Recently, Shanghai Lin Qingxuan Biotechnology Co., Ltd. (hereinafter referred to as “Lin Qingxuan”) submitted an IPO application to the Hong Kong Stock Exchange. Lin Qingxuan targets the high-end market, focusing on various skincare products such as facial essential oils. As a flagship product, the camellia essential oil had cumulative sales exceeding 30 million bottles by the end of 2024. Riding the trend of “nourishing skin with oil,” Lin Qingxuan’s revenue surpassed the 1 billion yuan mark, with 2024 revenue and net profit reaching 1.
21 billion yuan and 187 million yuan, representing year-on-year growth of 50.27% and 121.06%, respectively. This success is attributed to Lin Qingxuan’s diversified product portfolio, ranging from essential oils to creams. Simultaneously, the continuous growth of online channels served as a significant driver, contributing 714 million yuan in revenue in 2024, an increase of over 80% year-on-year. Despite this, controversies surrounding Lin Qingxuan persist. On one hand, “nourishing skin with oil” remains a niche market, necessitating higher promotional expenses compared to general skincare companies to achieve large-scale sales. In 2024, the sales expense ratio was 56.86%, nearly 10 percentage points higher than the industry median. On the other hand, although positioned in the high-end market, Lin Qingxuan’s offline stores are predominantly located in second-tier and lower-tier cities. These factors pose challenges to Lin Qingxuan’s journey in the high-end skincare market. Is Lin Qingxuan’s marketing strategy unconventional? The company primarily focuses on essential oils. From 2022 to 2024, essential oils generated revenues of 218 million yuan, 284 million yuan, and 448 million yuan, respectively, accounting for over 30% of total revenue. Among these, the camellia essential oil, launched in 2014, achieved cumulative sales of over 30 million bottles by the end of 2024. Selling millions of bottles of essential oil aligns with the rising concept of “nourishing skin with oil.” The fundamental principle involves supplementing and strengthening the skin’s natural oil barrier to achieve repair and nourishment. The skincare products used in this process are facial essential oils, with the market size growing from 900 million yuan in 2019 to 5.3 billion yuan in 2024, representing a compound annual growth rate of 42. 8%. This growth may be partly driven by essential oil companies like Lin Qingxuan. Data from Youmi Youshu shows that from 2023 to March 2024, facial essential oil category ad creatives garnered nearly 900 million exposures, with “nourishing skin with oil” becoming a high-frequency term in ad creatives. Actual controller Sun Laichun once admitted: “It was very difficult in the early stages. We relied on offline stores to gradually provide consumer experiences, essential oil usage methods, and continuously educate the industry. ” Lin Qingxuan’s sales expenses reflect the high costs of early market education.In 2022, Lin Qingxuan’s selling and distribution expenses reached 509 million yuan, accounting for 74% of its revenue. During the same period, the median sales expense ratio of eight A-share cosmetics companies, including Betaine (300957.SZ), was only 39.08%, more than 30 percentage points lower than Lin Qingxuan. With the expansion of revenue scale and improved promotion efficiency, Lin Qingxuan’s sales expense ratio has now decreased by over 17 percentage points to 56.86% in 2024, but it still remains nearly 10 percentage points higher than the industry median. This indicates that Lin Qingxuan may incur higher promotion costs compared to typical skincare companies in scaling its essential oil sales.
Aggressive marketing has previously backfired for Lin Qingxuan. In February of this year, several products in its stores used terms like “anti-aging” and “wrinkle reduction” in promotions, leading to a 21,000 yuan fine from the Beijing Chaoyang District Market Supervision Administration for violating advertising laws. Despite penalties, Lin Qingxuan continues to employ unconventional advertising language. For instance, recent promotions for a face cream claimed “cellular-level wrinkle resistance comparable to special beauty treatments,” implying superiority over medical aesthetics, though the anti-wrinkle efficacy test involved only 30 participants. Sun Laichun has demonstrated considerable marketing acumen. In 2022, when Chanel announced its new “Red Camellia” series, Sun publicly accused Chanel of “unfair competition,” alleging that it poached multiple frontline employees from Lin Qingxuan and calling it a premeditated declaration of war. The topic trended on Weibo, garnering significant attention for Lin Qingxuan. Later, in early 2023, to prove the product’s “all-natural ingredients,” Sun drank Lin Qingxuan’s camellia extract water during a live stream, sparking controversy. Since last year, Sun has frequently acted as a host on platforms like Tmall, Douyin, and Video Accounts, cultivating a founder IP with a feminist life coach persona. “For example, my Video Account builds a persona that speaks up for women, often sharing female-related topics. This content is relatable, and sometimes users with different viewpoints generate debates, naturally boosting engagement,” Sun stated. “Content needs to be youthful and fun; you must understand what young people want to see. They don’t want to listen to an old man preaching, so we follow the plans of our young team members. Despite these marketing efforts, one of the purposes of Lin Qingxuan’s current IPO fundraising is to further enhance marketing, such as organizing immersive offline events, collaborating with artists, and hiring endorsers.Lin Qingxuan positions itself as a high-end product brand. According to its prospectus, Lin Qingxuan ranked first in revenue in 2024 among all domestic high-end skincare brands in China. It was the only domestic brand among the top 15 high-end skincare brands, which include both domestic and international players.
In terms of pricing on Taobao’s ecosystem, Lin Qingxuan’s low-end products are positioned similarly to domestic essential oil brands like PMPM and AFU, with 15ML facial oils priced around one hundred RMB. However, in the high-end segment, PMPM and AFU’s product lines do not exceed one thousand RMB, whereas Lin Qingxuan’s 50ml Gilded Essence Oil (with a 15ml gift) is priced at 1,214 RMB, comparable to Chanel’s Repair Essence Oil priced at 1,160 RMB for 50ml. Furthermore, Lin Qingxuan’s combination sets, such as those including essence oils and creams, are priced above 1,600 RMB. In contrast, most domestic essential oil and skincare sets are priced in the hundred-RMB range, highlighting Lin Qingxuan’s relative scarcity in the domestic skincare market. This pricing strategy contributes to Lin Qingxuan’s superior gross margin performance compared to its peers. In 2024, its gross margin reached 82.48%, exceeding the average of eight A-share listed cosmetics companies, including Beteni (300957.SZ), by more than 17 percentage points. Despite its continuous marketing investments and high-end product positioning, Lin Qingxuan’s consumer base appears to be more concentrated in second-tier and lower-tier cities. The brand’s offline channel development is primarily located in these areas. Offline channels serve as a crucial revenue pillar for Lin Qingxuan, contributing 494 million RMB in 2024, accounting for approximately 40% of total revenue. By the end of 2024, Lin Qingxuan operated 506 offline stores, ranking first among both domestic and international high-end skincare brands. The majority of these stores are situated in second-tier and lower-tier cities, with 292 stores located in these regions by the end of 2024, exceeding the total number of stores in first-tier and new first-tier cities by over 30%. Lin Qingxuan explains that consumers in lower-tier cities exhibit a strong willingness to purchase high-end skincare products. “Although these customers reside in lower-tier cities, they demonstrate significant interest in and a high purchase intent for premium skincare items. The skincare brand still holds substantial growth potential in these markets, and we anticipate achieving deeper market penetration across broader regions in the future,” Lin Qingxuan noted. Lin Qingxuan continues to strengthen its presence in lower-tier cities. Starting in 2024, the brand began recruiting agents to enhance its CS (Cosmetic Store) channel, similar to cosmetics specialty stores. It has now expanded to over 3,000 CS stores nationwide.A key area for CS channel expansion is lower-tier cities. Lin Qingxuan has not only launched products exclusively for CS channels, such as the ‘Lin Qingxuan Shaohua Golden Elixir Oil,’ but has also introduced the ‘Ten Million Fans Plan’ for offline stores under the slogan ‘Everyone Can Be an Influencer.’ This initiative provides comprehensive training for store staff to help them become effective sales promoters. Continuously strengthening offline channels may create additional growth opportunities for Lin Qingxuan.
Although online channels contributed nearly 60% of Lin Qingxuan’s revenue in 2024, the overall consumer environment has increased pressure on e-commerce platforms, driving a gradual shift toward offline channels for traffic acquisition. Offline channels not only offer consumers a way to experience Lin Qingxuan’s products but also enable the brand to reach more cities through agents. However, this expansion could conflict with Lin Qingxuan’s proud ‘premium positioning.’ Balancing growth with brand integrity may pose a long-term challenge. Risk Warning and Disclaimer: Markets involve risks; invest with caution. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should evaluate whether any opinions, views, or conclusions herein suit their particular circumstances. Investments based on this content are made at one’s own risk.
