LONDON — Shanghai Chicmax Cosmetic Co. Ltd., the parent company of Chinese beauty brands Kans, One Leaf, Baby Elephant, Bio-G and Hanamino, signed a pre-listing tutoring agreement last week with CITIC Securities Company Ltd., kicking off the process of taking the company public in China.
Chicmax’s chief executive officer and founder Yixiong Lv said in 2015 that he planned to complete the company’s listing plan in 2018. However, in the years since, there has been no action or substantial progress regarding the listing. Now, the company has finally taken a substantial step toward an IPO.
Founded in 2002 with an ambition to become China’s household name, the company builds awareness for its star brands Kans and One Leaf by sponsoring popular reality shows and doing product placements in hit TV series.
In 2015, Chicmax signed a record-breaking 500 million renminbi, or $77.3 million, deal to be the sole sponsor of the dating reality show “If You Are the One.” Last year, its products could be seen in hit shows like “Nothing but Thirty.”
The company is known for hiring the most in-demand stars to endorse its brands. Actor and singer Kris Wu, who is also the face of Louis Vuitton, is the brand ambassador for Kans’ facial mask line, while actress Tong Liya is the face of the brand’s skin care line. The brand allegedly paid actor Lu Han, who is now the face of Gucci in China, 80 million renminbi, or $412.37 million in 2014, to get him to be the face of One Leaf.
Retail analyst Yuezhong Bao told the local press that behind the launch of Chicmax’s initial public offering is the intensification of competition in the market and its need for more capital to sustain its development. In fact, Chicmax has only received two rounds of investment: a 400 million renminbi angel around in 2015, and a 500 million renminbi equity financing last October.
With foreign high-end brands accelerating their presence in China, traditional domestic cosmetic brands are transforming and new brands are rising. Chicmax, which relies heavily on traditional marketing to drive sales, has lagged in the social media era.
Its lack of investment in platforms like Douyin, TikTok’s Chinese version, Kuaishou, Xiaohongshu and key influencers makes it unable to compete with digitally savvy conglomerates and new players like Perfect Diary and Florasis.
To put things into perspective, during last year’s Singles’ Day shopping festival on Tmall, Estée Lauder, L’Oréal and Lancôme occupied the top three spots on the skin care ranking, with each brand turnover exceeding 1.5 billion renminbi, while Perfect Diary and Florasis top the cosmetic ranking, racking in more than 550 million renminbi and 450 million renminbi, respectively.