Daily Chemicals Corps Meets Foreign Brands

Faced with the increasingly declining market share of local daily chemical brands, increasing their own competitiveness through resource integration has also become a way for local daily chemical companies to break through. It is reported that the "Japanese chemical state-owned" group army formed by the integration of daily chemical companies such as Beijing Daily Chemicals Plant, Goldfish Technology Co., Ltd., and Beijing Liyuan Company will formally be listed on March 9. So, can Bao Tuan-style competition shake the advantage of foreign brands in the cosmetics industry? What does this approach have to do for local brands to break through? Will Guangdong, a big Japanese province, follow suit? It is understood that the industry has praised and bombarded the practice of "building a group army to cooperate with foreign brands."

It is an indisputable fact that foreign brands occupy more than half of China's daily chemical industry. According to statistics, at present, the sales volume and sales volume of foreign brand cosmetics account for about 60% and 90%, and the profit share is more than 90%. Taking 2009 as an example, P&G ranked first with sales of 13.232 billion yuan and market share of 17.9%; L'Oréal ranked second with sales of 8.187 billion yuan and 11.1% market share. At present, there are more than 4,000 local cosmetics companies and only 50 of them have annual sales of more than 100 million yuan. Local brands with more than 500 million yuan are rare. This kind of disparity in strength has also generated a lot of arguments about foreign brands' "encirclement and suppression" of local brands.

In this market context, Beijing's industry consolidation is seen as a breakthrough in retaining local brands. It is understood that the integration of the daily chemical industry will be completed within Beijing First Light Holdings Co., Ltd., and the daily chemical companies such as Beijing Daily Chemical Factory, Goldfish Technology Co., Ltd. and Beijing Liyuan Co. "Group companies", then, several major brands that have once been on the market, such as goldfish, panda, aoqi, Huazi, baby, violet, and noble, will all be included in the new company. According to industry insiders, this is a move to “hold a seat in Beijing’s local cosmetics brand”.

Differences between the industry and the Guangdong temporarily do not follow the integration of local resources can affect the current cosmetics competition pattern?

Some industry insiders believe that Beijing’s move to integrate its daily chemical brands is necessary in the face of local ethnic national brands or foreign acquisitions or gradual declines. "Only through the integration of their respective superior resources and the formation of a conglomerate scale can they be able to resist foreign rivals." Yu Xueling, secretary general of the Guangdong Provincial Chemicals Association, also believes that this is a good thing for the industry and increases its competitiveness through resource integration. However, she stressed, "Don't regard resource integration as a way to fight foreign capital, but it should be a way for local brands to find their own way out."

However, there are also industry experts believe that this move is of little significance. Chen Hua, a daily chemical expert, believes that the current pattern of dominant foreign brands in the cosmetics market will continue. The integration of resources will not bring much competitiveness to local brands, but it will be the most important to strengthen their own brand power and brand culture. Wu Zhigang, a senior expert in daily chemical industry, pointed out directly that “a few state-owned brands can't change anything together. Market competition has its own set of laws. Baotuan competition is not possible in the current market environment.”

As Guangdong, the country's largest Japanese chemical industry, is there a plan for competition? Yu Xueling revealed that in the past, the industry had tried to integrate resources, but it could not be implemented due to various reasons. Ms. Chen from the industry pointed out that it is impossible for a competitive local company to rely solely on industry associations or companies. It must rely on the attention and support of the relevant government departments.