Category: Interview

An interview with Ms. Li CHEN, CEO of Phyt’s China

Eight years ago, when the organic concept was seldom heard of in China’s beauty market, Li CHEN boldly brought Phyt’s, an organic cosmetic brand originated from France, to China. With COSMEBIO certification and 100% natural ingredients, Phyt’s has now become a leading salon-line brand and a representative of quality in consumers’ hearts in China. To Li, organic certification doesn’t just mean the properties of the product or the quality of the manufacturing process. More importantly, it connotes responsibility, respect for nature and an elegant and self-disciplined lifestyle.

With a master’s degree in Luxury Management from the Institut des Hautes Etudes Economiques et Commerciales (INSEEC, France), Li has been engaged in the cosmetics industry for nearly 26 years and spent 14 years in the aroma field. She once went to India and Bulgaria to delve into the world of aroma before finally reaching Paris where she met Phyt’s. SpaChina interviewed Li, the pioneer in China’s organic beauty industry and a perseverant dream pursuer.

Why did you choose Phyt’s and bring it to China?

The story began in 1972. Biologist and naturopath Jean Paul Llopart joined hands with beautician Rosanne Verlé and created Phytal, a natural cosmetics brand. They laid the foundation for Naturo-Esthétique®, inspired by their revolutionary approach in which beauty is inseparable from overall health. Over the years, they developed a diversity of innovative and effective products totally free from synthetic preservatives. Acquired by Laboratoires Jérodia in 2004, a group specializing in ‘natural beauty and health’, the brand took on a new lease of life as Phyt’s.

When I went to study in France, I had an idea of finding a “more suitable” product and bringing it back to China. However, what the definition of “more suitable” was, I was not so clear at the beginning. I just described it as “safer and more effective”. Then I met Phyt’s. This is a luxury and organic cosmetics brand originated from France, a top option by professional salons in Europe. After a very good perceptual first impression, what really attracted me was the COSMEBIO logo, one of the three authoritative organic certifications of European Union. After a series of business visits, the brand amazingly met all my harsh requirements. My principle in making any business decision is: “If it’s only for Li CHEN’s wallet instead of the society, I will not do it.”  It is based on this principle that I brought Phyt’s France to China.

What is real organic? What is the standard to distinguish true and false organic products?

Organic products refer to products whose ingredient acquisition, raw materials monitoring, production, processing, emission management and sales all comply with environmental standards and that have organic certification and organic certification marks. Organic certification covers the whole process rather than a single ingredient. Organic certification shoulders the social responsibility of protecting species and environment and serves as a criterion to distinguishes true and false organic. When a product’s naturality, safety and efficiency are verified and recognized, it is a real organic one. Organic means effectiveness and efficiency, and maximum extent of active ingredients acting on the skin. Resources awareness, mutual help, social responsibility, gratitude, self-discipline are the key words for real organic.

Phyt’s is known as “100% natural and 100% safe”. Could you share more details on these two “100%”?

All Phyt’s products have been certified by COSMEBIO. In terms of formula, achieving COSMEBIO certification means that at least 95% of the product’s ingredients are derived from nature; at least 95% of the product’s plant ingredients comes from organic farming; at least 10% of the product’s composition comes from organic farming. Moreover, the cleaning, disinfection and transportation process are all under strict supervision. Far above COSMEBIO standards, all Phyt’s products contain 100% natural ingredients and are 100% safe, delivering a perfect combination of beauty, pleasure, effectiveness, harmlessness, and professional ethics.

How does Phyt’s transform natural plants into highly effective ingredients that work miracles on the skin? What are the core technologies and R&D strengths?

The expertise of Phyt’s since its foundation nearly 50 years ago is the development of 100% natural formulas and products of high effectiveness. In-depth knowledge of essential oils drives the development of formulas based on essential oil complexes which deliver diverse skincare functions. Plant extracts and complexes created therefrom are applied in the product ranges such as Phyt’s Sublime Eyes (anti-puffiness and dark circles complex) and Phyt’s White (an active brightening complex). Other star plant extracts include those from fresh orange and eucalyptus leaves. We employ a cold extraction process without using aggressive solvent. This process utilizes a pressure gradient system allowing a gradual and complete release of active plant cells. The R&D department lays special emphasis on technology innovation, which continues to enhance the products’ effectiveness and popularity among the consumers. We insist on using only natural perfume and emulsifiers from renewable resources. We stick to the brand’s DNA: a 100% natural cosmetics that respects people and environment.

Who are the main customers of Phyt’s in China? What are the most popular Phyt’s products in China? 

Most of Phyt’s customers in China have good education background, high income, overseas living experience, and environmental awareness. They are between 30 and 60 years old. To them, safety is a key issue. They understand that to choose organic is to choose health and health is the basis of everything. So they are more willing and also able to pay for organic cosmetics.

Phyt’s star products in domestic market include: Phyt’s Lait Nettoyant, Phyt’s Eau Micellaire Hydratante, Phyt’s Naturoderm, Phyt’s Sérum Multi-vita, Phyt’s Sérum Anti-rides, etc.

What kind of challenges have you met since you brought Phyt’s to China and are operating the brand here? What is your plan for the next three years?

After a thorough business evaluation, Phyt’s came to China. However, at the beginning, Phyt’s was not as popular as expected. Eight years ago, the knowledge and promotion of organic products was very scarce in China. We struggled a lot in marketing and organic education. I remember an interesting experience. At that time, apart from Phyt’s, some other products purchased from abroad are also used and sold in our own beauty salons. In order to achieve good sales performance, the salon managers were reluctant to promote and sell Phyt’s. Then I made a very ‘cruel’ decision: stop all foreign procurement budget. Finally, at the fourth year after its coming into China, Phyt’s safety and effectiveness were widely recognized. Meanwhile, with the boom of on-site service in high-end beauty market at that time, Phyt’s became increasingly influential in the market. Today, Phyt’s does not only rank first in beauty salon lines, but also known to the public through various channels.

The year 2020 is destined to be an extraordinary year. The sudden epidemic outbreak has quietly changed the retail mode. Live webcasts once again attract huge audience flow. Nowadays, people pay more attention to health, and the harmony between people and nature. This is undoubtedly an opportunity for natural and organic products to boom. In addition to traditional e-commerce, Phyt’s will also be engaged in live broadcasts and community marketing fields in the next three years.

What are the new trends you have observed in China’s wellness, spa and beauty industry?

Consumers are more and more stratified, and their needs are beginning to be more diverse. Anti-aging, freckle removal, and body shaping are hot topics in the industry. Meanwhile, the boundary between professional salon products and retail products begins to blur. Many top retail skincare brands now turn to natural and organic formulas as well. Their products can be as good as professional products in terms of quality and efficacy. Also, online marketing is becoming a must, yet online price systems may be quite chaotic.

Interview with Mr. James Tsang, Co-Founder and General Manager, Excellent Trading in China

James Tsang has more than 23 years market knowledge and experience in supply chain management and China import operations, and has built a full import operations platform in China consisting of supply chain finance, import agency, warehouse logistics and tax optimization. James is mainly engaged in the import of Beauty Products, Beauty Equipment, Medical Equipment and FMCG goods, and he and his team have worked hard to make Excellent Trading the forerunner of the industry, providing customers with the best import solutions which can make it easier to arrange for their products to enter China.

“Import is an ‘art’,” says James. “For the past 10 years, we have been dedicated to providing customers with perfect import solutions. We offer not only a single service, but we want to become a part of their relationship chain. Except for buying and selling, we penetrate all the rest sections of our customers’ business, from supply chain finance, trade agencies, international logistics, domestic customs clearance to domestic storage and delivery, offering truly one-stop import services.” 

Since the epidemic outbreak, Excellent Trading has been very busy. “The purchasing department must do enough surveys and analysis of the product supply to market, especially when it comes to import purchasing. Import purchase goes over national boundaries and may involve more issues.” Soon after the coronavirus outbreak in China, James and his team reminded customers to pay more attention to the domestic and foreign markets and purchase products to meet market demand. They also began to help customers transport different kinds of epidemic prevention goods at a very early stage, and offered suitable channels for customers to purchase and sell goods. Later, when the epidemic broke out abroad and as China already had sufficient supplies, James and his team shifted their focus and put more energy in assisting the export of epidemic prevention products.

“Within one month, we helped deliver tens of millions of masks and other medical supplies to every corner of the world,” James said. “When flights are much limited during the outbreak, we provide chartered airplane services for logistics transportation to many customers. In the past two weeks, we offered charter flights between China and Israel, Turkey, Europe and Southeast Asia.”

With the company’s business continuing to expand, Excellent Trading has built a new warehouse in Shanghai and doubled the size of its constant temperature warehouse. “In the future, we will be able to offer more intelligent and modern third-party e-commerce warehouses for customers to meet their diverse and updated demands on storage.” SpaChina invited James to share his experiences, passion and vision with our readers who would need more education and precise guidance on the trading business.

In the past two years, what is your main business related to SPA, medical aesthetic and medical industry?

As the 1990s generation becomes the main consumption force and as the public holds an more open attitude towards plastic surgery and medical aesthetic treatments, the penetration rate of and consumer demand in China’s medical aesthetic industry keep surging. I understand China has become the third biggest medical beauty market in the world. But unlike mature markets, the penetration rate of medical aesthetics in China is less than 2%. So the market potential is huge. In the next five years, the compound annual growth rate may reach 22.7%.  Market value is estimated to break 460 billion RMB by 2020.

Against such a background, some of our equipment customers have begun to develop specific devices for spa, medical aesthetic and medical situations or for home use. For example, one of our customers created a home-use RF beauty device Tripollar which falls in the type of beauty and medical aesthetic equipment. During the 11.11 shopping fest last year, the dispatch bills of this device exceeded 20,000. Every year, we help our customers import over 200,000 pieces of equipment from Israel.

How does the “You purchase I pay” money flow service offered by Excellent Trading work?

This is a service we offer in the trade section which aims to optimize customers’ fund flow. When our domestic customers purchase goods from overseas manufacturers, we can pay part of the amount for them in advance to the overseas enterprises, up to 75% of total contract amount. Unlike financial service institutions, we don’t need customers to have bank guarantees or give any pledge. The only condition is that they entrust us to do the goods transportation for them.

What legal tax reduction and tax avoidance solutions do you offer to customers?

Usually, we would suggest customers to establish a branch in Hong Kong as an international purchase center. On the one hand, the import and export payment procedures in Hong Kong are more flexible and convenient. It can be done through E-bank. On the other hand, the government has tax preferential policies for Hong Kong enterprises. If a domestic enterprise turns into a Sino-foreign joint venture or cooperative enterprise, it will enjoy more tax benefits, tax exemption or tax deferral privileges. Moreover, the corporate income tax in Hong Kong is only 17%. So to establish a branch in Hong Kong can help enterprises reduce costs and gain more margin.

Additionally, the classification of customs codes and product prices during customs declaration is a key issue. So while doing import declaration is for customers, we offer them suggestions on these two aspects to help them reduce cost and avoid risks.

Apart from what is mentioned above, what other unique services do you offer to customers?

In most cases, we are our customers’ consultants. For example, we have one customer who failed to control cost while importing an overseas brand’s products. As a result, the products’ prices in domestic market are higher than similar products. After doing an analysis, we discover that the high cost mainly comes from the overseas labor cost of packaging and logistics transportation. So we immediately suggested the customer import the products’ raw material and do the packaging in China. This not only reduced cost but also shortened the time for CFDA application. 

When customers begin to sell imported products in the domestic market, we further provide brand marketing advice and support to them. For instance, we implanted customers’ brands in our company’s promotional video at the end of 2019. The video was shown at several plazas in downtown Shanghai. Such care for co-marketing gained huge praise from our customers.

How does your online platform operate?

We will launch Yun Jin Tong (Cloud Import & Export) system at the second half of 2020. It is a one-stop import & export cloud operation platform designed and developed by Excellent Trading. We use it not only to improve our operational norms but more importantly, to create an interactive platform with customers.

For a long time, in the import business, products’ price and procedure details are not completely transparent. We are now developing a visual operation system with absolutely transparent price quotation functions. On this platform, customers are able to check quotations, place an order and track the order’s real time status. After typing in the product’s category and name, they can get all the customs clearance information right away including HSCODE, customs clearance elements, customs duty VAT, a list of documents one needs to prepare and operation guidance on every business section for each product. If you further type the product’s specifications, you can also know the cost for different sections and services (including cosmetics, medical equipment and beauty devices). Then, you can place an order, edit or save the data, upload or download information, do real time tracking or see the cost details. In summary, the platform can realize visualized operation, standardized process, and real time tracking.

How do policies like The Belt and Road Initiative influence the import and export trade in China?

According to the data issued by China’s General Administration of Customs on March 7, China’s import and export trade volume in the first two months of 2020 is 4,120 billion yuan, showing a 9.6% decrease on year-on-year basis. During the coronavirus outbreak, many countries launched trade restrictions on China which also influenced the import and export trade. But it is worth mentioning that China’s trade with the countries covered by The Belt and Road Initiative has expanded, surpassing 30% of total trade volume. Representatives from General Administration of Customs believe that the expanding cooperation with these countries will drive the development of China’s foreign trade and stabilize the foreign trade foundation of China.

How do you see the development of China’s health and wellness market in the next five years?

In recent years, “Health China” concept has been lifted up as a national strategy. Health and wellness have become a hot topic in people’s daily life. And this industry is deemed as a new commercial “blue ocean”. Personally, I observe the following five trends for China’s big health industry in the future.

1. High-tech. Wearable devices, telemedicine, bi-directional audio remote technology, chronic disease monitoring, block chain medicine will be widely applied in the medicine world.
2. Precision, standardization and professionalization. Personalized and specialized full lifecycle health management system featuring precise health check, treatment and wellness improvement is a trend.
3. Artificial Intelligence. New technologies such as artificial intelligent and IoT+ will transform big health industry.
4. Integration. Big health industry will have deep integration with culture and tourism.
5. Globalization. International cooperation and resource sharing is also a trend for the future development of medical and health industry.