On November 11, according to Nikkei Shimbun , Japan's Orix will acquire cosmetics e-commerce and health food company DHCh (Chinese name: Diecui Shi ), with an estimated acquisition amount of about 300 billion yen (approximately RMB 15.3 billion).
public information shows that DHC was founded by Yoshida Kazune in 1972. Its main business is cosmetics and healthy foods, and is involved in a wide range of businesses such as clothing and resort facilities operations. Its cosmetics business began in 1983 and has a history of 40 years.
It is reported that Olix will acquire all shares of the company from DHC founder and existing shareholders. After the acquisition is completed, the brand will be maintained and Olix will be dispatched to participate in the operation.
acquisition amount hits a record high
According to the above media reports, Olix Group 's acquisition of DHC is a merger and acquisition with the purpose of handover and career succession of the founder of DHC. DHC founder Gyako Yoshida is currently 81 years old. Olix will acquire all the equity of the company from him and his existing shareholders, and Olix will send directors to participate in the operation, striving to increase the value of the company.
This time, the acquisition of 300 billion yen not only set the largest historical scale in the merger and acquisition case of Orix Group, but also hit a record high in the merger and acquisition case of the Japanese founder's handover.
Yang Jianzhong, chairman of the Japan-China International Cosmetics Exchange Association, told Cosmetics Observation that in Japan, mergers and acquisitions for the purpose of handover are more common due to the aging of business operators. "After such mergers and acquisitions occur, it may have an impact on the company's business policies, but the original boss of the company may propose conditions such as retaining employees." It is understood that as of October 21 this year, the number of employees of DHC was 2,032.
Photo sourcePhoto website
It is worth noting that the acquisition of Orix Group has a good background.
public information shows that Orix Group was established in 1964 and is currently one of the world's largest diversified financial groups, ranking 272nd on the Forbes Global Listed Companies Ranking in 2021, and has been listed on New York Stock Exchange and East Exchange . The company's main businesses include banking, insurance, asset management, investment banking , financial leasing, etc., with assets managed by more than US$700 billion. From the perspective of asset management scale, Orix is of the same magnitude as Morgan, Blackstone , China Resources, etc., and is at the mid-level of top consortiums.
Olix entered China in 1981 and widely carried out financial businesses such as financing leasing and equipment leasing. Compared with the financial operation business, although its PE investment business started late, it has developed unique characteristics. Olix advocates the "deep incubation and investment" model, with the goal of accompanying the long-term growth of the company, grafting the group's advantages to the invested companies, thereby achieving sustainable and win-win development.
For the beauty industry, Orix Group is a relatively unfamiliar company. Regarding this acquisition, Orix spokesperson declined to comment and did not publicly disclose the motivation for the acquisition.
has a revenue of 4.6 billion yuan. As the acquirer of this time, DHC has long been famous in the cosmetics industry.
DHC is a well-known cosmetics brand in Japan. Its cosmetics business began in 1983. It currently covers basic skin care to cosmetics, body beauty products, hair care products, men's skin care products and baby skin care products. Its products are natural and gentle. The most classic and best-selling product is the olive nourishing series. The DHC deep makeup remover oil that Chinese consumers know more about belongs to this series.
In particular, all DHC products are sold in the form of communication sales, that is, sales are completed through television, telephone, Internet, direct mail, etc. All sales in Japan are communication sales. According to DHC's official website information, it has ranked first in the field of communications for 18 consecutive years.
According to the Japanese cosmetics industry, DHC's operating income in fiscal year 2021 was 90.1 billion yen (approximately RMB 4.594 billion). According to the sales ranking of Japanese cosmetics companies in the same year, it ranks fifth behind the four major actresses: Shiseido , Kao , Gaosi , and Poly .
Picture sourceDHC China official Weibo
As a Japanese brand, DHC business covers many places.In 1999, DHC entered Taiwan, China; entered the Korean market in 2002 and entered the mainland Chinese market in 2003. However, DHC's business in South Korea is not very smooth. According to relevant media reports, the brand officially withdrew from the Korean market in mid-September 2021, but did not mention the reasons for the termination of its operations.
In comparison, DHC has had a "highlight" moment in China. In July 2003, DHC entered the Chinese market and established a branch in Shanghai - Shanghai Diecui Shi Commercial Co., Ltd. (hereinafter referred to as "Shanghai Diecui Shi"). Its sales categories in China include skin care, makeup, and health foods. Among them, olive makeup remover oil, olive honey nourishing soap, and elastic essence moisturizing cream are the three best-selling items on the official website. In just one and a half years, sales reached 100 million yuan.
With DHC entering China, it has also brought its unique sales model to China, becoming the first cosmetics brand to fully adopt the communication marketing model in mainland China. Consumers can automatically become members by requesting DHC free trial packages via phone or online, or ordering products without paying any membership fees and annual fees. Moreover, if you purchase DHC products once, you can get a free monthly "Olive Club" magazine for 12 consecutive months, which contains the latest beauty industry information and discount information.
cooperates with this sales model, DHC once put on "phone ordering" advertisements on TV. In that era when video was still underdeveloped, DHC's ordering hotline "8008208820" was once circulated by many people as "advertising songs". In 2004, it became an "internet phenomenon" and also made many people know the brand. Since then, DHC has spared no effort to invest in marketing in China. From 2016 to 2020, it has successively signed stars such as Guo Biting, , Jia Jingwen, Hou Minghao, , Tan Songyun, and other stars as relevant spokespersons of the brand China region.
In addition to bringing the communication sales model to China, DHC has also actively sought changes and has laid out channels such as department store counter direct stores, Tmall , etc.
In 2007, DHC opened an offline direct store in China, and the number of stores has increased rapidly. As of 2018, Shanghai Diecui Shi had about 350 direct stores. In addition, the brand has also opened a flagship store on Tmall. On the Tmall platform, the DHC brand’s official flagship store has 2.59 million followers, and the highest-selling products are olive lip balm and olive makeup remover, with monthly sales reaching more than 40,000.
Source: DHC Tmall flagship store
In addition to its main cosmetics business, in 2019, DHC introduced two daily collagen oral beverages into the Chinese counter. In its view, in China, oral skin care products are a very potential market.
successively received fines, can " White Knight " be saved?
As mentioned above, DHC has achieved outstanding results in the Chinese market, but in recent years, it has been punished for posting false advertisements many times, and its brand credibility has been questioned by consumers.
For example, in May last year, Shanghai Diecui Shi, the responsible person in China, was fined 350,000 yuan by the Shanghai Pudong New District Municipal Supervision Bureau for posting false advertisements. In July this year, Shanghai Diecui Shi was confiscated by the Shanghai Pudong New District Municipal Supervision Bureau for "selling cosmetics that do not meet the technical specifications of cosmetics safety ". The administrative penalty decision shows that "Diecuis Men's Moisturizing Balance Cream" and "Diecuis Men's Balance Water" have been tested to contain "tetrasodium hydroxyethylphosphate" ingredients, which are cosmetics that do not meet the technical specifications of cosmetic safety.
According to Cosmetics Observation statistics, since 2017, DHC has been subject to 5 administrative penalties for , with a total fine of nearly 2.12 million yuan. The main reasons for the punishment are false propaganda and the addition of restricted ingredients beyond the scope.
has also been frequently fined in the Chinese market in recent years. On social media platforms such as Weibo and Xiaohongshu , the DHC brand has been labeled as "repeatedly unchanged" by netizens, and its credibility has plummeted. Some netizens posted, "DHC products have always claimed that they are natural and have mild properties, but they have been found to not comply with safety regulations and will not repurchase them in the future." The bad influence of
is also transmitted to the channel.During the cosmetics observation interview, there was feedback from cosmetics stores that it introduced DHC products in the store in the past, with a peak monthly sales of hundreds of thousands. However, the subsequent brand image management was poor and the products often showed negative news, and it was no longer sold three years ago.
"This brand has no voice in recent years, and the Chinese team has also conveyed a state of "half giving up" and its investment in the Chinese market is far less than that of other Japanese brands such as Shiseido and Kao." The above-mentioned cosmetics store owner further pointed out.
It is worth noting that Orix has an evaluation in the venture capital circle that "has good at seizing the bottom of the economic cycle, buying the bottom assets, often playing the role of a white knight, saving people from danger, giving timely help instead of adding icing on the cake". This acquisition may bring new opportunities to DHC.
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