Ultimately, quality is a company’s core trump card!

From rampant growth to refined development, from traditional channels to the integration of online and offline platforms, from foreign-invested dominance to the rise of domestic brands, and from brand marketing to product R&D—over the past several decades, China’s cosmetics industry has experienced rapid growth, accompanied by wave after wave of corporate and personnel turnover. Among them are established, time-tested companies that have remained resilient and firmly rooted in the market despite countless challenges, as well as a steady stream of new industry entrants eager to make their mark.

Everyone says they want to be the pig riding the wave of the new era—but when you actually find yourself standing at the heart of that wind, you’ll realize that what you really need is the industry’s timeless, unchanging foundation and core: quality—as a solid, unwavering support. Otherwise, if the wind gets too strong, you’re bound to fall!

As Mr. Zhou, the marketing director of Shanghai Xixiail Qidong Daily Chemical Co., Ltd. (hereinafter referred to as “Xixiail”), put it: “With aerosol production and manufacturing at its core, Xixiail has been developing for 26 years now. We’ve witnessed the birth and growth of China’s aerosol industry and have earned the trust and support of numerous Fortune Global 500 consumer goods companies. The market is huge, and there are many aerosol OEM manufacturers out there. While we don’t have much of an edge in terms of pricing, high-quality brands still choose us—simply because they value our exceptional quality.”

Seize the market trend and become a benchmark for aerosol manufacturing enterprises.

People who aren't very familiar with the company might think that Shanghai Xixi Aier Qidong Daily Chemical Co., Ltd. has only been in business for seven years since its establishment—but that’s actually not the case.

As early as 1995, Xixi’er was established in Shanghai as a Sino-foreign joint venture jointly invested in by Canada’s CCL Group, the U.S.’s DCPC, and Shanghai New Development Co., Ltd. of the Waigaoqiao Free Trade Zone in China. The company occupied a site area of 100 mu. In 2002, the Chinese shareholder, New Development Company, acquired the foreign shareholders’ stakes, thereby transforming Xixi’er into a state-controlled enterprise. It wasn’t until 2015, considering factors such as business operations and costs, that Xixi’er officially relocated its production base to Qidong, Jiangsu Province, while the Waigaoqiao Free Trade Zone in Shanghai continued to serve as the company’s headquarters and R&D center, providing technical support.

Synchronized with the company’s history is the continuous strengthening of SSI’s own capabilities and the ongoing expansion of its business footprint.

It can be said that in China’s cosmetics industry during the 1990s, Ciciel, benefiting from its Sino-foreign joint venture background, possessed greater confidence and advantages right from its inception—whether in terms of aerosol production technology or a series of sophisticated and standardized management processes.

After Xixiail came on stream, its very first client was a major U.S. company in the daily chemical industry, to whom it primarily provided OEM processing services for mousse spray products. Soon after, other Fortune 500 companies in the daily chemical sector also became Xixiail’s partners. As the company relocated its facility from Shanghai to Qidong, it strengthened its R&D capabilities and shifted its business model from OEM to ODM, expanding its reach from international markets to the domestic Chinese market. This strategic realignment enabled Xixiail’s business volume to triple. Through deep collaboration with leading domestic daily chemical enterprises, Xixiail has further solidified its market position.

“From the very beginning, Xixi Ai has been working with international companies. These clients have extremely high standards for their partner factories and maintain a set of their own rigorous audit criteria. As a result, our entire quality management system is tailored to meet their exacting requirements and is implemented with strict controls accordingly. That’s why, initially, we positioned ourselves solely as an OEM manufacturer, focusing on contract manufacturing based on customer-supplied materials and ensuring top-notch quality control. However, as the overall market environment evolved, we realized that offering only OEM services was no longer sufficient to meet our customers’ needs. Thus, even before the company relocated in 2015, we had already begun investing in R&D. What’s particularly commendable is that, despite the relocation, our core team members remained largely unchanged. This has ensured that our management processes and corporate culture have continued seamlessly,” said General Manager Zhou.

As everyone knows, Xixiaier started out by offering contract manufacturing services for aerosol products. However, today, Xixiaier’s product lineup has expanded far beyond that—its star categories include the Soothing Skincare Series, Sun Protection Series, Baby & Personal Care Series, and more.

“Although aerosols are our core strength product, they actually account for only 20% of our business share. As you can imagine, this highlights just how strong our capabilities are in other product categories.” However, she also emphasized that, in the face of intense market competition, C-Care still hopes to leverage its differentiated aerosol category to better penetrate and capture market share.

In General Zhou’s view, the differentiation and competitiveness of aerosol production are mainly reflected in the following two aspects:

First, the entry barriers are high. Companies that provide OEM services for aerosol products must design and construct their facilities according to Class A fire safety standards, comply with safety regulations for the production of hazardous chemicals, and equip themselves with specialized warehouses for storing hazardous materials. All of this imposes higher and more stringent standards and requirements on both the production environment and the technology used.

Second, the market prospects are broad. 2018 can be considered the breakthrough year for cosmetic aerosols—whether it’s whitening and sun protection, moisturizing and cleansing, or dual-action sprays, their popularity is evident. Yet even in this year of explosive growth for the aerosol industry, compared to the global market, China still has enormous untapped market potential.

According to relevant data, China’s aerosol production in 2018 reached 2.29 billion units, an 8% increase over 2017. However, the global total aerosol production for the same year was 16 billion units. In the niche segment of personal care, European aerosol products account for a 57% share, while the Chinese market only accounts for 19.19%, leaving a gap of three times. The aerosol market in the personal care sector is undoubtedly a blue ocean with tremendous growth potential.

Therefore, at the Shanghai Beauty Expo from May 12 to 14, although Cisair showcased products across all its product categories, its aerosol series remained its flagship offering.

As General Zhou put it, “Xixi Air is committed to establishing itself as the industry leader in the aerosol sector.”

R&D + Quality: Empowering Enterprise Development and Creating High-Quality, Distinctive Products

“Xixi Air remains relatively low-key in the industry and doesn’t get much exposure. We’ve always been focused on getting our work done, continuously refining ourselves around our customers and products. Although these days, there are quite a few companies offering OEM services for aerosol products, if you ask around the industry, people still mention Xixi Air—after all, what sets us apart is our unwavering commitment to quality.”

Over the past 20-plus years of Xixi Air’s development, an increasing number of contract manufacturers have entered the aerosol industry. Yet, General Manager Zhou remains fully confident in Xixi Air. In her view, while a manufacturing company can invest heavily in beautifully designed facilities and state-of-the-art equipment—these are merely icing on the cake and cannot become the company’s core strength. It is management and talent that truly embody its soft power. Thus, for Xixi Air, from the initial introduction and support of advanced foreign technologies to the gradual process of localization and development, the accumulation of more than two decades of experience and the step-by-step exploration and advancement—all these intangible assets have been forged only through time.

If we say that in the first two decades, Xixi’er has already set the industry benchmark in terms of controlling production processes and ensuring product quality, then building on this solid foundation of quality control and unlocking greater potential for both the company and its products hinges on R&D. Therefore, the shift from OEM to ODM is not only a necessity for the company’s development but also a trend of the times.

The company adopts a dual R&D model, with R&D teams located in both Shanghai and Qidong. The Fudan Science Park in the Shanghai Waigaoqiao Free Trade Zone serves as Shanghai’s R&D center, primarily focusing on research into non-aerosol products, including stability testing and efficacy evaluations. Meanwhile, the R&D team in Qidong is mainly involved in the development of aerosol products.

In fact, many major clients had been asking Sisier years ago whether it could provide ODM services. At the time, however, the company had always adhered to its commitment to maintaining high production quality and striving to perfect its core business. Nevertheless, Mr. Zhou was candid in saying: “As the cosmetics industry continues to evolve, we’ve come to realize that Sisier needs to adapt. In particular, with the rise of emerging brands—many of which lack their own R&D capabilities—they’re looking for ODM companies to offer them one-stop solutions. For us, this presents an opportunity to seize the current market dynamics, broaden our customer base, and embrace even more possibilities.”

Mr. Zhou also revealed that the company’s first ODM service client was a major global supermarket chain. At the time, we developed more than 40 SKUs for them—each one based on Sisial’s own proprietary formulations. “Everyone tends to think that big-name companies have their own R&D capabilities and don’t need ODM services from external contract manufacturers. But that’s actually not the case. Although these companies are large and comprehensive, they still have certain areas of specialization and will seek R&D support from external contract manufacturers in those specific niches.”

Moreover, the products that Xixiaier showcased at the Shanghai Beauty Expo this time gave us an even more direct glimpse into the ODM company’s successful transformation, as well as its innovative and distinctive approach to aerosol product development.

From facial cleansers and serums to essence creams, makeup removers (oil and water-based), and hair care products, this brand has broken through the conventional limitations of product formulations, achieving the ability to turn virtually anything into an aerosol. Moreover, its bubbles are exceptionally dense, long-lasting, and resistant to deflation. This time, CiciAir’s aerosol products also highlight the “carbonation” concept.

According to the introduction, carbonic acid is actually carbon dioxide gas. When products containing carbonic acid are applied to the skin, they can promote skin circulation and facilitate the penetration and absorption of subsequent nutrients. To make this principle more visually apparent, she sprayed the product onto the skin of her hand. After letting it sit for a while and then spreading it out, she noticed that the skin in that area turned slightly reddish. However, she emphasized that this was not an allergic reaction—it was rather the Bohr effect caused by the carbon dioxide. Currently, Cici Air has obtained an invention patent for “a carbon dioxide aerosol manufacturing system and process.”

In addition, there’s another “Pili Pala” product that’s also highly popular with customers. By incorporating a rich array of tiny carbon dioxide bubbles, when applied to the skin, you can both hear and see numerous fine bubbles forming in the liquid. Moreover, tactilely, you can clearly feel the subtle changes and bursts of these bubbles—just like the sound “Pili Pala”—directly engaging consumers’ five senses and even their sixth sense.

As online channels become mainstream and live-streaming sales emerge as a key marketing tool, novel, fun, and engaging product concepts are trending. Therefore, it has become critically important to visually communicate the science, efficacy, and underlying philosophies of products more effectively to consumers online. The two types of aerosol products mentioned above happen to perfectly align with and meet both consumer and market demands.

General Zhou said that, simply put, aerosol products are a combination of liquid and gas. However, there are technical barriers to overcome when it comes to designing the formulation—such as determining the optimal mixing ratio for achieving the best spray performance, figuring out how to design the nozzle valve, and integrating the formulation with the production process. Developing a truly great product isn't something that can be accomplished overnight; honing one's internal skills takes time.

Under the new regulations, quality becomes even more valuable.

The “Regulations on the Supervision and Administration of Cosmetics,” which officially came into effect on January 1 this year, has further strengthened the control over the quality of cosmetic products. The more rigorous and scientific management procedures and the more comprehensive product testing requirements have increased businesses’ operating costs and led to the closure of a number of small enterprises with defects.

However, for high-quality enterprises that already have well-established management systems and stringent standards in product quality, the new regulations are neither a burden nor a challenge—they are rather a favorable wind. Good money will drive out bad, weeding out non-compliant companies and creating a healthier market environment that will help legitimate businesses move forward.

Therefore, for Sisial—whose very DNA is already infused with a commitment to quality—positive developments are the key word. Mr. Zhou stated that the company currently has as many as forty to fifty personnel dedicated to quality management system work.

However, regarding the quality and safety officer—a role that has long been a hot topic of discussion within the industry—she also frankly admitted that “it can be quite troublesome.” Many brands simply don’t have this position filled. As a result, in the absence of such a dedicated role, some companies are considering having their contract manufacturers register and file the brand’s products on their behalf, while the brand itself would effectively shift to the role of a distributor. But if things go wrong and any issues arise with the brand, it’ll be the factory that ends up footing the bill. “Therefore, we also need to take into account the impact on our other partner clients. Whether or not to take on such brands—and how exactly to do so—are still questions we’re currently discussing.”

However, regardless of the circumstances, as national policies and industry regulations become increasingly stringent, standardized, and demanding in terms of cosmetic quality oversight, companies that consistently uphold product quality will ultimately stand out more clearly and demonstrate their true value and advantages amid the relentless reshuffling of the market.