The expansion of Chinese beauty tech companies in overseas markets accelerates, reflecting huge potential on a global scale. With the pandemic stepping down, new challenges and opportunities lie ahead. For TYMO, a brand that already has a certain advantage in the overseas market, dealing with increasingly fierce competition has become the key to success.
Over the past 40 years of reform and opening-up, China has continuously promoted its opening-up policy while practicing innovation, which has created opportunities for outbound investment. After joining the World Trade Organization (WTO), China has accelerated its opening-up process and realized the historical turn from "introducing" to "going out" and from following to leading.
As China's economy enters a new phase of steady growth, overseas markets become more attractive than in the past amid intensifying domestic volatility. In addition, the national government and relevant departments have been issuing a series of favorable policies in the field of international expansion. Besides, the increase in the level of openness towards the outside world has further motivated domestic brands to enter overseas markets. Lastly, the increasing improvement of the digital economy infrastructure including supply chain, mobile social commerce, the Internet and the rise of logistics, payment, SaaS/ERP and other tools have directly reduced the cost and significantly increased the convenience of going abroad.
As we step into this New Year, EqualOcean officially kicks off the project called "Global 100: Go Global and Co-creating the Future", in which our analysts will sit down with frontline industry practitioners and enterprise leaders to hear their opinions about Chinese brands going overseas. We hope to help brands be seen, recognized and valued through our professionalism and credibility.
The following is the fifth piece in this series, conducted by our analyst Yiru Qian after her talk with Cheryle Wu, Brand Director of TYMO.
EqualOcean: From your perspective, do you think consumers and their consumption behaviors have changed because of the epidemic in recent years? What adjustments have you made to your company/brand regarding operation, marketing and product strategy?
TYMO: TYMO Beauty participates mainly in North America and Europe, among other developed economies such as Japan and Korea. Based on the experiences we have had since 2019, in developed economies, developed leading brands and most local brands with high market share have start to shift from offline domains to E-commerce channels, and now it’s likely to become an irreversible trend for all industries. For any brand considering going abroad, the most efficient channel lies in digital. With the local competitors onboarding among other entering businesses, the cost of digital marketing in North America has risen up to 300% over the past 3 years. Major E-commerce platforms such as Amazon also launched a series of new policies which can be considered harsh for young brands. Opportunities came along with the challenges, as the epidemic has been repeated in the past few years, and offline sales channels were greatly affected. In fact, for developed economies, customers must go online to make complementary or supportive consumption decisions simply because of the limited access to local stores or way too much time to kill during the day. High competitiveness and strategy changes at leading brands can back up the scale expansion in E-commerce.
EqualOcean: TYMO has paid more attention to offline-channel sales since its debut and is also actively developing online markets at present. What is your online and offline sales ratio? And what kind of strategic approach are you adopting?
TYMO: We are expanding both domains at the same time and doubling, if not treble, ingrowth year by year. Our determination for balanced development is very clear. TYMO Beauty has set foot in the western markets, especially in North America, since its establishment. With the initial hero collection - TYMO RINGs went rival on social media, we were able to gain brand recognition and were lucky enough to have an army of fans on TikTok.
Most members of the TYMO team, including the founders, have relatively long experience studying, living and working overseas, where the understanding of target markets initially shaped, such as multi-racial segmentation, social science and cultural fusion. The respect and consistent communication between the brand and real customers carry on and would last as long as the brand exists Maybe at a certain level, the combination of empathy and rationalization, while we state ourselves as a learner towards new cultures, has made the success possible.
In developed markets, especially Europe and North America or Japan and South Korea, citizens have competitively higher disposable income. The transaction takes place in stores over 85% of the time, and the scenario will not have a decisive change in the short term, even with the impact of the epidemic. Such a decision-making flow is very different from China, where the E-commerce penetration rate is very high.
Another more important reason is that in developed economies in Europe and the United States, the labor costs and the cost of logistic implementation are too high and time-consuming. Supportive cooperation like JD. and Cainiao in China are hardly seen. It is only rational to accept and adopt the differences.
For us, the good thing is that since we were founded in 2019, we have entered the target markets just at the right time. With the lifestyle and daily routine reformed globally, it leads to the vast growth of the E-commerce market. From 2019 to 2021, there weren't many enterers, and digital marketing costs weren't too high.
For now, with the pandemic stepping down worldwide, people have returned to a normal state of lifestyle. A certain amount of them have returned to local stores, but fortunately, customers have developed a habit of online shopping widely in the past few years. With the commercialization of almost all social media and search engines, the progress of digitalization and E-commerce could play a leading role in developed markets in the following decades. Online or offline will not be optional but compulsory for most industries soon.
EqualOcean: What are the advantages and disadvantages of your company compared with local brands in the early stage of entering overseas markets? How did you learn from each other and grow big step by step?
TYMO: We can be regarded as in the beauty and personal care category in general, but the hero products of TYMO so far lay in hair styling. There are many well-known and successful globalized brands under the category, such as Dyson and GHD. In the United States, these two brands are positioned for the high-end market. There are some other brands, such as Revlon in North America, which may not be familiar to Chinese consumers, but in fact, Revlon has been leading the US market for more than 50 years.
How can we compete with them? As the founder of TYMO Beauty - Mr. Qi has discussed this a lot on various occasions by combining the strength of innovation and production.
As the dominant brands are aging, regeneration and innovative ability can be leftover, by all means; if the sales are promising, why bother through money into product revision? Therefore, outdated functions and unsolved demands arise, especially for the minor race group in TYMO’s case – textured hair types. Combining multiple functions into one tool not only benefits styling efficiency but also generate cost-friendly products for clients. Relying on the advantages of the Chinese supply chain, we have relatively lower costs and higher production efficiency than local vendors. From a product R&D perspective, dominant brands have a relatively weaker awareness of serving users as a listener and as a servant. While in China, I fulfilled thousands of candidates in the market that applied cutting-edge technologies and updated prototypes daily.
Young brands such as TYMO, working efficiency and responding speed are on the highway. We’d be able to seize the chances at an early stage when the performance of the leading brands is poor, and the cost is relatively high.
EqualOcean: What is your company's current plan for development in overseas markets? Will you continue to expand into new markets in 2023? From a strategic perspective, how do you see the significance of globalization for the future development of your company?
TYMO: We have been focusing on the North American market, and our initial target audience is African American group. After gaining a foothold through the hair straightener collection, TYMO Beauty has diversified its product collections in the past two years.
Nowadays, in Western markets, we are able to cover the diversified hair styling needs with more healthy and organic solutions, from blow drying steps to glamor wavy results. By adding on a hair care collection, TYMO Beauty can now provide solutions for the complete hair routine for all hair types. By entering the Mid-East and Far-East markets, the new battle filed now contributes more than 15% of the sales revenue.
Further down, we started running the domestic business in 2020 and radiating to Asia. Among TikTok’s invasion of Southeast Asia, it has been proven that the rise of a new market is certain. In 2022 brands with lower average prices performed really well, with further development in branding and marketing activities, brands with higher SKU prices have already stepped into the stage and seen Southeast Asia as the next China.
After exploring and comparing the characteristics of many different overseas markets, we have concluded the methodology for brand introduction for new markets, from awareness building and product revision to the conversion phase. Thus, this year we will also focus on the Southeast Asian market.
For areas with relatively high disposable income, consumers are now comfortable with place orders online for gadgets; however, for other areas where the acceptance of E-commerce orders over $100 is not particularly high, marketing strategies can be crucial for these areas.
EqualOcean: Looking forward, what opportunities do you think consumer electronics brands will have in 2023? What new changes will the future bring?
TYMO: I think in 2023, after 3 years long distance working mode, the team now is able to actually be in the oversea markets and build first-hand resources. At the same time, it also allows the acceleration of the offline expansion; for example, we’d have a sales team attending exhibitions and other events. In most scenarios, premium media such as TV airing and magazine coverages requires communication face to face.
On the other hand, after more than 3 years of repeated torment, whether we can quickly revive the confidence of the consumer market is something uncertain. Most overseas countries went back on track earlier than China. With such a relatively stable state, most Chinese brands with larger scale already try to test out the opportunity to go global, which may lead to a new round of intensive competition but also brings new ideas and energy into the market at the same time.
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