“Prior to now, S’Young Group was more driven by the twin business of operating self-owned brands and helping foreign brands to raised distribute in China”, says Juliette Duveau, the co-founder of consulting agency The Chinese Pulse. However the group founded in 2018 is not any longer content with its role of distribution partner in China. Last 12 months, S’Young purchased French brands Pier Augé and EviDenS de Beauté.

“We can foresee that S’Young will integrate the international channels and R&D techniques of those two French brands, paving the method to the international marketplace for its other self-owned brands in the longer term”, she adds.

These equity acquisitions of foreign brands also contribute to upgrading the group’s image, from Middle-Low end to more high-end. S’Young’s own brands – equivalent to Yunifang (御泥坊), which has over 10M followers on Tmall – mainly goal the Chinese mass market with an enormous customer base, especially in lower tier cities. Through the acquisition of foreign brands, the Group could reach more affluent customers in higher tier cities and might develop higher-end products to go global.

Sensitive skins and area of interest brands

Last 12 months, S’Young also acquired the Chinese brand Dermdoc (戴摩道克) specialized in skin repair from the group Hangzhou Songyang. Analysts noted it made S’Young enter the territory of Winona (薇诺娜), Chinese group Bethany’s brand positioned on sensitive skin treatment, which ranked within the Top 10 of national brands on the recent June shopping festival on several e-commerce platforms.

“Since 2017, the expansion rate of China’s sensitive skincare market has been higher than the general skincare market’s, and it has strengthened, especially after the epidemic”, observes Juliette Duveau.

In keeping with the 2022 Chinese Sensitive Skin Market Trend report, issued by Taobao and T-mall, around 45% of the Chinese population have a sensitive skin, and most of them are women of their twenties living in tier 2 and tier 3 cities. On this field, consumers mainly expect products focused on skin barrier enhancement, skin redness repair, and anti-inflammation.

S’Young also introduces itself because the pioneer of the “CP (Chinese Partner) model”, which consists in helping global brands grow and adapt to the Chinese market, by providing a comprehensive solution for the brand, product adaptation, sales, and distribution networks (online and offline).

This approach is different from the “Tmall partner model” offered by the Chinese platform to global brands used to cross-border trade with China. “While the Tmall partner model only focuses on the digital ecosystem of its own group, S’Young can provide diversified online and offline sales channels (shopping malls, select shops)”, explains Juliette Duveau. Last 12 months, the group actually opened a physical store called Shuiyangtang (水羊堂, “the temple of S’Young”) in Changsha, to supply all its brands and its partners’ on a 300-m2 area.

Given the brands that trust S’Young with the CP model (Kiko Milano, Fenty Beauty, Liérac…), the group has positioned itself on a slightly premium area of interest segment. “Area of interest brands hold a comparatively small share of the market and have a comparatively low awareness in comparison with established brands. Competition on China’s beauty market could be very fierce. But as Chinese consumers develop into more sophisticated and pursue personality expression, area of interest brands with sharp brand identities and values ushered of their opportunities. The continued popularity of area of interest brands challenges the established or mainstream beauty brands who are likely to re-examine their brand image to raised meet the needs of the young generation.”

Still, S’Young’s many initiatives have not received much praise from the Chinese financial press, which points on the group’s declining profitability (it’s listed on the Shenzhen Stock Exchange) and the necessity to seek out growth drivers on the now highly competitive Chinese market. “For now, the group will remain focused on the Chinese market”, says Juliette Duveau. “There remains to be a protracted method to go before it actually goes global”.