Domestic skincare brand Doctor Plant is making a push for IPO status. While its franchise model once fueled rapid expansion, it now presents numerous challenges. Can going public be the key to breaking through these obstacles?
Chinese skincare brand Doctor Plant is racing to become "the first single-brand cosmetics store stock on A-shares."
On June 27, the Shenzhen Stock Exchange website showed that Beijing Doctor Plant Cosmetics Co., Ltd. (hereinafter referred to as "Doctor Plant") had its main board IPO application accepted, with CITIC Securities Corporation Limited as the sponsoring institution.
Established 31 years ago, Doctor Plant has carved out a distinctive path in the cosmetics sector, opening over 4,000 stores nationwide.
However, behind this massive scale lurk significant risks.
Reviewing the prospectus reveals the company's over-reliance on offline franchise models, shortcomings in R&D investment, franchise violations, quality control issues, and regulatory oversight gaps.
The result: business growth has stagnated over the past three years, store closures have increased, and former model advantages are gradually fading.
While an IPO can bring Doctor Plant funding and attention, whether it can break through remains uncertain.
**Nearly 4,000 Franchise Stores Running Out of Steam**
Among numerous skincare brands, Doctor Plant's development model is somewhat unique.
Among peers, Proya Cosmetics Co.,Ltd. (603605.SH) and Yunnan Botanee Bio-Technology Group Co.,Ltd. (300957.SZ) both have direct-operation revenue ratios above 50%, while Guangdong Marubi Biotechnology Co.,Ltd. (603983.SH) and MAO GEPING (01318.HK) also primarily use direct-operation models.
Doctor Plant, however, adopts a model primarily based on distribution with direct operations as supplementary, where authorized specialty stores are franchise outlets.
Doctor Plant's low barriers have attracted numerous franchisees, especially those with limited capital but optimistic about the beauty market.
According to "Spicy" media reports, a Henan regional franchise manager revealed that Doctor Plant charges no franchise fees, only collecting a 10,000 yuan security deposit to regulate market order and constrain violations like cross-selling. The initial stocking cost for franchisees is 80,000-90,000 yuan to complete store merchandise display, with single-store startup capital controlled around 200,000 yuan.
In comparison, Fan Wenhua, another single-brand skincare brand, had early single-store total costs of 200,000-300,000 yuan, while Mixsoon's single-brand store franchise costs were even higher at 300,000-500,000 yuan.
Additionally, Doctor Plant has 73% of its stores located in lower-tier markets, cleverly avoiding high rents in core commercial districts. This strategy enabled rapid expansion in lower-tier cities while meeting local consumer demands.
To better bind users, Doctor Plant also launched "buy products, get treatments" services.
Spicy previously reported that Wang, a sales associate at a Chaoyang District store, stated this service has become Doctor Plant's core selling point for attracting consumers. Consumers spend approximately 986 yuan on a product set and can recoup costs with just 10 treatments.
Over the past three years, Doctor Plant expanded rapidly, adding 740, 843, and 508 stores respectively each year. By end-2024, offline chain stores reached 4,328, including 3,830 authorized specialty stores (88.5%) and only 498 direct-operation stores. Total store count even exceeds the combined offline store numbers of L'Occitane, Lin Qingxuan, and Yunnan Botanee Bio-Technology Group Co.,Ltd..
According to research by China Association of Fragrance Flavour and Cosmetic Industries, calculated by 2024 omni-channel retail sales, Doctor Plant ranks first among domestic single-brand cosmetics stores.
This asset-light model helped rapidly capture markets, particularly effective in lower-tier markets. Franchise stores also support half of Doctor Plant's revenue.
Under the distribution model, franchisees purchase goods at 4.3-fold pricing, with the company achieving stable profits through product sales to franchisees. From 2022-2024, distribution model business revenue consistently exceeded 63%, becoming the absolute revenue mainstay.
However, Doctor Plant's revenue growth has nearly stagnated over the past three years. From 2022-2024, operating revenues were 2.117 billion yuan, 2.151 billion yuan, and 2.156 billion yuan respectively, with growth rates of only 1.6% and 0.22%.
Lin Qingxuan, also focused on single-brand stores and pursuing Hong Kong Stock Exchange IPO, achieved revenues of 691 million yuan, 805 million yuan, and 1.21 billion yuan over the same period, with a compound annual growth rate of 32.5%. Among other comparable industry companies, Guangdong Marubi Biotechnology Co.,Ltd. and Proya Cosmetics Co.,Ltd. (603605.SH) both achieved 30% compound growth rates, while Yunnan Botanee Bio-Technology Group Co.,Ltd. also realized nearly 7% compound growth.
Doctor Plant's store operations also appear concerning. Last year, franchise stores decreased by a net 294 (508 new openings, 802 closures), with offline franchise store revenue declining by 27.49 million yuan.
All signs indicate Doctor Plant's model is gradually losing momentum.
**"Heavy Franchising, Light Management" Flaws Can No Longer Be Hidden**
Against stagnating performance growth, Doctor Plant adopted a "zero franchise fee" strategy to attract more franchisees.
However, despite lowered franchise barriers, franchisee operational pressures haven't decreased. Conversely, actual operations show many franchisees still choose to exit due to high costs and difficult profitability.
"Jinduan Research Institute" calculated that Doctor Plant's 2024 offline channel revenue was 1.637 billion yuan across 3,830 stores, averaging less than 430,000 yuan annual revenue per store, translating to under 40,000 yuan monthly. After deducting rent, utilities, and labor costs, profitability becomes very difficult for stores in first and second-tier cities.
According to "Bullet Finance" reports, a former Doctor Plant employee stated that generally, a Doctor Plant franchise store requires at least over ten months to recoup investment. Franchisees need monthly inventory of approximately 100,000 yuan, with goods transferable between stores, and stores typically requiring three trained staff members. This means inventory and labor alone create significant financial pressure for franchisees.
In contrast, Doctor Plant headquarters enjoys stable returns regardless of conditions.
According to "Sohu Finance" reports, franchisees purchase goods from Doctor Plant at 4.3-fold pricing, with profits dependent on the price difference between procurement and retail prices. If products don't sell, franchisees can return goods, but Doctor Plant applies additional discounts beyond the franchisee's 4.3-fold procurement cost, with the discounted amount being the final refund franchisees receive.
Therefore, Doctor Plant's direct-operation stores have significantly higher profitability than franchise stores. In 2024, Doctor Plant's distribution model gross margin reached 51.8%, lower than the direct-operation model's 71.2%.
The prospectus clearly states that distributors' personnel, capital, finances, operations, and management are independent of the company, significantly weakening brand control over franchise channels. Doctor Plant's over-reliance on franchise models with insufficient management has led to concentrated compliance issues.
When scale was smaller, management difficulty was low, and good growth momentum masked many potential risks. However, as scale expanded, management difficulty increased significantly, and previously hidden problems became concentrated.
Over the past three years, Doctor Plant and subsidiaries received 16 administrative penalty notices for violations including price fraud, supply chain management failures, missing health permits, false advertising, tax oversights, and fire hazards.
In typical cases, a Hubei Chibi franchise store was fined 85,000 yuan for selling cosmetics containing banned ingredient "phenylethyl resorcinol"; a Guizhou Guanling store was fined 4,000 yuan for selling expired cosmetics; a Sichuan Dazhou Quxian store was fined 5,000 yuan for falsely advertising "national gift" attributes.
Notably, as of May 31, 2025, Doctor Plant still has 32 subsidiaries and branches (direct stores) requiring health permits for in-store treatment services that haven't obtained permits, further exposing loose internal management.
These management gaps directly impact products, causing continuous damage to Doctor Plant's quality reputation.
In 2022, Doctor Plant's "Purple Lingzhi Multi-Effect Anti-Aging Cleanser" was found to have bacterial counts 21 times above standards, with affected batches ordered off shelves, yet continued selling on e-commerce platforms days after notification. Currently, Doctor Plant has 290 total complaints on the Black Cat Complaint platform, mainly involving product safety and misleading consumption issues.
These problems directly affected Doctor Plant's IPO process.
In July 2023, Doctor Plant initiated A-share IPO counseling. After two years and seven phases of counseling preparation, it wasn't accepted by Shenzhen Stock Exchange until late June this year, delayed 19 months.
Counseling institution CITIC Securities explicitly mentioned "franchise violations, false advertising, and supply chain oversight gaps" as primary reasons.
Breaking free from the old model has become urgent.
**Can Going Public Break Through?**
Facing multiple challenges, Doctor Plant pins hopes on going public.
According to the prospectus, Doctor Plant plans to raise approximately 998 million yuan, with funds primarily directed toward four areas: 526 million yuan for "marketing channels and brand building" (over 50%); 264 million yuan for "headquarters and R&D center construction"; 109 million yuan for "production facility technical upgrades"; and 99.9 million yuan for "information system upgrades".
Doctor Plant's IPO funding primarily targets two areas: channel transformation and product R&D enhancement.
Doctor Plant's product R&D investment is indeed insufficient, creating an insurmountable product capability gap.
From 2022-2024, Doctor Plant's R&D expenses were 73.77 million yuan, 75.88 million yuan, and 66.33 million yuan respectively, representing 3.48%, 3.53%, and 3.08% of operating revenue, showing overall decline.
Reduced R&D investment is also reflected in staffing. From 2022-2024, R&D personnel decreased from 166 to 149, then to 130.
The prospectus shows Doctor Plant's R&D activities span cosmetics ingredient development, packaging development, IT development, and other fields, requiring high theoretical knowledge, experience, and practical skills from R&D personnel.
With continuous personnel reduction, the proportion of highly educated staff in R&D teams has declined significantly. Personnel with college, high school, and below education increased from 28.31% in 2022 to 31.54% in 2024, while those with master's degrees and above represent only 12.31%
More concerning, Doctor Plant's core technologies largely depend on collaborative or outsourced R&D, with obviously insufficient independent R&D capabilities.
Specifically, the company has 59 invention patents, with 13 of 51 domestic invention patents acquired through transfer, exceeding 25%. Even for the company's flagship Dendrobium series and core technology projects like Yunnan highland plant whitening efficacy R&D and Dendrobium extract application research, the company only participates by "paying R&D fees."
Among the company's four listed core technologies, three involving product ingredient development and extraction, associated with 18 invention patents, are all collaborative R&D results. Only vacuum packaging technology involving utility model patents represents independent R&D.
These R&D shortcomings somewhat constrain Doctor Plant's long-term competitiveness. Consequently, its core Dendrobium series hasn't undergone technical iteration since launch seven years ago, with anti-aging efficacy claims remaining at basic moisturizing levels. Brand image aging has also led to young customer group loss.
However, Doctor Plant attempts to solve brand aging through marketing, hence inviting celebrities like Chen Weiting, Wang Junkai, and Jing Tian as spokespersons.
Regarding channels, Doctor Plant's excessive focus on offline franchise models has missed online channel opportunities.
Yunnan Botanee Bio-Technology Group Co.,Ltd.'s Winona brand, also starting from offline channels, achieved rapid growth by capitalizing on domestic beauty online explosion momentum. The prospectus shows Winona's 2019 revenue was under 2 billion yuan, but leveraging online channel rapid growth, revenue doubled within four years of listing, exceeding 5 billion yuan in 2023.
Historical data seemingly indicates Doctor Plant's overall online channel performance is unsatisfactory. Data shows the company's online direct e-commerce platform revenue represents only 9.3%, with distribution e-commerce platform revenue at merely 3.77%, significantly behind peers. According to the prospectus, Doctor Plant's online revenues from 2022-2024 were 571 million yuan, 486 million yuan, and 518 million yuan respectively, with slow growth.
Doctor Plant began shifting resources toward online channels in 2022, but since most skincare brands typically start online, the entire online market is highly competitive.
Doctor Plant's online channel development approach is also simple and crude: price wars. In 2023 and 2024, Doctor Plant attempted to leverage Douyin store models, positioning face masks as core traffic-driving products with significant promotional discounts (39 yuan/10 pieces), reducing average face mask prices from 100.92 yuan/kg to 78.98 yuan/kg.
Under this promotional approach, Doctor Plant's 2024 face mask sales increased from 3,829.08 tons in 2023 to 4,440.85 tons, but product gross margins also declined from 40.47% to 34.25%.
This low-price promotion may create "affordable" impressions among consumers, creating hidden risks for subsequent brand upgrades.
Currently, the cosmetics market has long formed an "online-first, offline-supplementary" pattern, yet Doctor Plant has never escaped path dependence, missing transformation opportunities and ultimately being forced to transform.
Doctor Plant states in its prospectus that future development will "further promote deep integration of online and offline channels." However, competition intensifies over time.
The "2025 China Skincare Industry White Paper" shows that from 2022-2024, the top ten domestic skincare brands' online sales grew from 24.4 billion to 43.55 billion yuan, with the top three—Proya Cosmetics Co.,Ltd., Han Shu, and Winona—collectively holding over 50% market share, with the "Matthew Effect" becoming increasingly apparent.
Following this trend, even if Doctor Plant raises needed funds through IPO, whether it can break through remains uncertain.