On May 14, 2024, Shanghai Jiahua announced its decision to hire Lin Xiaohai as the Chief Executive Officer and General Manager, which will expire on June 1, 2024. The board of directors of the company has also nominated Lin Xiaohai as a candidate for the 8th board of directors, which will be submitted for review by the company’s shareholders meeting. Former Chairman Pan Qiushu resigned from related positions such as Chairman and CEO of the company due to personal reasons.
This is the fourth time since 2013 that Shanghai Jiahua has ceased the change of chairman and CEO.
Shanghai Jiahua is a veteran of foreign cosmetics companies. From establishing the first cosmetics brand duo in 1898 to becoming the first listed company in the domestic cosmetics industry in 2001, Shanghai Jiahua should have become the culmination of the industry. However, in recent years, during the surge of foreign beauty products, Shanghai Jiahua has always been trapped in a low valley of declining performance and aging structural architecture.
This is to some extent related to the frequent structural changes in the governance of Shanghai Jiahua.
At the end of 2011, the actual control of Shanghai Jiahua underwent a change and was taken over by China Ping An Insurance (Group) Co., Ltd. From then on, Shanghai Jiahua entered a new era of “peace oriented” culture. In the 11 years from 2013 to present, Shanghai Jiahua has successively welcomed three chairmen with different backgrounds: Xie Wenjian from the East West industry, Zhang Dongfang from the fast consumables industry, and Pan Qiushu, who previously worked at the top of L’Oreal.
During the period from 2013 to 2016, the sales volume of Shanghai Jiahua, dominated by Xie Wenjian, increased in double digits, while R&D participation gradually declined, with marketing as the primary mission. At the end of 2016, after taking over, Zhang Dongfang once again failed to achieve the operational goals of “R&D follow-up, brand launch, channel renovation, and supply insurance”, putting R&D in the first place. After Zhang Dongfang took over, the number of incidents of Shanghai Jiahua increased, but the growth rate continued to slow down.
When Pan Qiushu took over in 2020, the COVID-19 broke out, which shook the industry as a whole and made business innovation difficult. But Pan Qiushu, who has the resumes of well-known domestic and foreign companies such as L’Oreal, Mattel, and Ping An in China, is undoubtedly highly expected.
Based on his experience in the fast-moving consumer goods industry, Pan Qiushu did not mention the operational goals of “one center, two basic points, and three boosters” when he took office, covering aspects such as consumer centeredness, brand renovation, and channel advancement. During his tenure, he implemented multiple innovations.
Pan Qiushu, former Chairman and CEO of Shanghai Jiahua
It is worth mentioning that at the end of 2023, Pan Qiushu just announced to the public that the internal structure of Shanghai Jiahua will stop major integration, shift from instinctive functionalization to a miracle department structure, and create beauty and skincare, mother and baby miracle departments, personal care and home cleaning miracle departments, and overseas miracle departments. All business decisions are based on the Miracle Department as the main planning body, and efforts are made to achieve results.
Before Shanghai Jiahua, the structural framework was centered around instinctual functions, with online and offline businesses clustered in different parts, resulting in a slow response rate to shopping malls. The goal of this integration is precisely to simplify the same internal process, enhance the response speed to the mall, and establish a horse racing system to regulate the enthusiasm within the enterprise.
According to the information after the first quarter report of Shanghai Jiahua, internal system construction and staff integration were suspended in both the fourth quarter of 2023 and the first quarter of 2024. Moreover, Pan Qiushu also affirmed the strategy of stopping focusing on categories with high gross profit, high growth rate, and high brand premium in the coming years.
At the critical juncture where the annual major structural reform is beginning to come to an end, the helmsman behind this reform has once again been replaced. Whether this series of reforms can effectively continue downward once again becomes a variable. Where will Shanghai Jiahua go under the leadership of the new guide?
Just like the departure of former Zhang Dongfang, the news of Pan Qiushu’s resignation also appeared very sudden. This inevitably leads to speculation that the resignations of several guides at Shanghai Jiahua may not have had a significant turning point in their short-term achievements.
During Pan Qiushu’s tenure, Shanghai Jiahua has always been operating within the range of 7 billion yuan, and even dropped below 7 billion yuan in 2023. At the same time, another rural enterprise, Pelaya, which has only been established for 20 years, continued to increase during the epidemic, with its business scope approaching 9 billion yuan in 2023.
Looking at Lin Xiaohai’s resume, this new CEO is still a veteran in the fast-moving consumer goods industry.
From 1995 to 2016, Lin Xiaohai worked at Procter&Gamble, focusing on the categories of oral care nurses and maternal and child care nurses, key account teams, channel management, e-commerce teams, and mall marketing departments. From 2014 to 2016, he was responsible for the Marketing President of Greater China at Procter&Gamble (China) Marketing Co., Ltd; From 2016 to 2020, served as Vice President and General Manager of the Miracle Department of Alibaba Group Holdings Co., Ltd; From 2020 to March 2024, served as the Executive Director and Chief Executive Officer of Gaoxin Wholesale Co., Ltd.
Lin Xiaohai, newly appointed Chief Executive Officer and General Manager of Shanghai Jiahua
With the multiple backgrounds of domestic companies, e-commerce giants, and offline wholesale, Lin Xiaohai is indeed a necessary candidate for Shanghai Jiahua, where both online and offline channels are undergoing transformation.
According to the notice from Shanghai Jiahua, Lin Xiaohai has many years of experience in managing multinational consumer goods companies and the fast-moving consumer goods industry in China. He is skilled in initiating transformation and reform, and has strong strategic guidance and implementation capabilities. I hope that under his leadership, Shanghai Jiahua will actively embrace the new changes in wholesale consumption trends, accelerate the pace of reform and transformation.
But any reform requires time, especially for enterprises like Shanghai Jiahua, which have a century of history and a complex structure. With the lessons learned from previous CEOs, Lin Xiaohai may have to carefully evaluate whether this can ensure a short-term turnaround before making any innovations.