First China fragrance deal of 2024 bodes well for local brands’ global ambitions

What happened Leading Chinese luxury fragrance brand Documents secured a multi-million RMB investment from luxury beauty and retail group Ushopal Group, announced on January 5. It is the first sizable deal in China’s beauty sector this year, and also Ushopal’s first equity investment in a Chinese brand. Documents will use the money to expand its global supply chain and sales channels, with the goal of establishing itself as a global brand. Ushopal founder and CEO Guo Lu expressed her optimism about Documents, stating in a press release that it is “one of the very few Chinese brands that can compete with global high-end brands” in areas like brand values, product development and unique artistic expression. An investor in brands like Juliette Has a Gun, Argentum, and Bulk Homme, Ushopal boasts a track record of guiding brand expansion both in China and globally. The Jing Take Founded in 2021, Documents is a high-end fragrance brand that invented the concepts of “bold zen”(or “zen cool”) meaning a fresh return to the essence of Chinese luxury, a kind of understated refinement. It produces novel fragrances with ingredients sourced from China, and its flagship products are priced at 850 RMB (approximately $119) per 30ml. The brand expanded rapidly in China in the following two years, opening 12 stores in various upscale shopping malls in major cities. Last year, Documents expanded its unique aesthetics and brand philosophy into fashion, launching its first accessories ‘Pray 念.’ In September 2022, Documents secured multi-million RMB funding via an investment round led by Cathay Capital and Shanghai Meicifang Investment, a subsidiary of L’Oréal China. This marked L'Oréal's first equity investment in a Chinese luxury perfume brand As noted in Jing Daily’s new China Fragrance Market Report 2024, China’s domestic perfume market is projected to grow to $4.73 billion (30 billion RMB) by 2025, a significant increase from $2 billion (13.6 billion RMB) in 2021. This growth has drawn the interest of international brands, resulting in their entry into the market, and increasing investment. Although domestic brands such as Documents are winning over young Chinese consumers with their takes on traditional Chinese culture, they face fierce competition from international brands. Additionally, domestic labels’ pricing strategy, which has seen some products priced similarly to or even higher than more recognized brands like Chanel and Dior, has sparked criticism. In November last year, cosmetics brand Forest Cabin (林清轩) introduced a perfume priced at 1,702 RMB ($263) for a 75ml bottle, which triggered an online backlash and led to the brand removing the item from its online store. Documents last month closed its Chengdu IFS store after just one year of operation. The move prompted some consumers to express their concerns about the brand’s pricing on Xiaohongshu. One user @xxx commented: ”These brands have accumulated rich heritage over decades, you can’t surpass that solely by charging a high price.” For emerging brands, striking the right balance between innovation and pricing is crucial, and whether Documents can become a global brand will ultimately hinge on its ability to navigate this challenge. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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First China fragrance deal of 2024 bodes well for local brands’ global ambitions