Source | Qingyan Extra Extra: "During the 618 promotion period, major brands achieved high double-digit growth across all online channels, with e-commerce (channel) GMV growing nearly 30% year-on-year." On June 25, at Shanghai Jahwa's 2024 annual shareholders' meeting, Lin Xiaohai confidently announced the company's latest results. At that moment, it had been exactly 389 days since Lin Xiaohai became chairman and CEO of Shanghai Jahwa. Reflecting on his personal performance over the past year, Lin gave himself 79 points, saying, "80 points would be a bit arrogant, but I think I basically achieved the (desired) goals." "(This job) is certainly very difficult, but I thought, if it weren't difficult, why would they need me?" "All our strategic directions have now been validated as correct, and the overall organizational capability has basically been built," Lin said. For this job, which could be called the "hardest" in China's beauty industry, Lin Xiaohai seems to "relish" it. When he was first appointed, this Alibaba-affiliated executive who left Gaoxin Retail was not widely favored by the market. So, a year later, how is the transformation of Shanghai Jahwa progressing? Major Organizational Restructuring The author's review found that since 2023, Shanghai Jahwa has lost the top spot in domestic beauty for two consecutive years, being surpassed by Proya, Shanghai Chicmax, and others, falling from the previous No. 1 to fourth place in 2024. Among these, 2024 saw the largest gap between "new king" Proya and "old king" Shanghai Jahwa. Financial reports show a revenue difference of 5.1 billion yuan, with Shanghai Jahwa's revenue at 5.679 billion yuan that year. In other words, Proya's revenue is now almost equivalent to two Shanghai Jahwas. According to the latest financial report, in the first quarter of this year, Shanghai Jahwa achieved revenue of 1.704 billion yuan and net profit attributable to the parent of 217 million yuan. In June 2024, as the new chairman of Shanghai Jahwa, Lin Xiaohai made his first public appearance, asking the outside world for time regarding the company's recent lag: "Shanghai Jahwa has formed a certain momentum in years of decline, and reversing it requires tremendous determination. Please give me some time, shareholders." Yesterday, Qingyan noted at the shareholders' meeting that during the CEO business report segment, Lin Xiaohai spent nearly half an hour, without notes, detailing the company's changes over the past year under "four major tasks" and "four focuses." According to Lin, in the second half of last year, Shanghai Jahwa completed four major tasks: setting direction, clarifying governance, boosting morale, and clearing burdens. Photo taken by Qingyan at the Shanghai Jahwa shareholders' meeting In terms of "setting direction," Lin Xiaohai redefined Shanghai Jahwa's vision, changing it from "Becoming a leader in China's beauty and daily chemical industry, bringing Chinese beauty to the world" to "Through classic brands and high-quality products, creating a beautiful and healthy life for consumers, becoming a first-class daily cosmetics company based domestically and radiating overseas." At the same time, Shanghai Jahwa analyzed the assets of all brands to formulate first, second, and third tiers, each with set priorities. The first tier includes Liushen and Dr. Yu; the second tier includes Herborist and Maxam; and the third tier includes GF, Chinfie, and Shuangmei. In terms of "clarifying governance," Shanghai Jahwa's organizational structure was redesigned, shifting from a channel-driven system that managed 10 brands through two major channel platforms (online and offline) to a new agile organization with brands as combat units, business divisions as command centers, and an authorization mechanism based on trust. In Lin's view, "boosting morale" is crucial: "The best team-building is a series of victories." Last year, Shanghai Jahwa set a goal of double-digit GMV growth for the Double 11 promotion and ultimately achieved 17% growth. Lin said, "This victory greatly boosted employee morale and enhanced market and shareholder confidence in Jahwa." In the fourth quarter of 2024, Shanghai Jahwa focused on "clearing burdens." According to Lin, "Shanghai Jahwa has a relatively large historical burden, with the biggest being offline counters. Previously, inventory days for counters were 300 days; after a series of adjustments, we reduced it from 300 days to 90 days, returning the counter business to a healthy operating state. Since the beginning of this year, same-store growth at counters has approached double digits." Additionally, the transformation of Shanghai Jahwa's offline sales departments is noteworthy. In Lin's view, Shanghai Jahwa previously had 29 sales departments across the country, each with inventory and finance, acting as small combat units that were poorly managed. "Over the past year, we consolidated these departments, centralized them in Shanghai, and converted them to sales roles, greatly improving personnel efficiency." Regarding the overseas Tommee Tippee business, due to its continued decline, Lin believed its overall valuation was too high, so he resolutely addressed this historical issue by streamlining channels and conducting goodwill impairment to clear this "burden." "Let the Capable Get Rich First" In 2025, Shanghai Jahwa, based on its new vision, summarized its specific strategy into four focuses: focusing on core brands, brand building, online channels, and efficiency. "If everyone is hungry, we need to let the capable get rich first." Based on this idea, Lin prioritized brand development. In his view, "The first-tier brands Liushen and Dr. Yu have clear positioning and competitive products; what they lack is operational capability, content, and investment. With slight adjustments, they can quickly return to healthy growth, so we treat these two brands as 'vanguards.'" Herborist and Maxam have high awareness and great potential, but because their brand image, value, and target users are unclear, they need more time to be redefined, so they are placed in the second tier. GF, Chinfie, and Shuangmei are placed in the innovation business division: "We hope these brands can find their survival space through more innovative methods." According to Lin, different tiers are matched with different organizational designs: "For first-tier brands, we provide standard or even better talent allocation; for the second tier, we may implement one person with multiple roles; for the third tier, we implement centralized e-commerce operations to improve operational efficiency." While redefining brands, several brands under Shanghai Jahwa have also launched new products this year. Among them, the launch of the mosquito repellent egg is undoubtedly Liushen's most significant move in the past six months. It is reported that Liushen previously focused on classic glass bottle florida water, suitable for family use, with heavy weight and low unit price (190ml priced at only 20 yuan), making it difficult to achieve breakthroughs online. To this end, Liushen chose to move from family scenarios to outdoor scenarios, launching the new mosquito repellent egg and upgrading the formula, with the core ingredient combination of 20% picaridin + Liushen original liquid. Tests show the effective mosquito repellent duration is up to 8.2 hours. According to Lin's expectation, the mosquito repellent egg is expected to achieve 100 million yuan in GMV this year; if achieved, it would be the first time in years that a new product from Shanghai Jahwa breaks 100 million yuan in GMV within a year. Scented shower gel is another important new product for Liushen. In Lin's view, "Shower gel is the largest category among all Shanghai Jahwa products, and the gap with competitors is not far; we rank fourth offline and around tenth online. If we can achieve top 4 or top 3 online as we do offline, the space is huge." To this end, based on insights into the scented market demand, Liushen launched a refreshing scented shower gel. It is reported that this shower gel is priced at 55 yuan/410ml, with a higher unit price, making it more suitable for online e-commerce sales. According to data provided by Shanghai Jahwa, since its launch in April, this product has accounted for 28% of Shanghai Jahwa's online shower gel category performance. Dr. Yu has successively launched the second-generation barrier repair series cream, B5 repair mask, macromolecular sunscreen, and other new products, and upgraded core technology ingredients and visual identity. Among them, the second-generation barrier repair series cream innovatively applies artemisinin extract developed in collaboration with the Institute of Chinese Materia Medica, China Academy of Chinese Medical Sciences. Herborist, in the third tier, launched the new seven-white whitening mud mask, with a higher unit price, better suited for online channel strategies. Lin also mentioned that some dark horse brands have emerged in the third tier, such as GF: "We didn't give it any budget this year. Previously, the budget earned by Liushen was distributed to various 'little brothers' (brands) to spend. This year, all the 'little brothers' money is gone, all invested in Liushen. These small brands have to find their own way." In terms of focusing on online, Shanghai Jahwa focuses on breaking through live streaming capabilities, currently operating 10 self-operated live streaming rooms. Shanghai Jahwa stated that multiple brands have seen their self-broadcast GMV more than double year-on-year, and several brands have achieved self-closing loops, with positive net channel contributions. Regarding influencer live streaming, Lin mentioned the cooperation between Herborist's white mud mask and influencer Liu Yuanyuan: "During last year's 618, the first live stream with Liu Yuanyuan for the white mud mask only sold 20,000 units and lost several million yuan; that was the tuition we paid first." "This year's 618, Liu Yuanyuan's live stream (for the white mud mask) achieved 180,000 units, with 37 million yuan in GMV and a refund rate of less than 10%." Regarding the much-watched 618 results this year, Lin also introduced: "During the 618 promotion, Shanghai Jahwa's major brands achieved high double-digit growth across all online channels, with e-commerce (channel) GMV growing nearly 30%. Among them, Dr. Yu grew 20% year-on-year, Liushen grew 30%, Herborist, driven by the white mud mask, grew 50% in GMV, and several innovative brands grew 30% to 50% year-on-year." In terms of focusing on brand building, multiple brands under Shanghai Jahwa held new product launches and other activities, such as Dr. Yu's skin barrier professional summit and Liushen's mosquito repellent egg launch. Additionally, Dr. Yu and Liushen brands conducted joint pop-up events and launched a summer "sunscreen + mosquito repellent" combo. In R&D, Lin said, "Over the past year, every department tightened its belt, and the only department we invested in was R&D, with R&D expenses increasing by more than 30% year-on-year." This Year, Mid- and Back-Office Staff to Be Reduced by 10%-15% In the interactive session at the end of the shareholders' meeting, Lin Xiaohai responded to external concerns such as "low personnel and product efficiency" and "Ping An Group's delegation of authority." Photo taken by Qingyan at the Shanghai Jahwa shareholders' meeting Regarding issues with product and personnel efficiency, Lin said that over the past year, in terms of personnel efficiency, they reduced more than 500 headcounts, mainly from offline. "When formulating the 2025 budget, except for R&D, I basically required all mid- and back-office departments to reduce headcount by 10%-15%, investing more in business divisions and online. In the past three months, our sales department continued to reduce by 300 people." According to Shanghai Jahwa's financial report, as of the end of 2024, the total number of employees was 4,311. In terms of product efficiency, Lin introduced, "In December last year, there were 10,000 SKUs in Shanghai Jahwa's system. Within a month, we cut 7,000, and on that basis, set a goal of improving product efficiency by 40%." The author noted that in the latest announcement, Shanghai Jahwa set a target of achieving double-digit revenue growth year-on-year in 2025. In response, Lin admitted it is "a very hard battle": "The growth in the first half of this year came from improvements in basic operational capabilities, adjustments in product and pricing structures, etc. The second half will face greater challenges because the low-hanging fruit has basically been picked." Shanghai Jahwa performance assessment indicators (screenshot from latest announcement) "In our view, the second half will return to the four focuses," Lin said, expressing confidence for the second half. On one hand, all new products in the first half met expectations, and some categories even exceeded expectations. The company is also confident about launching new products in the second half, hoping to at least drive double-digit growth for the domestic business for the full year. "The sense of mission to revive the century-old Jahwa, the determination to win, the spirit of getting things done, the learning ability to grow quickly, and the urgency to roll up our sleeves and run." Lin put forward five requirements for Shanghai Jahwa's organization. Regarding the mission to revive the century-old Jahwa, Lin said, "For the organization, thinking about this matter (reviving the century-old Jahwa) should give you goosebumps; you should feel it is worth investing all our enthusiasm." However, Lin also acknowledged the difficulty of the task and emphasized the importance of ideals and passion: "I hope we can become an organization that can fight, so I put forward these five requirements to the team. If it's just for a salary, even for long-term incentives, I think we won't reach the future." It is worth mentioning that there were rumors that Ping An Group, as the major shareholder of Shanghai Jahwa, had delegated significant authority to Lin Xiaohai. Lin responded for the first time: "Ping An Group, as the major shareholder of Shanghai Jahwa, has always supervised Shanghai Jahwa under the premise of legality and compliance. In my personal view, the overall process has not changed significantly." "I think it's more about communication with the major shareholder, including that the management team needs to think clearly, make strategies more reliable, and maintain closer communication. More importantly, we need to continuously earn the trust of the major shareholder and all shareholders in the management." Lin emphasized, "Trust is not given; it is earned through battles. Only through a series of victories can we give shareholders more confidence, which brings more trust, and behind trust comes greater authorization." "I think as long as it is under the authorization of the entire board, the management can fully operate as an agile organization in the e-commerce world, allowing employees who hear the gunfire to make necessary decisions," Lin said. Another insider close to Shanghai Jahwa revealed, "Ping An's control over Jahwa is not as strict as the outside world sees, but it's not that loose either. Ping An still holds the majority of seats on the board. Therefore, Ping An has voting and veto rights over Jahwa's development." "But from another point, Ping An is a financial institution, while Shanghai Jahwa is a consumer goods company. There are many things they know they don't understand, and they can't reach that far, so they won't manage too meticulously. To some extent, the outside world has demonized Ping An's influence on Shanghai Jahwa," the insider added. It is also worth mentioning that the insider mentioned that Ping An Group Chairman Ma Mingzhe once proposed the vision that "Ping An must manage Jahwa better than when Ge Wenyao was in charge." In his view, "Shanghai Jahwa itself is not just a business; it also concerns face." "It feels like sitting on a sinking big ship, trying to pull it up with all my strength, but unfortunately I'm standing on the ship, not on the shore. No matter how I pull, the ship is sinking." Years ago, Lin Xiaohai said this when talking about an early work experience. This time, Lin is clearly determined not to let the script repeat, but the wheels of history roll on, and the challenges facing Shanghai Jahwa remain significant. 🔺