Few Chinese cosmetics company has embraced digitalization as thoroughly as JALA Group.

Walking into JALA Group’s office at Shanghai SOHO East Ocean Plaza, digitalization slogans are omnipresent—not merely for external promotion but as internal reminders. Like capillaries, digitalization permeates every department, reshaping JALA into a new entity.

Amid the frosty cosmetics market of 2022, JALA Group delivered a surprising "report card": digital revenue accounted for 98.8%, a year-on-year increase of 50.8%; digital retail comprised 76.1%; its database covered 966 million consumer profiles, with 81.9 million members; terminal network online rate reached 96%, and beauty advisors’ (BA) online engagement exceeded 80%.

These figures demonstrate that JALA Group has become a highly digitized enterprise, achieving phased success in its digital transformation. After three pandemic years, JALA has evolved into a "digitally-driven biotech beauty company."

What drives JALA Group’s digital transformation? As a pioneer, what insights and significance does JALA’s evolution offer the cosmetics industry and broader business landscape?

01 A Top-Down Revolution in Digital Thinking

Meng Wanzhou, Huawei’s Vice Chairwoman, Rotating Chairwoman, and CFO, once stated, "Digital transformation must be a leadership project, with data intelligence as the direction." JALA Group’s rapid success in digital transformation likely stems from its foundational approach.

Rewinding to 2018, China’s cosmetics market thrived on consumption upgrades, fueled by capital influx, new channel traffic, and intensified marketing. Yet Zheng Chunying, Chairman and CEO of JALA Group, adhered to his "half-step ahead" philosophy—honed over 22 years—to offer a distinct perspective on the landscape.

Mr. Zheng Chunying, Chairman and President of JALA Group

Until 2019, it still took 5-6 months for our new products to reach store shelves."
According to Zheng Chunying, under the traditional distribution model, inefficiencies in inventory and logistics had fostered detrimental practices such as cross-regional reselling and price manipulation by agents. These behaviors disrupted JALA’s pricing and distribution systems, diluted brand value, and severely damaged corporate credibility and market order. These issues increasingly unsettled him.

"Digital transformation is imperative for future survival. Without it, it’s not consumers leaving us—we’re leaving them." Driven by urgency, Zheng decided to bet JALA’s future on digital transformation. He believed that without overhauling consumer engagement and channel management through digital ecosystems, JALA could not achieve long-term growth.

This decision required immense courage at the time.

For any company, comprehensive digital transformation is a profound, long-term overhaul—rarely yielding instant results. Moreover, in China’s fragmented market, domestic beauty brands lacked precedents for digitalization, with many equating it merely to "e-commerce department tasks."

"A leader must never be the ceiling for a company’s growth," Zheng realized. Digital transformation was not just a technological revolution but a shift in mindset and business models.

Once a digital novice with skepticism, Zheng immersed himself in learning: "I tried every digital tool—online shopping, ride-hailing, food delivery, ticketing—to gain firsthand experience. I learned to prioritize user-centric thinking."

Through relentless study, Zheng became JALA’s digital "pacesetter," with a clear roadmap for transformation crystallizing in his mind.

He prioritized tackling the most pressing issue: inefficient distribution channels stifling JALA’s growth. Drawing lessons from peers while tailoring strategies to JALA’s context, Zheng conceived an innovative "One-Stock" model—centralizing national inventory under JALA’s unified management, eliminating agents’ physical warehouses, and achieving true nationwide stock integration.

Yet the "One-Stock" rollout faced unexpected resistance. "We cannot expect digital fruits to grow in a soil barren of digital thinking." Aligning internal consensus and cultivating a digital-first corporate culture became Zheng’s pressing challenge. Digitalization, as a systemic engineering endeavor, demanded unified cognition, aligned incentives, and organizational mechanisms to ensure execution.

The COVID-19 outbreak in 2020 provided the final impetus to launch the long-planned "One-Stock" initiative and digital transformation. Confronting disoriented employees and disillusioned agents burdened with excess inventory, Zheng seized the crisis as an opportunity to reinvigorate the project.

"Back then, I rallied the team, holding daily virtual meetings to stress innovation, bold experimentation, disruptive approaches, and digitalization." Zheng recounted.

After upskilling management and core teams through external training, Zheng led executives in redesigning top-level strategies, clarifying reforms in systems, processes, personnel, and operations. He then cascaded the transformation blueprint to middle management and frontline staff. Additionally, he personally visited agents, demonstrating solidarity and resolve, ultimately securing majority support through unwavering conviction.

Aligning timing, conditions, and unity—much like his decisive move a decade earlier to phase out order conventions—Zheng announced in 2020 that "One-Stock" would spearhead JALA’s three-phase digital transformation: 1.0 Business Online, 2.0 Digital Operations, and 3.0 Intelligent Marketing.

Under Zheng’s steadfast leadership, JALA’s digital voyage finally set sail in full force—a journey mirroring his original mission upon entering the beauty industry in 1997: "I asked myself why I chose this path. The answer was clear: to empower consumers with beauty and confidence."

02. "One-Stock"-Driven Full-Link Digitalization

Zheng established three transformation principles for JALA: "Win-Win Collaboration, Proactive Adaptation, and Data-Driven Decision-Making." Over three pandemic-affected years, the company systematically advanced the "One-Stock" model with flagship brand CHANDO as the pilot, developing a unique tripartite methodology integrating "business model innovation, IT implementation, and institutional safeguards."

On September 21, 2020, JALA inaugurated its first "One-Stock" warehouse in Xi’an and completed nationwide inventory restructuring within 69 days. Agents transitioned to "virtual inventory management," with third-party logistics handling direct shipments to stores and consumers, enabling unified, visible multi-channel inventory distribution.

The results were immediate: the system consolidated 177 fragmented inventories into 14 unified hubs, eliminating 31% of excess channel stock and reducing inventory days by 41%. With scientific stock allocation and agent demand-driven procurement, CHANDO generated nearly RMB 500 million in sales via the CS (Consumer & Society) channel within six months.

From the outset, JALA Group has reaped the benefits of digitalization. Subsequently, the company intensified its digital infrastructure development by establishing a "3+N+1" digital business platform. This initiative not only enabled flexible inventory allocation but also eliminated data silos, achieving real-time transparency in order transactions, marketing policies, and other critical data streams.

Building on this foundation, agents—now relieved of financial and logistical pressures—evolved into "Digital Retail Service Providers." Their role shifted to "assisting brands in training retail clients on system usage and meeting multi-scenario retail demands."

Taking Hebei Chenlong Huazhuang Industrial Co., Ltd. as an example, General Manager Duan Yajing stated, "Since implementing the 'Single Inventory' model, our warehouse area has been reduced from over 6,400 square meters to 1,000 square meters, while warehouse staff decreased from 40 to 4, significantly boosting operational efficiency." According to JALA Group's data, the establishment of channel governance has virtually eliminated cross-regional diversion and price chaos. As a result, agents' average profits increased by 3-5 percentage points.

Beyond empowering agents, JALA also delivers flexible and precise marketing strategies for brick-and-mortar stores grappling with traffic challenges, realizing its vision of "Tailored Strategies for Each Store."

Leveraging Cloud Store's digital tools, physical stores have transformed into digital retailers covering a 3-5 km radius. They now attract new customers through public traffic while optimizing private domain operations. For instance, collaborating with stores near university towns, JALA launched in-store experiences such as efficacy-focused face masks and "SNOWY REDGION LOTION" lotions tailored to students' hydration and repair needs, dramatically enhancing customer acquisition.

JALA has demonstrated increasing proficiency in partnering with digitally advanced retailers like Watsons. At the recent O+O Ecosystem Summit hosted by Watsons, CHANDO's exclusive product line emerged as a benchmark case for joint digital innovation.

"Efficiency, Growth, and Profitability" define JALA's three core objectives for smart retail—clear-cut and pragmatic. Today, new products or policies can reach over 40,000 retail terminals within 24 hours, with goods delivered to all outlets in 36 hours. While driving growth and per-square-meter efficiency for partners, JALA aims to "increase profit margins by 10% for every product sold at retail terminals, with beauty advisors earning several extra yuan per transaction."

To ensure "flawless execution," JALA internally overhauled its organizational structure, business processes, and performance metrics to align with new operational models and IT systems.

Notably, Chairman Zheng Chunying personally spearheaded weekly meetings to resolve ambiguities and overlaps between departments, adopting a user-centric approach. Under his leadership, the entire organization prioritized the Single Inventory project and digital transformation, restructuring into a "front-middle-back office" model optimized for digital strategy execution.

This created a virtuous cycle: "Wherever JALA's digital transformation advances, business model innovation and institutional development follow in lockstep."

In summary, through three years of digital infrastructure development and external resource integration, JALA achieved breakthroughs in online resources, consumer assets, and digital retail. With the Single Inventory model and three iterations of Cloud Store upgrades, the group has built a fully digitized ecosystem, propelling its industrial value to new heights.

03 Three Strategic Implications of JALA's Early Digital Success

In Homo Deus: A Brief History of Tomorrow, Yuval Noah Harari posits that "Dataism" will mark humanity's next evolutionary phase. Observers note that in a future driven by data, computing power, and algorithms, traditional enterprises will fade, leaving only digital and intelligent entities. Amid uncertainty, digital and intelligent transformation will serve as Chinese enterprises' key weapon to navigate cycles over the next decade.

According to the three core capability models for enterprises to navigate business cycles outlined earlier by FBeauty Future Beauty Journal, JALA Group's digital transformation has become a critical "watershed" in its corporate evolution, building upon recent product R&D advancements. Through digital transformation and corresponding organizational restructuring, JALA Group has honed its foundational capabilities over the three pandemic years to address today's fragmented channel ecosystems and diversified competition, demonstrating remarkable resilience.

Within the broader beauty industry ecosystem, JALA Group's current digital achievements carry threefold significance.

Firstly, by reconstructing its front-mid-back office operations, JALA Group has reengineered organizational and business processes while innovating its commercial models. This transformation not only reduces costs and enhances efficiency but also enables more agile, consumer-centric marketing approaches, securing JALA a stronger position within the industry ecosystem.

Reviewing the 40-year evolution of China's cosmetics distribution channels, beauty brands have transitioned from "single-channel" to "multi-channel" operations, and are now progressing from cross-channel to omnichannel marketing.

As online traffic dividends plateau, brands face mounting transformation challenges and short-term performance pressures, making "holistic domain marketing" imperative. By establishing its proprietary "digital middle platform," accumulating "data assets," and leveraging these in private domains to maximize "customer lifetime value," JALA Group has not only optimized cross-channel traffic operations through comprehensive digital transformation but also elevated consumer experiences and strengthened strategic autonomy.

To date, JALA Group's data analytics capabilities enable the design of 8 consumption scenarios and 11 audience segmentation models. Continuous iteration of these models through segmented operations has achieved precise consumer targeting and improved sales conversion rates.

Secondly, under JALA's "Digital Symbiosis" philosophy, cosmetics stores and their agents—the "capillaries" of beauty market distribution—have embarked on digital upgrades through the "One-Stock System." This advancement holds profound implications for enhancing digital capabilities across the entire Consumer Sales (CS) channel.

James Womack, father of lean production management, posits in Lean Thinkingthat building core competitiveness should extend beyond internal operations to encompass all external entities linked to "creating consumer value," thereby shaping "value streams."

JALA's close manufacturer-distributor relationships, once epitomized by initiatives like the "Dragon Club" and "JALA University," were previously studied by multinational corporations. Today, CHANDO's agent network remains among China's most capable cosmetics market operators. Driven by JALA, their collective innovation and upgrades have become a paradigm-shifting transformation model.

Notably, unlike many domestic beauty leaders heavily reliant on e-commerce, JALA's 42,000 premium AB-class offline retail stores—accumulated through decades of operations—represent unique and high-quality assets. Consequently, JALA's transformation carries greater industry-wide ripple effects and exemplary significance.

Retailers note that JALA's sales teams have transformed from traditional roles focused on policy promotion, inventory pressure, and collections to becoming "digital stewards" providing tools for ground promotions, campaign execution, digital empowerment, and data management—a fundamental shift in operational paradigms.

Finally, JALA Group has created a blueprint for digital transformation among domestic beauty enterprises, offering valuable lessons to help latecomers avoid detours.

A compelling example emerged during the 2022 Shanghai lockdown: Despite being at the epicenter, JALA demonstrated exceptional resilience. The company maintained smooth R&D progress across brands, ensured orderly product supply through its "One-Stock System" and "Direct-to-Consumer Fulfillment," mitigated operational impacts via comprehensive policies, and drove 3-5 percentage point profit growth for agents while helping retailers attract over 60% new customers—achieving countercyclical growth.

Building on its pandemic-era achievements, JALA Group sounded the clarion call for "surge growth" in 2023. At its offline distributor conference held in March, the company set three clear objectives: 18% revenue growth, significant profit expansion, and quality-driven value creation.

By revitalizing its online-offline channel assets and consumer data resources, JALA has solidified its position as one of China's most digitally capable domestic beauty enterprises. The company is now poised to activate the flywheel of compound growth.

Aligned with the three-year digital transformation roadmap drawn up earlier, JALA has completed foundational infrastructure for comprehensive business digitization and normalized digital operations. The impending era of intelligent marketing 3.0 heralds a new phase where the company will focus on consolidating digital achievements, pursuing premium growth amid hyper-competitive omni-channel distribution landscapes, and elevating offline partners' capabilities. The progress of this "digital marathon" warrants close observation.