{"text":[[{"start":8.49,"text":"This article only represents the author's own views."}],[{"start":12.879999999999999,"text":"A fresh Hong Kong IPO application from Chando Global Holding Ltd. is showing the big potential of China’s huge cosmetics market, as domestic consumers increasingly delegate their beauty spending to such domestic brands. The company is rising quickly in a Chinese market traditionally dominated by foreign players. Its latest listing document, filed last week, shows all top five players are international heavyweights, including, L’Oréal (OR.PA), P&G (PG.US), Estée Lauder (EL.US), Shiseido (4911.T) and LVMH (MC.PA)."}],[{"start":57.260000000000005,"text":"But that seems to be changing fast, as domestic cosmetics brands rapidly upend the foreign dominance of China’s 1.1 trillion yuan ($159 billion) cosmetics market. The domestic names have soared ahead to take more than half of that market, accounting for 57.4% of sales last year, according to the China Association of Fragrance Flavor and Cosmetic Industries."}],[{"start":86.39,"text":"Among the top five brands by gross merchandise value last year on Douyin, China’s equivalent of TikTok, three were domestic, led by Chicmax (2145.HK) and Proya (603605.SH). Chando was fifth, moving up from eighth place in 2024, according to research by Caixin."}],[{"start":110.37,"text":"Chando was China’s third largest domestic cosmetics company in 2024, after Proya and Chicmax, even though it was only about half their size in terms of revenue. Chando posted 5.3 billion yuan in revenue last year, up 15.2% year-on-year, compared with more than 10 billion yuan for Proya in 2024 and 9.1 billion yuan for Chicmax."}],[{"start":137.72,"text":"If Chando is more petite than its competitors, its IPO marks a milestone for domestic cosmetics brands nonetheless, due to the company’s backing by a major global brand. That brand is L’Oréal, which invested 442 million yuan in Chando in 2024 and 2025. L’Oreal was one of the first outside investments of any kind in Chando, whose founders as recently as 2023 denied any intention of going public. Equally impressive, its most recent funding valued Chando at 7.14 billion yuan, putting it in the leagues of “unicorn” companies worth $1 billion or more."}],[{"start":182.51999999999998,"text":"Chando is among the oldest in this new generation of domestic cosmetic firms, established in 2001. Its profile mirrors some of the domestic industry’s strengths, as well as its weaknesses."}],[{"start":196.90999999999997,"text":"On the plus side, Chando and its competitors have high gross margins, as well as relatively strong – if fluctuating – bottom lines, and a knack for e-commerce. Most of their sales come from online channels, with key online influencers (KOLs) playing major roles. The domestic brands mostly charge mass-market prices, usually below 300 yuan per product, differentiating themselves from major international brands that are typically in a higher, premium price range."}],[{"start":230.49999999999997,"text":"In 2025, Chando’s major product line, skincare, had a gross margin of 71.8%. Including its smaller color cosmetics, personal care and other product segments, its gross margin for the year was 70.6%. Its rivals are in a similar range, though slightly higher, including Proya’s 73.4% gross margin for the first half of 2025, and Chicmax’s 75.2% for all 2025."}],[{"start":263.53999999999996,"text":"Offline legacy network"}],[{"start":266.06999999999994,"text":"Unlike its competitors, Chando has a large legacy network of offline retailers, with 64,800 retail sales points, according to its filing. While this may be a key selling point for some consumers who like to sample their wares before buying, it also means greater costs for traditional in-store advertising, billboards and distribution."}],[{"start":289.81999999999994,"text":"Then there are the negatives for the domestic cosmetics players, starting with rising costs for their favored marketing strategy of using KOLs and e-commerce platforms that charge ever-higher fees as demand soars. According to Chinese media, livestreaming commissions for beauty influencers increased from about 40% in 2024 to 60% in 2025. Douyin raised its technical service fee for the skincare category from 2% to 4% in 2025."}],[{"start":324.11999999999995,"text":"Chando has been increasing its pool of influencers, both in-house as well as external. Its number of in-house KOLs nearly doubled between 2023 and 2025, from 52 to 98, while the number of external KOLs increased from 11,852 to 13,611 over that time."}],[{"start":347.86999999999995,"text":"As a result, Chando’s sales and marketing costs have been rising, which is quite typical for cosmetics companies. Such costs accounted for 57.2% of revenues in 2025, thanks in part to the high costs of KOLs. Sales and marketing has always been the company’s biggest cost, ranging from 54.2% of revenue in 2023 to 59% in 2024. Variation of that metric translates directly to its bottom line."}],[{"start":380.41999999999996,"text":"Chando’s net profit rose 84.7% to 350.8 million yuan last year, but that was after a 37% decline in 2024. The company blamed the decrease in 2024 to increased costs “from enhanced marketing activities on our products and brand.”"}],[{"start":402.85999999999996,"text":"The company has also been aggressively expanding its online sales channels as that portion of its business becomes its main revenue source, moving away from its legacy offline channels. But even after its share of revenue from online platforms grew from 61.9% in 2023 to 69.5% in 2025, the figure was well behind Chicmax’s 93.9% of revenue from online sales last year and Proya’s 96% in the first half of 2025."}],[{"start":439.64,"text":"A problem facing the mass-market domestic players is navigating changing demographics. Younger consumers want not just low cost and an Asian-leaning aesthetic, but also products that do what they claim. If a product says it has anti-aging or skin whitening properties, they want proof, not just labels. That implies a need for greater spending by the companies on product development. Although all the companies brag about their scientific formulas and natural ingredients, none spends much on R&D. Chando and Proya spend less than 2% of revenue on R&D, while Shanghai Chicmax led the trio by spending 2.4% of its revenue on R&D in 2025."}],[{"start":487.57,"text":"Chando relies almost exclusively on its namesake brand. That presents another risk if the brand encounters reputational issues, which are frequent in an industry guided by consumer fads and social media."}],[{"start":504.05,"text":"Chando brand products made up 95.3% of its sales in 2025, according to Chinese media, while contributions from its other brands, like Biorrier, Maysu, Spring Summer and Imine, were negligible. In contrast, Proya and Chicmax rely on their main brands for about 80% of sales and have had better success with some of their smaller brands."}],[{"start":531.69,"text":"The latest IPO filing isn’t the first for Chando. The company previously filed to list last year, but that application expired in March this year. The company is in a race to market with Proya, which is already listed in Shanghai and filed for a second IPO in Hong Kong last October. Both are hoping to copy the performance of Chicmax, whose shares have roughly doubled since their 2022 IPO that raised HK$1.1 billion ($140.4 million)."}],[{"start":574.4000000000001,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1775777862_8669.mp3"}