A company's listing has sparked controversy, with only 8 R&D personnel and a gross profit margin comparable to Maotai Medical Beauty | Fu Erjia | R&D
Skin care product racetrack has always been an industry of "making a fortune with silence", and Yimei facial mask is a typical representative.
The so-called medical beauty facial mask was originally used for post medical beauty surgery care, also known as medical dressing or medical cold compress, which belongs to a kind of medical devices. The production approval number is "machinery". The production approval number of our common facial mask is "makeup".
With the rise of the concept of medical beauty in recent years, medical beauty facial mask, a product between skin care products and drugs, has been sought after by many beauty lovers.
Under the market heat, relevant enterprises on the track have also intensified their capital layout.
Red Star Capital Bureau has noticed that recently, the China Securities Regulatory Commission (CSRC) website issued an announcement approving the registration of Harbin Fuerjia Technology Co., Ltd. for its initial public offering of shares.
Looking back at Fu Erjia's listing journey, it was also a bumpy one.
In September 2021, Fu Erjia submitted a prospectus to the Shenzhen Stock Exchange for the first time, intending to be listed on the ChiNext board.
In 2022, Fu Erjia updated its prospectus twice in January and July, and successfully held a meeting in September 2022. However, due to the delay in obtaining the registration approval from the China Securities Regulatory Commission, the IPO progress has stalled. On May 12th this year, Fu Erjia entered the registration submission stage and finally successfully registered in the near future.
The news that Fuerjia is about to go on the market also makes Yimei facial mask related topics attract market attention again. The most discussed topic is the excessive profits and brutality of this industry.
The medical beauty facial mask is not "the truth of being expensive"
According to the prospectus, Fu Erjia was founded in 2017 and is a company engaged in the research and development, production, and sales of professional skin care products.
The company's products on sale cover medical device dressings and functional skin care products, focusing on dressings, stickers and film products, and launching water, essence and lotion, spray, freeze-dried powder and other forms of products.
Although Fu Erjia has not been established for a long time, it has a high market share in the industry.
According to Frost Sullivan's analysis report, in 2021, the sales of Fuljia patch products ranked first in the professional skin care product market, accounting for 15.9%; Medical device dressings and patches account for 17.5% of the total, ranking first in the market; Functional skincare products and film products account for 13.5%, ranking second in the market.
According to the prospectus, from 2020 to 2022, Fu Erjia's operating revenue was 1.585 billion yuan, 1.65 billion yuan, and 1.769 billion yuan, respectively. During the same period, its net profit was 648 million yuan, 806 million yuan, and 847 million yuan, respectively, indicating strong profitability.
The secret of Fu Erjia making such money can be summarized as "high gross profit and low cost".
From the perspective of gross profit margin, Fu Erjia's comprehensive gross profit margin from 2020 to 2022 was 76.47%, 81.95%, and 83.07%, respectively.
It can be seen that the gross profit margin of Fuerjia has been continuously increasing in recent years, no wonder netizens jokingly claim that Fuerjia's gross profit margin is comparable to Maotai. The financial report shows that the overall gross profit margin of Maotai in 2022 is 91.87%.
The high gross profit margin is partly due to the fact that Fuljia is indeed sold at a high price.
According to public information, the main product of Fuerjia - white film medical dressing patches, originally priced at 148 yuan/box, is priced around 30 yuan per piece.
Even if the promotion price is reduced to 118 yuan/box, each facial mask will be close to 24 yuan.
On the market, the price of ordinary facial mask is 5-10 yuan/tablet, which shows that even if there are promotional activities, the price of Fulga is still not cheap.
From the perspective of cost, the prospectus shows that the unit price of medical dressings purchased by Fulga from Harbin Sanlian is less than 10 yuan/box, and the cost of a single facial mask is roughly estimated to be only about 2 yuan.
Last September, the topic of "148 boxes of Fulga facial mask cost only 10 yuan" was even more popular on Weibo, which triggered extensive discussion among netizens.
In general, Yimei facial mask can really be called a "profiteering" business, and Fulga also stepped into this subdivision of the skin care industry.
But at the same time, the voice that Yimei facial mask is harvesting "IQ tax" also followed.
The other side of "emphasizing marketing over research and development"
The rise of the concept of medical beauty facial mask is based on the rise of the culture of live broadcast with goods and "planting grass" in recent years. So is the popularity of Fulga.
In May 2019, Fu Erjia's white film made its debut in Li Jiaqi's live broadcast room. Public data shows that 250000 facial mask were sold that night, which also makes more consumers exposed to the concept of Yimei facial mask.
Afterwards, Fu Erjia, who tasted the sweetness, began to vigorously promote and promote the brand, signing artists such as Yuan Shanshan and Zhao Lusi as brand spokespersons, sponsoring variety shows such as "Wife's Romantic Travel 4", "Flowers and Everything 2&3", and "Who is the Treasure Singer", constantly exposing the brand. Fu Erjia also began to be known by more and more users.
Of course, in this stage, the KOL community is also an important part.
These KOLs are active on social platforms such as Xiaohongshu, Tiktok, Kwai, and station b, and share their experience after using the product through content forms such as pictures and texts/videos. For example, on Xiaohongshu, there are over 50000 notes related to "Fu Erjia" searched. Through social media platforms, Fu Erjia continuously penetrates consumers.
It can be said that in various timing and platform choices, Fu Erjia's series of marketing operations can be said to be proficient.
The marketing efforts are also reflected in Fu Erjia's financial report.
According to the prospectus, from 2019 to 2022, Fu Erjia's sales expenses were 115 million yuan, 265 million yuan, 264 million yuan, and 390 million yuan respectively, with sales expense ratios of 8.6%, 16.75%, 16.01%, and 22.06%.
Among them, promotional expenses were 70.3175 million yuan, 166 million yuan, 236 million yuan, and 354 million yuan, respectively. Especially in 2022, promotional expenses accounted for 90% of sales expenses.
However, compared to marketing investment, Fu Erjia appears very stingy in research and development.
According to the prospectus, from 2020 to 2022, Fu Erjia's R&D investment was 1.4797 million yuan, 5.2429 million yuan, and 15.4261 million yuan, accounting for 0.09%, 0.32%, and 0.87% of operating revenue, respectively; Compared to the same industry, Fu Erjia's R&D expense ratio is at the bottom level.
From the perspective of R&D personnel, the prospectus shows that as of the end of 2022, Fu Erjia has only 6 R&D personnel, including fresh graduates. By March 2023, its R&D personnel had only increased by 2 people, and currently it is 8 people.
Overall, Fu Erjia's emphasis on marketing over research and development is quite evident.
Why are consumers willing to pay for the expensive Yimei facial mask. In the final analysis, it is consumers who, strongly recommended by celebrities and online celebrities, believe that the facial mask with the word "Yimei" has "miraculous effect".
But from the company's financial report data, it is obvious that Fu Erjia has put more emphasis on promotion rather than the product itself.
It is worth mentioning that in this IPO, Fu Erjia is expected to raise 1.897 billion yuan, of which 885 million yuan will be used for brand marketing and promotion projects.
How long can the concept of medical aesthetics last?
Relying on the concept of Yimei facial mask, Fuerjia successfully entered the skin care market. However, it is unknown how long the concept of Yimei facial mask can go.
On the one hand, government departments are tightening their supervision of "machinery" brand products.
In fact, as early as January 2020, the National Medical Products Administration issued a document stating that according to the "Naming Rules for Common Names of Medical Devices", promotional words such as "beauty" and "health" should not be included, and there should be no exaggerated scope of application or other misleading and deceptive content; The concept of "mechanical facial mask" shall not exist, and medical device products shall not use "facial mask" as their name.
That is to say, strictly speaking, the name "Yimei facial mask" does not exist. It can only be called "medical dressing".
The reason why there is the concept of "Yimei facial mask" is that the industry deliberately tries to connect it with the facial mask in daily use in order to better understand the product for consumers. To put it bluntly, "Yimei facial mask" is actually a marketing gimmick.
In addition, at the end of 2021, the National Medical Products Administration issued another document to delete the relevant entries of "liquid and paste dressings" in the "Catalogue of Class I Medical Device Products", and stated: "Liquid and paste dressings with ingredients that do not have pharmacological effects and cannot be absorbed by the human body are planned to be regulated according to Class II device regulations."
China implements a franchise listing supervision system for the sales of medical devices, and the operation of Class II medical devices requires the application of a Certificate of Registration for the Operation of Class II Medical Devices. However, the medical dressings sold by Fu Erjia belong to Class II medical devices.
The stricter regulation of medical device operation has also led to a significant decline in the number of graded distributors of Fuerjia.
According to the prospectus, from 2019 to 2022, the number of graded distributors of Fuerjia was 1143, 606, 620, and 351, respectively. In 2022, the number of graded distributors in the company experienced a significant decline.
On the other hand, the controversy of Yimei facial mask among consumers is also growing.
According to Fu Erjia's prospectus, from 2018 to June 30, 2022, the market supervision and management department under Fu Erjia received a total of 51 consumer complaints related to the company.
On the Black Cat Complaint Platform, there are 188 complaints related to Fu Erjia, among which many users have complained about keywords such as "allergy" and "bad face".
Under various pressures, the medical device dressing business of Fuerjia has begun to come under pressure.
According to the prospectus, in 2022, the sales revenue of Fuerjia medical device dressings reached 866 million yuan, a year-on-year decrease of 6.68%.
During the same period, sales of Fuljia's Tmall flagship store and JD flagship store both showed varying degrees of decline. The sales revenue of Tmall flagship stores decreased from 479 million yuan to 406 million yuan; The sales of JD flagship stores decreased from 20.4381 million yuan to 12.1282 million yuan.
However, Fujia may also feel the crisis of maintaining the concept of Yimei facial mask. Nowadays, Fu Erjia continues to increase its "makeup" brand products.
As of the end of the reporting period, among the 51 products of Fuerjia, cosmetics accounted for 46 types, far exceeding the number of 5 types of medical device products.
In other words, Fuerjia, which rose by relying on the medical beauty facial mask, is now transforming to the cosmetics track. However, in the cosmetics market, the industry is even more prosperous, and Fuljia, which has lower research and development investment, faces competitive pressure that can be imagined.
Summary
With the concept of medical aesthetics, Fu Erjia rises with the wind. However, the challenges now facing Fu Erjia are not small. No matter how difficult the concept of medical aesthetics is, Fu Erjia urgently needs a new story.
Red Star News reporter Liu Mi
