In the initial development stage of "the rise of new domestic products", domestic beauty products left consumers with a heavy impression of value and marketing. Enriching R&D and doing a good job of product inclusion have become the most practical embodiment of "responsible products" of domestic beauty products.
The research and development system of Yixian e-commerce is an open research and development system called Open Lab. The "openness" of the system lies in that Yixian E-commerce integrates the R&D capabilities of itself and cooperative research institutions, and includes the world’s top partners in the upstream and downstream of the industrial chain, such as raw materials, R&D and production.
In 2022, the improvement of Yixian’s R&D capability will make the Group more confident to carry out high-quality transformation.In June 2022, Yixian’s R&D center in Guangzhou was officially recognized by China National Accreditation Committee for Conformity Assessment.（CNAS）Laboratory accreditation certificate issued by. At the same time, the group began to build a large-scale new R&D center in Shanghai, and has jointly organized the Yixian-Ruijin Medical Skin Care Joint Laboratory with Shanghai Ruijin Hospital. On the whole, the Group will build another R&D center in Shanghai.
In 2022, the R&D investment of Yixian E-commerce exceeded 130 million, accounting for 3.4% of the revenue, and its expense ratio ranked first in the industry. By December 31, 2022, Yixian e-commerce had applied for 174 patents worldwide, of which 43 were invention patents.(Some are in the process of transfer).
The research and development achievements of Open Lab continuously support the brand of the Group to launch new potential products. For example, the targeted red repairing technology developed by Yixian and the National Nano-drug Engineering Technology Research Center, Jandard Skin successfully launched the triple repairing essence of Darskin in 2022, and achieved good performance during the Double Eleven last year.
At the end of 2022, Yixian cooperated with Sun Yat-sen University to establish a joint laboratory for accurate research on skin health, which is expected to help Yixian expand its territory on new tracks such as anti-aging and probiotics.
R&D efforts will help the group to climb new technological peaks from the real needs of consumers. The persistence of "responsible products" not only reshapes the research and development of enterprises, but also reshapes the marketing of enterprises at the other end.
In order to implement the principle of responsible marketing, Yixian has set up a strict internal audit mechanism for advertising. The advertising information of products needs to go through four audits to ensure the truthfulness, accuracy, legality and compliance of advertisements.
Also from the standpoint of product responsibility, Yixian also started consumer education on safe makeup and scientific skin care, and added the functions of beauty cosmetics and skin care consultants to the highly sophisticated customer service work, so that the customer service team can scientifically recommend the most suitable products according to the needs of consumers.
On the other hand, the era of seizing the market only by product aesthetics and marketing is gone forever.
In addition to some improvements that can be intuitively seen by the market, the corporate behavior level of Yixian E-commerce has also been evaluated as industry-leading by MSCI. This essentially requires the Group to control risks, comply with regulations, and maintain the integrity of employees in a huge supply chain system and customer service system.
But these are still the "technical" aspects of corporate governance. On the "Dao" level, Yixian E-commerce has launched a new five-year strategy since 2022, cultivating brand matrix, creating a second curve on skin care brands, and building the Group’s R&D and value creation capabilities.
ESG is an effective reference for enterprises to think about their own development motivation and quality. Yixian e-commerce has obtained an A rating in MSCI ESG, and has been well received in some key tasks-But this rating is not an end in itself.The transformation of the Group has just started, so we need to think about the focus of sustainable development in the dynamic.
After the initial exploration in 2021 and 2022, the Group became more aware of the priorities of different sustainable issues and began to put forward some new priorities. For example, in Yixian’s ESG, the emphasis on labor management, data protection, diversity and tolerance has been strengthened, while the core concern on chemical safety has been retained, reflecting Yixian’s strategic judgment on product responsibility and team building.
As we have seen before, every ESG and sustainable development issue, if enterprises think thoroughly enough and have positive value propositions, can often fall into specific development and product strategies. Just as Yixian’s persistence in sustainable products means that the group will be guided by "clean beauty"（Clean Beauty）The concept continues to create environmentally friendly and skin-friendly products, and thus enrich the image of its brands.
So what is the relationship between ESG and brand value building? ESG topic is a set of sustainable development requirements based on industry commonness. Based on these requirements, enterprises can still put forward their own unique ideas and strategies. Then, what really touches customers,It may also come from a flash of inspiration from R&D personnel, a sincere sharing by Xiao Wanzi, a story behind a sustainable component, and so on.