The past few decades have witnessed the rapid development of China’s cosmetics industry from barbaric growth to refined development, from traditional distribution channels to online and offline integration, from the leading role of foreign investment to the rise of domestic products, from brand marketing to product research and development...as well as the unceasing replacement of enterprises and persons.However, even in this context, there is neither a lack of well-established enterprises that overcome all obstacles and still firmly stand in the market, nor start-ups that join the competition one after another.
There is a saying that even a heavy pig can fly if it stands at a windy enough spot. Therefore, many companies rush to become the “pig” in the new era. However, when a company actually stands at the “windy spot”, it often discovers that quality is always the eternal foundation and core of each industry. Otherwise, a gust of strong wind will blow itself down easily!
As Ms. Zhou, the marketing manager of SCAL Qidong Daily Chemical Co., Ltd. (hereinafter referred to as "SCAL"), said, "with its core competence of aerosol production and manufacturing, SCAL has been in good standing for 26 years. During this period, we have not only witnessed the start and growth of the domestic aerosol industry but also harvested the trust and support of many world’s top 500 daily chemical companies. There are many aerosol product OEMs in this huge aerosol market, and our company is less competitive in price.But our company can still gain supports from high-quality brands. This is because we have the quality that they valued."
Win Early Access to the Market and Become a Benchmark for Aerosol Manufacturers
People who are not familiar with SCAL may take it for granted that this company has only be established for 7 years, but this is not the case.
As early as 1995, SCAL has been incorporated in Shanghai. At that time, it was a Sino-foreign joint venture invested by CCL (Canada), DCPC (USA) andShanghai Waigaoqiao Free Trade Zone Xin Development Co., Ltd. (China), with an area of 100 mu. In 2002, Xin Development, the Chinese shareholder of SCAL, acquired the foreign shares, and it was then that SCAL was restructured into a state-controlled enterprise. In 2015, in consideration of the company's operations and costs, SCAL decided to relocate its production base to Qidong, Jiangsu Province, with the premises in Shanghai Waigaoqiao Free Trade Zone serving as the headquarters and the R&D Center to provide technical supports.
In the 1990s, benefiting from its status as a Sino-foreign joint venture, SCAL, since its establishment, has already had a better foundation and was more competitive in both in terms of aerosol production technologies and standardized and advanced management processes among the cosmetics industry in China.The first customer with which SCAL cooperated with after initiating production was a giant American company in the daily chemical industry, and SCAL mainly served as an OEM of mousse spray products of that company. Whereafter, many other world’s top 500 daily chemical companies have also become SCAL’s partners. SCAL’s strategic layout — relocating the factory site from Shanghai to Qidong, strengthening its R&D capabilities, upgrading its development model from OEM to ODM, seeking cooperation from international to the domestic market — has increased the company’s business volume by three times. The in-depth cooperation with domestic leading daily chemical companies also further strengthened its market status.
"SCAL has been in contact with international enterprises from the very beginning. These enterprises are usually demanding for their partners’ factories and set their own auditing standards. Therefore, our entire quality management system is designed to meet their standards and implemented and controlled in strict accordance with their requirements. We initially only positioned our company as an OEM manufacturing enterprise focusing on accepting materials from customers for processing and enhancing quality management. However, as the whole market environment changes, we realized that the single OEM service could not meet the customer needs. Therefore, before the relocation of our company in 2015,R&D investment was already started. What’s more remarkable is that the key staff of our company remained unadjusted to a large extent in spite of the relocation, so our management process and cultural concept are able to continue." Ms. Zhou said.
It is known to all that SCAL is started out as an aerosol OEM, but up to now, SCAL’s product lines are far more than that and our featured star products include soothing skin care series, sunscreen series, baby and child care series and intimate care series.
"Aerosol is our core product, but in fact,it accounts only for 20% of our business volume. So you can imagine how strong our product marketing ability is." However, Ms. Zhou also stressed that in the face of fierce market competition, SCAL still hopes to better enter and open the market with the differentiated aerosolproducts.
As far as Ms. Zhou is concerned, the aerosol production differentiation and competitiveness are mainly reflected in the following two aspects:
First, the access threshold is high. As an OEM for aerosol products, SCAL’s firefighting facilities are designed and constructed in accordance with the same criteria for Class A buildings. It also follows the good manufacturing practice for hazardous chemicals, is equipped with a warehouse for hazardous article storage, etc., and has higher and more stringent standards and requirements for the production environment and technologies;
Second, the market prospects are broad. The year 2018 has witnessed a breakthrough in cosmetic aerosol development. The cosmetic aerosol products are widely applied in whitening and sunscreen products, moisturizing cleansers and dual cartridge sprays. But even in the year when the aerosol industry was developing explosively, compared with the international market, China’s market still had space for growth.
Statistics show that China's aerosol production in 2018 was 2.29 billion, an increase of 8% over 2017, but the total global aerosol production in the same year was 16 billion. In the personal care segment, European aerosol product categories accounted for 57% of the market share, nearly three times that of the Chinese aerosol product categories, which only had a share of 19.19%. The aerosol market for personal care is bound to be a “blue ocean”.
Therefore, at the Shanghai Beauty Expo organized from May 12 to May 14, SCAL displayed various categories of its products, with the aerosol series remaining the main promotion product.
As Ms. Zhou said, "SCAL is committed to building itself as a leading enterprise in the aerosol industry."
R&D + Quality — Two Drives to Enable Enterprise Development and Develop High-Quality and Characteristic Products
"Instead of showing a high profile, SCAL is more committed to reinforcing self-development targeting the fields of customers and products. Nowadays, there are many aerosol product OEMs, but if you ask around in the industry, many people will say that they are impressed by SCAL’s adherence to quality."
Over the development course of more than 20 years, more and more OEMs have stepped into the aerosol industry, but Ms. Zhou never lost her confidence in SCAL. In her opinion, neither beautiful factories nor advanced and well-configured equipment can become the core competitiveness of an enterprise. What can truly reflect an enterprise’s soft power must be the management and talents. SCAL initially relied on the introduction and support of foreign advanced technologies and gradually focused on localization. The intangible wealth of SCAL is its experience of more than20 years and step-by-step exploration efforts.
In terms of production process control and product quality assurance, SCAL has already emerged as a benchmarking enterprise in the industry in the past two decades. Apart from its good practice in quality control, it is R&D that gives SCAL and its products more possibilities. Therefore, the transition from OEM to ODM not only meets its needs for better development but also caters to the trend of the times.
SCAL adopts a dual R&D model and has R&D teams in both Shanghai and Qidong. The R&D Center in Fudan Science and Technology Park, Shanghai Waigaoqiao Free Trade Zone, is mainly engaged in the research of non-aerosol products, including stability testing and efficacy evaluation, while the R&D team in Qidong base mainly works on the development of aerosol products.
In fact, many years ago, there were large customers asking whether SCAL could provide ODM services, but at that time, SCAL adhered to keeping product quality and trying its best to complete its tasks in an extraordinarily good manner. Ms. Zhou also said bluntly: "With the development of the cosmetics industry, we also realized that SCAL neededchange. Especially with the rise of emerging brands, many of them lacked R&D capabilities and hoped that ODMs could provide one-stop services for their products. So for SCAL, seeking for change is also to understand the current market pattern, extend our customer base, and embrace more possibilities."
Ms. Zhou also revealed that the company's first ODM customer was a large global supermarket chain. At that time, SCAL developed more than 40 SKUs for it, all of which were SCAL's own formulas. "We all think that large enterprises may be equipped with R&D capabilities and there is no need for them to seek ODM services from outsourcing factories, but in fact, although they are large and comprehensive, they still have weaknesses, so in a certain segment, they may hope to get R&D supports from outsourcing factories."
The products displayed by SCAL at the Shanghai Beauty Expo also intuitively announced its success in the transition to an ODM and SCAL’s innovation and uniqueness in the development of aerosol products.
From cleanser, essence and cream, to cleansing oil, makeup remover and hair care products, the aerosol products are widely used, breaking through the dosage form used by traditional products and achieving that goal of "aerosol for everything". Moreover, the soft and fine foams can last a long time without being defoamed. The main promotion point of SCAL’s aerosol products displayed in this Expo is also "carbonic acid".
Carbonic acid is carbon dioxide gas in essence. When applied to the skin, products with carbonic acids can promote skin circulation and the subsequent absorption of nutrients. In order to visualize the principle description, she sprayed the product onto her hands. After letting it stand for a while, she smeared it evenly and the skin appeared red, but she explained that this was not an allergic reaction, but the Bohr effect caused by carbonic acids. At present, SCAL has obtained a patent for its invention of "aerosol manufacturing system and technology with the filling of carbon dioxide".
The product “cracking” is also favored by customers. This product contains rich carbon dioxide micro-foams, and when applied to the skin, users can hear and see lots of fine micro-foams in the liquid and obviously feel the bursts of foams, just like “cracking”. By using this product, customers can directly mobilize their senses and feel the change.
When online channels become the mainstream, live streaming commerce becomes an important marketing tool, and novel, fun and interesting product concepts become a trend. How to convey the product science, effects and concepts to consumers online in a more visualized way tends to be particularly important. The reason for the above two types of aerosol products being well-received is that they cater for and meet the needs of consumers and the market.
Ms. Zhou said that in simple terms, aerosol products are a combination of liquid and gas, but it is not easy due to the presence of technical barriers in how to design the formula, what proportion of mixture can ensure the best spraying effect, how to design the nozzle valve, how to combine the formula and the production process, etc. A truly good product is time-taking and cannot be developed overnight.
Quality is Even More Valuable Under New Regulations
The Regulations on the Supervision and Administration of Cosmetics, which went into effect on January 1, 2021, further strengthened the requirements for quality control of cosmetic products. Furthermore, due to the requirements for more rigorous and scientific management processes and a more complete range of product testing items, it is inevitable that enterprises have to increase their operating costs, and what’s worseis that small enterprises with defects have to close down.
However, for high-quality enterprises that already have sound management and strict standards on product quality, what the new regulations brought are opportunities rather than pressure and challenge. As the saying goes, "survival of the fittest".Eliminating non-conforming enterprises is a must to create a better market environment and promote the development of standard enterprises.
Therefore, for SCAL, which adheres to the principle of “quality first”, good quality is the best policy. As Ms. Zhou disclosed, SCAL currently has 40 or 50 relevant personnel serving the quality management system.
However, she also expressed her concerns about the lack of quality and safety directors in some enterprises in this industry. Many brands did not set this post and some of them considered delegate OEMs to be responsible for brand registration, so the original role of these brands was changed to distributors. But the consequence is that factories have to pay for anything that goes wrong. "Therefore, we also need to pay attention to the impact on other cooperative clients. Whether and how to accept such brands are the issues that we are still discussing."
All in all, with the stricter, standardized and high requirements of national policies and industry on cosmetics quality supervision, enterprises that adhere to product quality all the time will definitely realize their values and give full play to their advantages under the waves.