{"id":10741,"date":"2022-08-07T07:30:55","date_gmt":"2022-08-07T07:30:55","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=10741"},"modified":"2025-04-23T09:38:15","modified_gmt":"2025-04-23T09:38:15","slug":"should-brands-in-china-spend-on-marketing-or-rd-the-case-of-beneunder","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/should-brands-in-china-spend-on-marketing-or-rd-the-case-of-beneunder\/","title":{"rendered":"Should brands in China spend on marketing or R&D?"},"content":{"rendered":"

As another Chinese consumer brand falls foul of the Chinese government by concentrating its budget on quick fix marketing, what can companies learn about allocating their priorities in the China market? Asks Mark Tanner<\/strong> from China Skinny<\/strong><\/h2>\n

\u201cIf you protect yourself from the sun, you will be whiter than others. If not, you will be uglier,\u201d so said a controversial sun hat advertisement last month on Douyin<\/a> from the multi-billion dollar Chinese sun protection brand, Beneunder.<\/p>\n

Beneunder has capitalised on the perennial belief across much of Asia that fairer skin is symbolic of a higher social class, away from working in the fields and rural poverty associations. While whitening skin creams are the best-known products that support the belief, nine years ago, Beneunder started selling premium umbrellas that claimed to block 99% of UV rays, soon establishing itself as the \u2018<\/span>Herm\u00e8s of umbrellas\u2019. <\/span>The company was quick to capitalise on its reputation and diversify its range, with top-selling products now including sun-protection clothing, face masks and sleeve gloves.<\/p>\n

\"launchpad<\/a><\/p>\n

Increasing affluence and changing trends are seeing Chinese consumers spend more time in the sun. They\u2019<\/span>re holidaying in rural areas more, with a big jump in those going camping<\/a> and planning outdoor activities such as kayaking or golf. On top of that, the 58% fall in PM2.5 air pollution over the past decade has made China\u2019<\/span>s sun harsher.<\/p>\n

As a result, China\u2019<\/span>s sun protection industry is booming. Sun Protection notes on Xiaohongshu<\/a> (RED) grew 56% last year, and 115% in the first four months of 2022. Sales of related products grew an average of 80% across Tmall and JD last year. Sunscreen has been among the fastest growing categories for skincare, yet many consumers are opting to use less of the cream on their skin, instead choosing \u2018<\/span>less obtrusive\u2019<\/span> protection such as Beneunder\u2019<\/span>s umbrellas and clothing. Sun protection apparel is tracking to grow from RMB 61 billion last year to RMB 96 billion in 2026, according to CIC.<\/p>\n

So when Beneunder filed for an IPO in April, things should have been promising. But it didn\u2019<\/span>t quite go that way. In June, the official newspaper of the Chinese Communist Party, the People\u2019<\/span>s Daily<\/em>, slammed the company for excessive spending on marketing and underinvesting in research and development. Investors have also been pressuring Beneunder to halve its $3 billion valuation from earlier this year.<\/p>\n

Beneunder follows a classic example of many Chinese disrupter brands. When\u00a0tech companies fell out of favour<\/a> with Beijing, investors pivoted towards consumer brands, which became awash with cash. Much of this cash was spent on marketing \u2013 not strategic marketing investments, but rather transactional initiatives aimed at quick sales.<\/p>\n