Ximuyuan focuses on R&D to create a world-renowned beauty brand that makes Chinese people proud

After seven rounds of financing in two years and even experiencing the ban on cannabis cosmetics, Ximuyuan has never lacked topics since its inception. But what really made it successful was the founder's way of thinking that always started from the end, and the team's dedication to the dream of becoming a leading brand of skin care products in China, without being swayed by temporary setbacks or successes.

After seven rounds of financing in two years and even experiencing the ban on cannabis cosmetics, Ximuyuan has never lacked topics since its inception. But what really made it successful was the founder's way of thinking that always started from the end, and the team's dedication to the dream of becoming a leading brand of skin care products in China, without being swayed by temporary setbacks or successes.

For the functional natural skincare brand Ximuyuan, 2021 was an extraordinary year - cannabis ingredients were just banned in May, but a new wave of performance exploded in July. Not only that, the company also obtained the latest round C investment, increased its investment in research and development, and jointly built a functional skincare laboratory with a national research center. As of August this year, the parent company of Ximuyuan, Nord Traceability (Guangzhou) Biotechnology Co., Ltd., has just been established for two years.

Why did investors favor Ximuyuan after 7 rounds of financing in two years?

The Ximuyuan brand was founded in August 2019. Its founder Jeffrey was the brand director of Olay at Procter & Gamble, responsible for brands, products, national department store channels and e-commerce. Co-founder and chief R&D officer Ted Tan Xingchun is one of the four initiators of the Guangdong Cosmetics Society. He studied under Professor Mao Peikun, a leader in the daily chemical industry. He is the director of the Cosmetics Efficacy Traceability Committee of the Guangdong Cosmetics Society and has 26 years of R&D experience in the field of functional skin care.

According to industrial and commercial information, Ximuyuan has completed a C round of financing of over 300 million yuan, with a valuation of up to 4 billion yuan. This is the seventh round of financing completed by Ximuyuan in the two years since its establishment. It is also the third time that Coatue, a top global hedge fund, has increased its investment (it has invested in Ximuyuan's A and B rounds of financing), and it is also the second investment by H capital.

Ximuyuan Financing History

The background of this round of financing is particularly worth mentioning. Just two months ago, on May 28, the State Food and Drug Administration officially listed "cannabidiol" as a banned raw material for cosmetics, and "hemp kernel", "hemp seed oil" and "hemp leaf extract" as banned ingredients for cosmetics. This means that the wildly growing cannabis cosmetics have been officially sentenced to death.

As a result of the regulatory changes, the revenue of a CBD-based cosmetics factory fell from 200 million yuan to 40 million yuan. For Ximuyuan, which won the Tmall Golden Makeup Award for "Super Ingredient of the Year" with its CBD essence on April 13, it is undoubtedly facing tremendous pressure. Against this background, the two top institutions have continued to increase their investments, which shows that investors are optimistic about the functional skin care track and Ximuyuan. As Jin Ming, managing partner of GoGo Capital, said, "We are firmly optimistic that world-class leading companies will emerge in the Chinese skincare market. We believe that the ultimate pursuit of products is the only correct answer for skincare companies to stand out, and Ximuyuan is a practitioner of product supremacy. The Ximuyuan team thinks from the end to the beginning and is never swayed by setbacks or success at certain stages. The ban on industrial hemp is a baptism of rebirth for the company, which has strengthened the company in all dimensions. We are more confident in the company's values, operating capabilities, R&D and product accumulation."

Ximuyuan Office Building

Co-build a functional skin care laboratory with a national research center

After winning the National Natural Science Foundation Outstanding Achievement Award at the end of last year, Ximuyuan has once again increased its investment in the field of research and development. On August 20, Nord Source, the parent company of Ximuyuan, officially reached a strategic cooperation with the National Engineering Research Center for Genetically Engineered Drugs, and the functional skin care joint laboratory jointly built by the two parties was unveiled.

Professor Liu Zhong, deputy general manager of the National Engineering Research Center for Genetically Engineered Drugs (left) and Tan Xingchun, co-founder of Ximuyuan (right)

It is reported that the National Engineering Research Center for Genetically Engineered Drugs is the first and only national engineering research center in the field of genetically engineered drugs established by Jinan University and approved by the National Development and Reform Commission. It brings together researchers from the School of Life Sciences and Technology of the well-known Jinan University and dermatologists from the Affiliated Hospital of Jinan University and other scientific researchers. Members of the expert group include Professor Chen Zhinan, an academician of the Chinese Academy of Engineering, Professor Yao Xinsheng, an academician of the Chinese Academy of Engineering, and Dr. Su Guohui, an academician of the Chinese Academy of Sciences.

The center has achieved a series of internationally leading R&D results in the fields of functional cosmetics, genetically engineered drugs, small molecule drugs, and cell therapy. In the past five years, the center has undertaken nearly 500 scientific research projects, published more than 2,012 research papers included in the three major indexes, obtained more than 80 authorized patents, won three second prizes in the National Science and Technology Progress Award, one International Science and Technology Cooperation Award of the People's Republic of China, and 13 second prizes or above in provincial and ministerial science and technology awards.

At the beginning of its establishment, the Ximuyuan team cooperated with Liu Zhong's team at the National Engineering Research Center for Genetically Engineered Drugs to jointly develop the hemp leaf rejuvenating repair series and the camellia soothing series, and also cooperated in the efficacy construction and evaluation of the radiant glaze series and the cherry blossom bright and translucent skin series.

In the face of the outside world's praise that Ximuyuan is the next Perfect Diary and Winona, Liu Zhong, deputy general manager of the National Engineering Research Center for Genetic Engineering Drugs and director/professor of the Cosmetics R&D Center, firmly expressed his optimism about the Ximuyuan brand, but he also corrected it, saying, "I have seen some articles saying that Ximuyuan may be the next Perfect Diary or the next Winona. What does this mean? Ximuyuan wants to be the Ximuyuan in the Chinese cosmetics industry and the Ximuyuan in the global cosmetics industry. I believe it will definitely be achieved."

4D Stereo L2C Mode

Since the first day of its establishment, Ximuyuan has been full of scientific spirit, from the global tracing of natural ingredients to the original research and development of balanced formulas. Different from the ODM model commonly used by cosmetics brands, Ximuyuan takes Simpcare Lab as its R&D core and creates a four-dimensional Lab to Consumer (from laboratory to consumer) R&D product continuous innovation model.

According to Tan Xingchun, "The four-dimensional model includes global traceability, Chinese customization, technical cooperation with top universities and research institutions, in-depth research and co-creation of products with consumers, and patent applications to increase moats. Only by doing well in these four aspects can we achieve breakthroughs in product strength and support the continuous innovation of products and brand strategy."

Ximuyuan×National Engineering Research Center for Genetically Engineered Drugs Joint Laboratory for Functional Skin Care Unveiled

The joint construction of a functional skin care laboratory with a national research center is a milestone for Ximuyuan to build a sound Lab to Consumer R&D system. It also represents Ximuyuan's determination to continue to deepen R&D, ensure the company's continuous innovation on the product side, and create products and brands with long-term craftsmanship.

Relying on the Lab to Consumer R&D system, Ximuyuan has also cooperated deeply with global top raw material suppliers such as BASF, Ashland, and Matsumoto Kosho to create multiple product lines. Among them, the Camellia and Sakura series, two series developed for people with sensitive skin, have achieved sales of more than 75% of the total.

In May this year, Ximuyuan launched a high-factor sunscreen for sensitive skin and a cherry blossom mask with a special whitening certificate. The product safety and efficacy have been certified by internationally renowned third-party testing agencies such as SGS and Intertek. In July, the Camellia series of four-piece sets including lotion, lotion, cream and mask passed the real-person test and on-site factory inspection by the strict standards of the folk science evaluation organization "Dad Evaluation", and obtained the "Dad Random Inspection" logo authorization; in late July, the set won the first place in Tmall's soothing facial set best-selling list, praise list, and repurchase list.

Tan Xingchun revealed that in the future, Ximuyuan will rely on this R&D center to continue to increase its R&D investment. For example, we develop oil-control and pore-tightening products for oily and sensitive skin groups; we develop firming, lifting and skin elasticity-enhancing products for dry and sensitive skin groups; and we develop acne-removing and repairing products for acne-prone skin groups.

The hostage is very big and his ambition is far-reaching

Data from TouBao Research Institute shows that from 2011 to 2019, the overall market size of China's functional skin care products (i.e., efficacious skin care products) continued to grow from 7.08 billion yuan to 28.36 billion yuan, and will reach 84.14 billion yuan by 2025, with an annual compound growth rate of 22.2%, far higher than the 9%-10% growth of the skin care products market. At the same time, the basic customer base of functional skin care products is people with sensitive skin. Frequent replacement of skin care products for people with sensitive skin can easily cause allergic reactions or aggravate sensitivity, and the switching costs and risks are high. Therefore, they have high brand loyalty and strong willingness to repurchase.

In 2019, the Ximuyuan team took the research and development of sensitive skin care products as the starting point and entered the functional skin care track. Nowadays, the functional skin care products market is gaining momentum, with more and more players entering this market, but their strategies are very different. Liu Zhong believes that in today's era of chasing traffic, it is very rare to find brands that are willing to calm down and spend a lot of time and energy on research and development. He hopes to use the top scientific research capabilities of the National Engineering Research Center for Genetically Engineered Drugs to empower brand development and help Ximuyuan become a world-renowned beauty brand that makes Chinese people proud.

To be a world-renowned beauty brand that makes Chinese people proud is also in line with the founder Jeffrey's expectations for the brand. He said that behind the rise of every national brand must be the rise of that nation and country, and the development of Ximuyuan is precisely due to the strength of Eastern culture and the Chinese market. In fact, deep in the heart of the brand founder Jeffrey, he hopes to promote the aesthetic quality of the Chinese people and even the level of civilization of the entire society through an industry that spreads and creates beauty.

Facing the sudden change of regulatory policies and the concerns of the outside world, Jeffrey quoted a passage from Su Shi's "On Liu Hou", saying: "The so-called heroes in ancient times must have extraordinary integrity. There are things that people cannot tolerate. When a common man is insulted, he draws his sword and stands up to fight. This is not bravery. There are great brave men in the world who are not surprised when they are suddenly faced with it, and are not angry when they are attacked for no reason. They have great ambitions and far-reaching goals."

Source: Cosmetics News