Clear Development Goals-Approval of Equity Incentive Scheme by Shanghai Jahwa Shareholders' General Meeting

On October 28, Shanghai Jahwa (600315.SH) held the 2020 Annual Extraordinary General Meeting, which considered and passed the bill for the by-election of the seventh board of directors and the 2020 restricted stock incentive plan (draft) and other related bills. At the meeting, Pan Qiusheng, chairman and chief executive of Shanghai Jahwa, introduced the equity incentive plan, future performance targets and development plans, and many shareholders also had a warm exchange with the management on the reform and adjustment process, brand and channel development, organizational and cultural reconstruction, three-quarter performance and other issues that the market paid close attention to.

The future development plan released at the shareholders' meeting shows more clearly how the "consumer-centric, channel-oriented and brand innovation as the two basic points, with culture, process and digital as the three booster" business policy how to carry out "soft landing". Pan Qiusheng said that the company will focus on "simplification" and "focus" two core keywords to carry out all kinds of work, in order to achieve the next three years of performance.

Brand Innovation: Adjusting Development Strategy

In terms of brand innovation, the company further insight into the needs of consumers, comb clear brand and category positioning, through the establishment of consumer insight-led new product research and development methodology, to create TOP single products, to achieve the differentiation of brands in various channels, and promote efficiency-oriented marketing innovation.

Pan Qiusheng introduced in the shareholders meeting, the company in the future will promote high growth, high gross profit category product growth: "For example, High-end skin care, medicine make-up and make-up are the current market average annual compound growth rate and gross profit rate is high and promote the faster category, the brand matrix of the company has re-comb and cut from the category size, growth rate, gross profit rate, market competition concentration and other dimensions." Pan Qiusheng said, firstly, the brand is divided into the key category and sub-category of two categories, each brand has developed a differentiated development strategy to seek new market opportunities. Key categories will focus on the fast growth of high-end skin care, efficacy skin care field, Baicaoji and Shuangmei will focus on high-end skin care products in the essence of anti-aging field, Yuze and Dian Cui focus on the efficacy of skin care products category, and for the color cosmetics category, its own brand will test water at the same time choose the opportunity to combine with the acquisition of color makeup brands. In the subdivided category, the company's Liu shen, Qichou, Tang mei xing, Gao fu, etc. has become or is expected to become the segmentation of the market champion brand, will be deeply tilled individual care, baby children, men of three categories; Meijiajing and home safety and other subdivided market leading brands will be the layout of mass skin care and home clearance category.

Channel Advancement: Optimized Structure Management

In terms of channel progressive, the company's offline channels will be in years of development on the basis of further consolidation, and focus on the new retail state, through the home-based cloud mall, home platform, retail sales and other new channels will be online and offline two into one, to achieve the unified management of the entire channel consumers drainage. Supermarket channel is the company's traditional advantage position, the company will consolidate it, increase the volume of single products on shelves, improve operational efficiency, revitalize the traditional channel. The company will continue to shrink the department stores, select high-efficiency stores, and optimize the elimination of low-output stores, in the traditional department stores and the planned layout of sephora to promote high-end layout strategy. In addition, the company will also rebuild the traditional CS channels, and maintain the high growth of brands, such as Acer in the Watson channel.

For online channels, the core of the next phase of e-commerce channel work is to further enhance operational capacity and promote sustainable development. The company will strengthen strategic cooperation with major e-commerce platforms, focus on its own brand and platform cooperation, layout of live and short video and open up new channels; and will focus on the category of high growth potential, to enhance the success rate of new products to create explosive products; in order to obtain tflow at the same time, but also to enhance the transformation, re-purchase and associated capacity to enhance efficiency. For the special channel, the company continuously strengthens the resource sharing with the big shareholder "Ping An China", through customizes the different development strategy to the life insurance channel, the production insurance bank, the new business, maximizes the security system resources.

Clear Goal: adjustment in progress

The company's performance targets for the next three years will be clearly defined in the draft of the 2020 Equity Incentive, which was considered and approved at the shareholders' general meeting. Pan Qiusheng also in the shareholders meeting of the incentive scheme design and the future operating performance goals synchronous interpretation: "2020, 2021 for the company's business adjustment year, and equity incentive appraisal year is 2021-2023, after nearly two years of full adjustment foundation, the company's business is expected to achieve healthy and rapid growth, so as to achieve this equity incentive performance appraisal goal."

On the site of the shareholders' meeting, the management of the company also exchanged views on many issues of concern to the shareholders. In response to the adjustment of the company's e-commerce business, Pan Qiusheng said that from the beginning of the third quarter of this year, the company took the initiative to adjust the e-commerce structure, optimize the frequency and proportion of live broadcast, cultivate the direct broadcast talents within the company, and form a three-dimensional construction of the super head + middle waist KOL + store direct broadcast matrix, so that the e-commerce business development is sustainable; and the market concern about the development of the brand such as Yuze, Shuangmei, Pan Qiusheng said, Yuze still maintained a high-speed growth this year, it will continue to contribute to the company's performance, Shuangmei adjustment development strategy has achieved explosive growth, the future has a greater room for development imagination. In addition, Pan Qiusheng also made statement to the independent operation of the brand since June this year, he said the brand led this year's Watson channel skin care category growth, and in the third quarter to achieve double-digit sales growth, and Baicaoji will continue to focus on the needs of young consumers, from product innovation and channel adjustment to promote brand development.

As the century-old leader of the daily cosmetics industry in China, in the future, Shanghai Jahwa will continue to carry out and advance various tasks under the "123 management policy", further realize the rejuvenation of national brands, create greater value for consumers, employees, shareholders and society, and satisfy people's yearning for a better life on a broader and richer level.