Core Insights - The article discusses the declining performance of traditional Chinese hair care brands, specifically Lafang, Mingchen Health, and Bawang Group, which have seen significant drops in revenue and profit despite a growing market for hair care products [1][2][3]. Group 1: Market Overview - The hair care market is projected to reach 899.95 billion yuan in 2024, with a year-on-year growth of 59.32%, indicating a positive outlook for the industry overall [1]. - Despite the optimistic market growth, traditional brands are struggling to maintain their market share and profitability [2]. Group 2: Revenue Performance - Lafang's revenue peaked at 1.101 billion yuan in 2021 but has since declined, reaching 860 million yuan in 2023, with a slight projected increase to 889 million yuan in 2024 [6]. - Mingchen Health has shown a more favorable trend, with revenue increasing from 681 million yuan in 2020 to 1.638 billion yuan in 2023, although it is expected to drop by 15.71% in 2024 [6]. - Bawang Group has consistently lagged behind, with revenue hovering around 250 million yuan, experiencing a decline from 2021 to 2023, but showing a potential recovery with a 9.33% increase in the first half of 2025 [6]. Group 3: Profitability Challenges - Lafang's net profit fluctuated significantly, peaking at 117 million yuan in 2020 but dropping to 41 million yuan in 2024, with a 77.01% decrease in the first three quarters of 2025 [10][11]. - Mingchen Health's net profit has been volatile, with a peak of 102 million yuan in 2020, followed by a drop to 25 million yuan in 2022, and a rebound to 70 million yuan in 2023, but again declining to 47 million yuan in 2024 [10][11]. - Bawang Group has faced continuous losses, with net profit of 14 million yuan in 2023, but falling to 7 million yuan in 2024, and a loss of 3 million yuan in the first half of 2025 [12]. Group 4: Gross Margin Trends - Lafang's gross margin has shown volatility, decreasing from 48.37% in 2020 to 47.18% in 2022, then recovering to 48.49% in the first three quarters of 2025 [15]. - Mingchen Health's gross margin peaked at 60.27% in 2023 but fell to 52.50% in 2024 due to rising raw material costs [16]. - Bawang Group's gross margin has been low, ranging from 36.20% to 39.17% from 2020 to 2022, but increased to 50.38% in 2023 before dropping to 43.95% in the first half of 2025 [16]. Group 5: R&D Investment - Mingchen Health has led in R&D investment, peaking at 99 million yuan in 2021 but dropping to 40 million yuan in the first three quarters of 2025 [20][21]. - Lafang's R&D investment has remained stable around 30-40 million yuan, but decreased to 23 million yuan in 2025 due to revenue decline [20][21]. - Bawang Group's R&D investment has been the lowest, consistently below 15 million yuan, indicating a lack of innovation [20][21]. Group 6: Brand Strategy and Market Position - Lafang's main brand continues to dominate, accounting for 80.41% of total revenue in the first half of 2025, but other brands have not made significant contributions [26]. - Mingchen Health's focus on gaming has led to a delay in updating its hair care brands, resulting in marginalization of its traditional products [26]. - Bawang Group's reliance on traditional products has left it vulnerable to competition from both established and emerging brands [26]. Group 7: Industry Challenges - The article identifies four main challenges for these traditional brands: product iteration lag, lack of user engagement, pressure from domestic and international brands, and quality compliance issues [27][31][35]. - The emergence of new brands and changing consumer preferences have intensified competition, particularly on platforms like Douyin [28][31].