Surfing to a World | Shanghai Jahwa Held 125th-Anniversary Strategyic Conference

2023-03-17 On March 17^th, Shanghai Jahwa (SH.600315) hosted its 2023 online Strategy Conference titled “To Beauty to Youth.”

Shanghai Jahwa has experienced a long and eventful journey of 125 years, staying true to its roots and always dedicated to beauty and excellence. During the Strategy Conference, the management team led by Alex Pan, Chairman and CEO of Shanghai Jahwa, presented corporate strategy, trends and development, brand innovation, ESGmanagement, shared Jahwa’s achievements over the past year and its long-term vision. External experts and partners were invited to discuss consumption trends and growth paths in a new era.

Shanghai Jahwa unveiled its brand-new corporate video titled “To Beauty to Youth,” reviewing the journey trodden by five generations of Jahwa people. In those dynamic times, each generation of Jahwa people has taken and passed the torch with passion and dreams, riding cycles and waves, braving turbulences and obstacles to make breakthroughs. The relays have been lighting up the youth of Jahwa people. Over 125 years, Jahwa has always taken consumer-centricity as the one pivot to develop excellent and memorable products with craftsmanship. Jahwa is an organization full of vitality and dynamism, for we constantly adapt to the times while staying pure to our original ideal. We always dream big and cherish our status as a national champion. We take it upon ourselves to make Chinese love national brands, realizing the dream of the rise of national products. In the future, we shall become the market leader in the Chinese beauty and personal care industry, presenting Chinese beauty to the world. 

At the Strategy Conference, Alex Pan, Chairman and CEO of Shanghai Jahwa, made his speech “Innovation to Excellence”. He elaborated on Jahwa’s achievements in 2022 and corporate strategy for 2023: “As national economy gradually transforms from fast growth to development driven by quality, a series of positive signals can be observed from the overall recovery of consumption. This is a strong boost to the entire beauty and personal care industry. As an industry leader, Shanghai Jahwa continues to improve on differentiation, R&D investment, resource optimization, productivity, and capital expenditure. The company makes constant progress with solid operations and management.”
Alex Pan introduced Jahwa’s 123 operation principle to drive brand innovation. Jahwa focuses on expertise, premiumization, and experiential to enhance brand equity. While pushing for expertise in brand, segmentation and product, the company creates more, better products for consumers through its R&D and marketing prowess. With regards to corporate brand innovation, the company has instilled a concept of long-term, sustainable, and memorable consumer service. Furthermore, Shanghai Jahwa has constantly adapted to market trends and evolved its products for premiumization in positioning, products, target consumers, and packaging. Meanwhile, the company focuses on experiential, improving consumer experience on three dimensions for brand innovation and service enhancement.
Alex Pan said that with a legacy of 125 years, Shanghai Jahwa needs to stay young, dynamic, and relevant, always dreaming and striving. As a long-term player riding through business cycles, the company is dedicated to beauty, adheres to its mission of creating the best health and beauty products and services to maximize the value for consumers, employees, shareholders and entire society. “Times flies, we are just young and stepping forward. With the experiences accumulated and improvements made over the past few years, we are constantly growing and transforming with new vitality and dynamism. We hope that at some moment in future, Shanghai Jahwa can achieve a new level of excellence, representing Chinese brands to compete against international brands on the world stage. We aim to present Chinese Beauty to the world.”

Premiumization: Innovation for Beauty and Youth

Daniel Zipser, McKinsey Global Senior Managing Partner, Head of Consumer and Retail China and Asia Pacific, shared the newly-released 2023 McKinsey China Consumer Report at the Conference. The report highlights five new trends of China as the second largest economy worldwide: the middle class continues to rise; premiumization; wiser choices and no downgrading of consumption; product as king; local companies today who have been gaining market share in this market.

Daniel Zipser stated: “The increasingly wealthy Chinese consumers are resilient. Financial pressures are making consumers more precautious in making purchasing decisions. The consumer today who looks for a product at a high quality, with great features.  As this behavior is increasingly prevalent, companies that can adapt quickly to these trends will win out. This is a rare opportunity.”

After the speeches of Alex Pan and Daniel Zipser, the Shanghai Jahwa management team elaborated on the upgraded brand innovation strategy in more details.
As the Chief Marketing Officer (CMO) of Shanghai Jahwa, Ms. Mandy Chen presented Shanghai Jahwa’s focus on expertise in brand, segmentation, and product, against the background of the megatrend of increasing consumer recognition of China domestic brands. On brand expertise, Jahwa is dedicated to brand positioning and expertise in cooperation with authorities. Take Dr. Yu for example, Dr. Yu has been dedicated to skin barrier recovery since 2003 and has innovated a model of “validated by dermatologists.” At the same time, there is a skin health research center for Dr. Yu. A high-level China specialist skin barrier summit gathering hundreds of dermatologists has been established to explore frontier research in skin health, especially skin barrier recovery.

On expertise segmentation, Shanghai Jahwa has upgraded consumer insight and segmentation analytical models, to choose segments to participate with more forward-looking insight. The company has anchored on five segments with favorable trends for new opportunities. An example is sunscreen. Jahwa has initiated the macromolecular sunscreen segment with products that feel great on skin while being safe, mild, and non-irritating, suitable for sensitive skin.

On product expertise, Dr. Jia Haidong, Senior R&D Director, introduced Jahwa’s product design principle of “Balance Efficacy and Safety.” The company has adapted to the consumption trend of “product as king,” incorporating efficacy and safety scientifically and seamlessly. To create products with high technical barriers, the company has established eight foundation platforms and an open innovative network. Jahwa opens up to external cooperation between business, academy and research for innovation on multiple dimensions. This accelerates the commercialization of innovative technology and builds up leadership advantages in the industry for the future. To ensure that product efficacy and safety can be perceived by consumers, Jahwa has established a thorough assessment system in efficacy and safety validation.

While fully upgrading its brands and products, Shanghai Jahwa has been adapting to premiumization of the overall consumption market. Mandy Chen introduced the premiumization experience on four major dimensions: premium quality, positioning and upgrading; product premiumization; premium target group and average transaction value focus; packaging premiumization.
Chief Digital Officer (CDO) Mickey Zhang pointed out that expertise and premiumization are the way forward for brand innovation while experiential is the foundation to implement this brand innovation strategy. Shanghai Jahwa is dedicated to constantly improve consumer experience through three dimensions: listening to consumer voices; establishing an overall integrated consumer service center; digital innovation as a driver. In addition, to provide consumers with a full loop of unique brand and product experience, Jahwa implements six major measures: multi-level social seeding, livestreamer matrix, integrated platform cooperation, private domain, brand spokesman, and IP marketing. These measures further contribute to creating hero products. Shanghai Jahwa will engage Star brand spokespersons for various brands in its portfolio to achieve brand upgrading. Liu Shen will continue to work with Sean Xiao, a popular young actor to attract consumers born in the 1990s and 2000s, to make Liu Shen a young brand. Dr. Yu will officially announce its first brand star spokesperson. Herborist will join hands with popular first-tier actor to usher in a new brand experience of youth and premium. Giving will work with a World-class Grand Slam Champion mom to initiate the brand’s journey of becoming a champion. Jahwa will work with more than 20 Ips. For example, GF, a man’s skincare brand will collaborate with top esport mobile gaming IP and KPL top team eStarPro in a three-way strong partnership. Liu Shen will continue to enhance its own IP Liu Shen Cooling Festival. Vive will work with Soong Ching ling Memorial Residence in Shanghai for a cross-field co-branding experiment, a new hybrid IP marketing idea. 

For the past year, Shanghai Jahwa has been devoted to social responsibility and building up its ESG steadily. On the Strategy Conference, Han Min, Deputy General Manager, CFO and Secretary of the Board, and Dong Hongyang, Senior Supply Chain Director, explained Jahwa’s ESG results and prospects.
In 2022, Shanghai Jahwa moved up to BBB on MSCI ESG, an industry benchmark. This is Jahwa’s best result in history, putting Jahwa in the top tier of domestic beauty and personal care industry. On Wind ESG, Jahwa jumped to AA from A in 2021, number one in the industry and leading competitors by a large margin.
On low-carbon environmental protection pillar, Dong Hongyang, Senior Supply Chain Director said that Jahwa has constantly been conducting product full lifecycle analysis, pushing for green and low-carbon initiatives on product ingredients, green design for packaging materials, and supply chain operations. Jahwa has been able to make substantial progress in lowering waste disposal, water consumption, carbon emissions and in adopting low-carbon products. The 2025 carbon peak targets are not far off. Shanghai Jahwa is on a solid path of green and sustainable growth. 
On social pillar, Han Min, Deputy General Manager, CFO and Secretary of the Board of Shanghai Jahwa, said that Jahwa puts consumers at the center. The company further regulates chemical management principles and process, focusing on R&D, and is dedicated to beauty and employee care. Jahwa also focuses constantly on building its talent pool. Over the last year, the company has trained employees in key positions such as digitalization, marketing, and channel management. Jahwa has also initiated key potential talent assessment for key positions, and conducted rotations and training programs. On community services in 2022, Jahwa worked on three fronts: company-university partnership; caring support; multi-dimension caring. The company co-hosted an ESG-themed business competition for MBA students with School of Management,Fudan University. Jahwa also repeatedly donated materials and products to front-line medical professionals and young volunteers fighting Covid-19, Luding earthquake disaster zone, CIIE volunteers, minorities and poor students in Yunnan and Guizhou, and autistic children’s home.
On governance, Jahwa continues to strengthen diversification of the Board, enhance ESG performances, expand Board's committee, adhere to internal compliance, emphasize on protecting investor rights, increase information disclosure transparency, improve information disclosure quality, and demonstrate its corporate brand image in the capital markets. These efforts are widely recognized externally and awards obtained. 

“How beautiful economy blooms during a new time” roundtable forum discussed changing trends in market consumption and corporate sustainable development path. Mickey Zhang, Chief Digital Officer, moderated the forum. Guests included Mr. Henry PAECKERT, BASF Senior Vice President, Business & Market Development Greater China, and Mr. Lambert Bu, McKinsey Global Senior Partner and Leader of McKinsey，Digital Practice in Greater China. Topics covered “consumption development trends in economic recovery cycle,” “future brand development focus and innovation direction,” and “how a 100-year company sustains its vitality,” etc.

Consumption demand insight is needed for enterprise innovation when consumption recovers. After three years’ shocks of various external uncertainties, the economy is recovering while consumer confidence is steadily rising. Every industry and enterprise is thinking about how to find certainty in repeated uncertainties, get breakthroughs and achieve growth. For companies in the consumer sector, the most important thing is to capture future consumption growth opportunities. 

In the era of quality dividend, companies turn their focus to growth quality. As Chinese population reaches an inflection point, the aging society emerges and Internet penetration peaks. The Chinese economic growth rate will regress to an appropriate level. For the consumption market, the theme changes from achieving high growth through market penetration to growth on quality dividend. Against such a background, more and more companies realize that it is no longer realistic to merely pursue a growth rate. They need to focus more on growth through quality.

R&D and innovations are companies’ hard power on which moats are built. The future trend in product R&D must orient closely towards consumers. Henry Paeckert believed that sustainable products must be healthy and safe, and this requires solid R&D and innovating capabilities, the key winning hard power for companies. Alex Pan agreed with him. For the past few years, Shanghai Jahwa has increased spending in R&D, doubling its patent applications on those of 2019 and 2020. On awarded invention patents, the number during 2020 and 2022 increased by 57% over that of 2017 and 2019. Excellent R&D capability builds the moat for long-term company development. 2023 is the 125^th anniversary of Shanghai Jahwa, the 158^th anniversary of BASF, and the 97^th for McKinsey, three long-living enterprises that have crossed economic cycles and maintained extraordinary vitality. Every company is thinking about finding certainty in repeated uncertainties, get breakthrough and achieve growth. It is imperative especially for companies in the consumption sector to adapt to trends and capture future growth opportunities.

“Someday, with my sail piercing the clouds, I will mount the wind, break the waves, and traverse the vast, rolling sea.” During the 2023 annual sessions of the National People's Congress (NPC) and the National Committee of the Chinese People's Political Consultative Conference (CPPCC), high-quality development to build a socialist modern county was stated as the priority of China. Shanghai Jahwa has witnessed the changes of times and trends. Generations of Jahwa people have inherited the legacy of our predecessors, injected vitality in the business and dreamed big. As high-quality development becomes a clear priority of China, Shanghai Jahwa, a representative of the manufacturing sector, actively takes upon itself social responsibilities of private enterprises. We adhere to our principles of innovation, coordination, green, openness, and sharing. We believe in our long-term core strategy. Guided by the 123 operation principle, we continue to drive changes and optimizations. With our deep insight in “beauty” and trends, we shall leverage our solid R&D advantages and other advantages as a private enterprise to achieve high-quality resilient growth. In addition, with brand innovation and upgrading, we will deliver excellent products and services to consumers, and present Chinese beauty to the world.