Hou Juncheng on building Proya, China’s response to L’Oréal
Hou Juncheng has a dream, and it ain’t modest. He wants to own the biggest cosmetics company in China – and he’s already off to an extremely fast start.
Hou is the founder and key shareholder of Proya, a dynamic Chinese cosmetics group that encompasses skincare, makeup and beauty products that includes its signature marque, local Chinese brands such as Timage, and handles European marques like Zwyer Caviar, Artemis in China.
His weapons: e-commerce, live-streaming and social media influence. Proya’s business is practically all concentrated in China and it is booming. So much so, that Forbes placed Hou on its list of Chinese billionaires in 2020 with a fortune valued at $1.2 billion.
Proya has also come roaring out of the pandemic. In 2021, annual sales totaled RMB 4.6 billion, or some €650 million, 80% of which came from online sales.
Mr. Hou, as everyone seems to call him, was in Paris this week, imbibing the atmosphere in his first visit to Europe in three years, allowing FashionNetwork.com to dine with the hard-charging president.
“Why am I in Paris? Because Paris is the capital of France and fashion, culturally and economically. So, as we work in cosmetics, it’s vital to come here and learn and work with French companies. Plus, I love France and French people,” explained the ebullient Hou.
He founded Proya in 2006, after distributing cosmetics in the 1990s. By November 2017, Proya was floated on the Shanghai Stock Exchange.
“Research shows that Chinese consumers spend about $40 a year per head on cosmetics. Let’s say the proportion is one about to seven compared to the U.S. I believe that in 10 to 20 years, our consumption won’t be that much different to the West. And remember, there are 20-times as many people in China as in France, so we are talking about China becoming a really, really huge market,” he beams.
“We believe that many Chinese consumers are not taken into account in the research. Like illegal or black-market consumption and a lot of internet sales, which are not always fully counted. So, I’d say average annual consumption is more like €60. Plus, there are 150 million Chinese consumers wandering around the world, and they always buy cosmetics!” he insists.
There is certainly plenty of room to grow internally. Industry studies predicts that the Chinese cosmetics market will grow by 11% in 2023 to some $85 billion. Moreover, color cosmetics currently make up just 12% of sales in China, allowing for huge upward potential.
Today Proya, a huge hit among 18-to-24 year olds, boasts 10 key brands including Uzero, which advocates fresh skin energy from plants, like green tea serum. Another in the group is Timage, a makeup label recognizable by its green jade hue - which in Chinese iconography represents a calm and free spirit.
In China, Proya handles Zwyer Caviar, a Swiss label founded in 2009 that began selling caviar online from day one. And now creates rejuvenating face creams and silky serums that sell for equally high prices - €290 for 50 mls and €340 for 30 mls, respectively. And it takes care of Artemis, another Swiss label based on natural high-tech plant science, with advanced products but at a significantly more affordable price point. It also has a joint venture with Spanish skincare line Singuladerm.
“We actually created a company in South Korea back in 2008. At the time, Chinese people were in love with Korean cosmetics. So, we created a company with a lot of innovation there, but the sales were always in China,” notes Huo, who likes to ruminate about business and philosophize about life.
Asked about Japan, and why so many Chinese shop there, he responded: “We have a great deal of admiration for the way that Japanese people look to be perfect. And we learn a lot from them, and we can love them. Even if we cannot avoid remembering the war. Sometimes their prime ministers are friendly, while others have had anti-Chinese attitudes,” argues Huo.
“In China we have pretty good cars. But consumers still want to buy Hyundai, Mercedes Benz and Ferrari. We opened our doors relatively late, and we still like to buy foreign products and cutting-edge ideas. 50% of cosmetics markets is still made up of foreign brands. But two decades ago, 90% of our cosmetics market was foreign brands,” stresses Hou, who tucks into his food. Chinese family-style, our table of seven all share each other’s starters and main courses, from artichokes and foie gras, to sole and entrecote.
Hou was born in 1964, almost a generation before Deng Xiaoping began his market reforms and opening of China to foreign investment in 1978.
“In 1982, I lost my father when I was just 17, so I had to work early and help provide for our family,” said Hou, the youngest of five kids. “Back in those days, the policy on big families didn’t exist.”
Like his dad, who worked in a factory, Hou began modestly, repairing tractors and bicycles, before beginning to work in sales, and then opening his first business with his family in 1992.
“I realized that was the way to change my destiny. I had to create my own brand, which I did in 2003 with Proya,” said Hou. Its name means 'elegance', an important element in beauty, and easy to remember.
“I was pretty talented in sales and management. We have a saying in China: 'A single flower does not make spring, while one hundred flowers in full bloom bring spring to the garden.' You know why a professor, or an expert can never be boss of a company? Because they are over concentrated on their own sector and too busy calculating things, so they can’t have time to manage,” he chortles.
Success has brought the fit-looking Mr. Hou all the right trappings. He wears Dior suits and Berluti shoes. And he likes to vacation on Sanya, the trendy, near-tropical island off southern China, where he has a seaside home and a 36-meter yacht named 'Horizon'.
One suspects he will continue to amass riches, seeing as the market cap of Proya is currently just under $7 billion, and Mr. Hou owns 35% of the group.
During the pandemic, Proya donated 200,000 masks to European countries, leading Marc-Antoine Jamet, mayor of Val de Reuil, at the center of what is sometimes called France’s Cosmetics Valley, to award a medal of honor to this Chinese entrepreneur, via Zoom, bien sûr.
“I think one has a duty to humanity to always help people in need. Otherwise, what is the point?” he says.
Hou is less precise about his next goal, an international development phase for Proya. Competing against global giants like L’Oréal and Estee Lauder will not be easy. Curiously, Proya’s R&D is not enormous by French standards. A total of RMB 74.6 million (about €10 million) according to the official company profile, or just 2.5% of revenue.
Looking back in business history, Hou believes that the cosmetics industry in China was initially centered on production, with Guangzhou the center of the industry. A decade later, the cosmetics industry was centered on distribution, with Shanghai at the center. Today, the cosmetics industry is centered on e-commerce, live-streaming and social media influence, and Hangzhou, where Proya is based, has become the new center of the cosmetics industry.
Taking a leaf out of the French book, Hou’s other big plan was linking up with the Wuxing District Government of Huzhou City to promote the construction of China Beauty City. Their long-term goal is become the equivalent of an Eastern Grasse. Given Hou’s track record, don’t be surprised if that happens.
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