When China’s beauty market undergoes reshuffling amid channel shifts and waves of traffic-driven growth, how should a 23-year-old legacy brand break its path dependence and regain momentum?
A few years ago, this question might not have mattered much for Marubi. Even as “new consumption” brands rose and online channels heated up, Marubi kept its distance. In founder Sun Huaiqing’s words, the mentality at the time was:
“You do your e-commerce, we’ll keep focusing on the offline market.”
The pandemic fundamentally changed that trajectory. Marubi had no choice but to confront reality, and in 2021 it shifted from offline-first to online-first operations. For Sun, the pivot injected new vitality into the company and he acknowledged its direct effect on growth.
Still, asking a company accustomed to long-term growth to let go of its past is not easy. 36Kr interviewed Sun to learn where Marubi stands today.
The following transcript has been edited and consolidated for brevity and clarity.
36Kr: This year, Marubi set a revenue target of RMB 4 billion (USD 560 million). How is progress so far, and why that number?
Sun Huaiqing (SH): This target didn’t come out of nowhere, it stems from our transformation.
Previously, offline was our main source of sales, but the pandemic caused a sharp decline in physical retail. Once consumer habits form, they are hard to reverse: they don’t return to what they were just because the pandemic ends. So in 2021, we launched a shift from offline-first to online-first.
In late 2022, we set a goal of achieving roughly 30% year-on-year growth for the next 12 quarters. We’ve met that goal for ten consecutive quarters. At this pace, hitting RMB 4 billion this year shouldn’t be a problem.
36Kr: How did your channel mix change after the transformation?
SH: Before the pandemic, offline accounted for 70% of sales. Now our mix is 80% online and 20% offline. It is a dramatic reversal. This shift gave us new life, and without it, we would not have today’s growth.
36Kr: Around 2019, when the new consumption wave peaked and brands moved online, why didn’t Marubi think about transforming?
SH: Companies that succeeded in the previous era tend to be slow to adapt or pretend to be slow. We were the latter. We were attached to the past. We were the “king” among domestic brands. In 2019, we earned RMB 500 million (USD 70 million) in profit. Some brands were larger than us but made only RMB 200 million (USD 28 million). With both scale and profitability, we thought, “you do your e-commerce, we’ll keep focusing on the offline market.” We never anticipated the pandemic would bring such fundamental change.
36Kr: When you saw the online market booming, was there no sense of crisis?
SH: Not really at first. We even thought, can the online market really replace offline retail?
36Kr: Was the transformation top-down?
SH: I made the decision, led the shift, joined the process, and worked alongside the team. This was a major move. Without founder-level determination, it would not have happened.
36Kr: What allowed you to let go of the past this time?
SH: Once cognition evolves, attachment disappears. We realized we must stay aligned with young consumers and that e-commerce is the future of China’s beauty market. It is the trend. Also, the impact of a 30% decline in performance was huge. We were used to growing every year. Dropping nearly 50% forced us to confront transformation directly.
36Kr: Did your user base change significantly after the shift?
SH: It did not change, it expanded. Offline customers remain and are mostly women over 40 in lower-tier cities. They are strong purchasers. Online, we added young consumers in first- through third-tier cities, young professionals, style-conscious mothers, and middle-class users, centered around the 30-year-old demographic. This combination covers the full spectrum.
For example, our top four provinces online are Guangdong, Jiangsu, Shandong, and Henan. Henan has always been strong offline, while the first three were weak offline markets for us. Naturally, the shift expanded our total volume.
36Kr: Many say the online traffic playbook of “new consumption” brands has been disproven. What is Marubi’s approach?
SH: Those playbooks were flawed from the start. They were not B2B or B2C, they were “B2VC.” Spending RMB 200 million to make RMB 100 million (USD 14 million) and relying on financing damages the ecosystem. That is not real branding.
Our logic is that a business must be a profit center. Without profit, nothing is sustainable. The core of online strategy is still a blend of product, user experience, and branding. If the product is good, creators promote it, consumers repurchase, and a strong supply chain ensures stability. Our 23-year brand history builds trust.
36Kr: Which online channel is currently the largest for Marubi?
SH: Douyin is slightly larger. Profit margins on e-commerce platforms are being squeezed. Offline, you might earn RMB 2 (USD 0.28) per unit, whereas on marketplace e-commerce you might earn RMB 1 (USD 0.14). On content platforms like Douyin, earnings can be even lower. Some brands say they lose money on Douyin and treat it as advertising. But we make money because we do not rely solely on traffic buying. We manage costs well and rely on repurchases.
36Kr: As a 23-year-old brand moving online, were you concerned that young consumers lacked awareness of Marubi?
SH: Why would they lack awareness? L’Oreal, Estee Lauder, and Shiseido are decades- or even centuries-old, yet young people still know them. Our brand ambassadors have always followed youth trends. From Tony Leung, Zhou Xun, and Eddie Peng to Angelababy, and now Yang Zi, they have remained aligned with young audiences.
Our products also meet young consumers’ needs. Young people have dark circles and puffy eyes, so we launched the small red eye cream pen. They want value, so we increased the eye cream size from 15–20 grams to 30 grams. They like technology, so we added a superconductive gilded massage head with 12,000 vibrations per minute. Influencers also genuinely recommend our products, which builds credibility.
36Kr: Has Marubi’s branding approach evolved?
SH: Many say we need to embrace change, but change isn’t always good. What we should embrace is what doesn’t change. Three constants in branding are innovative, high-quality products, professional service, and timeless values that bridge the East and West.
Communication methods may change, but the core of content creation does not. Channels may shift, but reaching users has the same foundation. The approach has not changed much.
36Kr: Many beauty brands talk about R&D. What about you?
SH: R&D should be judged by effective, steady investment, not just spending levels. We have applied for more than 600 patents, with nearly 100 granted. About half are already applied in products, and 15% are reserves, so we are not caught off guard when new tech emerges.
We invest RMB 70 million (USD 8.4 million) a year and have done so for 23 years. That cumulative investment is far greater than brands that spend RMB 100 million a year for only a short period.
36Kr: Marubi’s reports show high selling expenses and low R&D ratios. Some say this reflects heavy marketing and light R&D.
SH: That’s a misunderstanding of the industry. L’Oreal and Shiseido spend only about 2% on R&D. Our 3% is already higher than leading foreign brands. High selling expenses are normal in the beauty market because brands must reach consumers through channels and marketing. Our marketing is also effective rather than cash burn. When we work with influencers, we have them test products rather than buy traffic.
R&D should be judged by outcomes. Our patents and our PDRN products are real results. Ratios alone do not tell the full story.
36Kr: In expanding into makeup, is acquisition a shortcut?
SH: After establishing ourselves in skincare, we wanted to complete our makeup portfolio, which led to the acquisition of PL. At the time, we believed buying a brand was easier than building one, so we spent RMB 50 million (USD 7 million). But the brand had nothing but a name. We rebuilt everything.
In hindsight, the acquisition was not successful. That RMB 50 million did not generate much value. It would have been better to build a new brand.
36Kr: But PL seems to be performing well now?
SH: At first, we were unfamiliar with makeup. For example, we could not predict next year’s trending colors. So we avoided color cosmetics and focused on base makeup. Base products have only three shades, and foundations, cushions, and cream foundations rely on emulsion technology, which is our strength from skincare. We leaned into strengths and avoided weaknesses.
PL’s team is also composed of younger generations, effectively our target users. They know what their peers like, eliminating guesswork. After five years of development, PL is expected to surpass RMB 1 billion (USD 140 million) this year.
36Kr: What’s causing anxiety for you right now?
SH: Recently, it’s platform restrictions during Singles’ Day. But anxiety aside, we must think long-term and reduce our dependence on any single online channel. We can’t afford to lose either marketplace e-commerce or content e-commerce. Yet the rising walls between platforms squeeze margins to the point where companies may earn nothing.
36Kr: How do you stay connected with young people and understand their preferences?
SH: Stay humble. I take notes in every meeting and keep learning. Stay curious. If young people are making short videos, I will try it too. You must dare to try and dare to lose to stay young.
36Kr: What has been the most memorable challenge, and what did you learn from it?
SH: The 2021 transformation. It was extremely difficult. It taught me to think further ahead. I used to believe that if you do well today, tomorrow follows. Now I plan five years out. I focus less on short-term performance and more on long-term survival and development.
36Kr: Is there a gap between public perception of Marubi and reality?
SH: A big one. We rarely promote ourselves. For example, in 2013, an LVMH-backed fund invested in Marubi. It was the fund’s first beauty investment in China and its first in all of Asia. LVMH invested USD 50 million. The media was surprised and questioned why it did not choose other brands. But LVMH hired consultants to conduct due diligence and ultimately chose us. That was genuine recognition and a clear vote of confidence. Yet few people know this story.
36Kr: Do you worry about being overtaken by competitors?
SH: Life has ups and downs, and so do companies. Being surpassed does not mean becoming worse, only that you have not caught up yet. If the direction is right, you will return.
I also remind myself that as the chairman of a listed company, with a happy family and a doctorate, I already feel I have won in life. There is no need to stress over being temporarily overtaken. It is better to focus on long-term goals.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Li Xiaoxia for 36Kr.