Domestic skincare brand Botanee is pushing for an IPO. While its franchise model once fueled rapid expansion, it now presents significant challenges. The question remains: Can going public be the key to its turnaround?

Botanee, a "homegrown skincare brand," aims to become the first single-brand cosmetics retailer listed on China's A-share market. On June 27, the Shenzhen Stock Exchange disclosed that Beijing Botanee Cosmetics Co., Ltd. (hereafter "Botanee") had submitted its IPO application, with CITIC Securities as its sponsor.

Over its 31-year history, Botanee has carved a unique path in the cosmetics industry, opening over 4,000 stores nationwide. However, behind this massive scale lie hidden risks. Its prospectus reveals vulnerabilities such as overreliance on offline franchising, insufficient R&D investment, and issues like franchisee violations, quality control challenges, and regulatory gaps. As a result, growth has stagnated over the past three years, store closures have risen, and its once-successful model is losing steam.

While an IPO could bring Botanee funding and attention, whether it can overcome these hurdles remains uncertain.

**The Franchise Model That Built 4,000+ Stores Is Stalling** Botanee’s approach differs from peers like Proya Cosmetics Co.,Ltd. (603605.SH), Yunnan Botanee Bio-Technology Group Co.,Ltd. (300957.SZ), and Guangdong Marubi Biotechnology Co.,Ltd. (603983.SH), which rely heavily on direct sales. Instead, Botanee operates primarily through franchising, with authorized stores accounting for 88.5% of its 4,328 outlets as of 2024.

Its low entry barrier—no franchise fee, just a ¥10,000 deposit and ¥80,000–90,000 initial inventory cost—attracted small investors, especially in lower-tier cities where 73% of its stores are located. The brand also differentiated itself with a "buy products, get free treatments" service, which became a key selling point.

Yet, despite rapid expansion (adding 740, 843, and 508 stores annually from 2022 to 2024), revenue growth flatlined at 1.6% and 0.22% in 2023 and 2024, respectively. Meanwhile, competitors like Lin Qingxuan (targeting a Hong Kong IPO) saw 32.5% CAGR. Botanee’s franchisees struggled too: average annual store revenue fell below ¥430,000, with slim margins after costs. In 2024, 802 franchise stores closed, outpacing new openings.

**Weak Oversight, Mounting Problems** Botanee’s "zero franchise fee" strategy backfired as加盟商 faced thin profits and high operational pressures.加盟商 purchase stock at 43% off retail but bear the risk of unsold inventory, while Botanee profits regardless. In 2024,加盟渠道毛利率 was 51.8%, far below直营’s 71.2%.

Lax oversight led to 16 regulatory penalties in three years, covering false advertising, banned ingredients, expired products, and hygiene violations. Over 30直营 stores lacked required health permits as of May 2025. Quality incidents, like a bacteria-laden cleanser in 2022, and 290 consumer complaints further tarnished its reputation.

These issues delayed Botanee’s IPO filing by 19 months, with CITIC citing "franchisee violations and supply-chain gaps" as key hurdles.

**Can the IPO Turn the Tide?** Botanee plans to raise ¥998 million, allocating over 50% to marketing and branding, and 26.4% to R&D and HQ upgrades. However, its R&D spending has declined (3.08% of revenue in 2024), with fewer researchers and reliance on outsourced innovation. Core products like its Dendrobium series haven’t been updated in seven years, weakening competitiveness.

Online渠道 also lags: e-commerce贡献 just 13% of revenue in 2024, versus线上-focused rivals like薇诺娜 (which surpassed ¥5 billion in 2023). Botanee’s price-driven抖音 strategy eroded面膜毛利率 to 34.25%, risking brand dilution.

With China’s skincare market increasingly线上-dominated and top players like Proya, Winona, and Kans consolidating share, Botanee faces steep odds in pivoting from its加盟-heavy past. Its prospectus vows "online-offline integration," but in a tightening market, time may be running out.