Produced by Tiger Sniff Commercial Consumer Group
Author|Qi Minqian
Edit | Miao Zhengqing
Title map | Visual China
The Gyeongshunyuan Park on weekday evenings is lazy and romantic. The large lawn spreads out gently and is full of tender green colors. In such an environment, the young girls carrying dragon fruit-colored shopping bags looked particularly jumpy and "eye-catching". They had just come up shopping from an underground clothing store, busy checking in and taking photos and posting on social media.
This underground clothing store, which is the Internet celebrity clothing store "BASEMENT FG" (hereinafter referred to as BF) that is currently on fire in Beijing, every weekend, people waiting in line for the elevator can even go from the elevator entrance to the path outside the park, and there are long queues in the fitting room and checkout table, "the main thing is that there are more than one person."
Young, fashionable girls are BF's main customers. From the perspective of clothes and store decoration, BF and the previous popular fast fashion brand BM are not much different, both sell the same size "American hot girl clothing", the difference is that BF stores as a whole have a more "sense of atmosphere", and the probability of encountering idol stars is greater.
A regular customer told Tiger Sniff that the park's photo-friendly environment, the music videos played on the store's two large screens, coffee tables, K-POP music, idol team roadshows, and the cashier who is said to be idol, etc., all of which combine to form a "sense of atmosphere" that attracts her greatly.
The high-value clerk selected after the interview is standard. The two girls who were shopping suddenly stopped, their eyes were sucked by the male clerk who pushed the cart by, and when the clerk walked a few meters away, he began to whisper: "He's so handsome." "This kind of picture has to be played out N times a day in BF.
BF also has idol stars from time to time. Lehua Entertainment's artist Wu Xuanyi is known as "BF Wild Spokesperson" because she often visits this store; The boy band of the same company also often visited BF in the past two months, or roadshows in the park.
On the surface, artists visit trendy stores just for shopping or "platform", but in fact, Lehua and BF have a closer relationship - not long ago, Lehua took a stake in Beijing Blue Signal E-Commerce Co., Ltd., the operating entity of BF, with a 1% stake. On the lawn near the exit of the BF store, there is also the "peripheral" of Du Hua's self-created mask brand, founder and CEO of Lehua Entertainment.
The "Lehua element" of Jingshun Park is just a small microcosm of the company's investment territory. In addition, Lehua Entertainment has also invested in several consumer brands. Du Hua, founder and CEO of Lehua, also established a personal mask brand, and recently completed his live broadcast debut.
(Near BF storefront)
"With a fan base, it's easy to do anything." Internet celebrity agent Fan Fan said that he had been the agent of first-line artists, and in his opinion, whether it is investing in consumer goods or live streaming goods, the fan base of its artists is the advantage of Lehua and Du Hua himself.
Young playwright and director Xiang Kai believes that Lehua and Duhua's own investment in consumer goods is essentially to use traffic artists to drive consumer goods, and use the value of traffic artists to promote product sales.
The decline in the main business of artist management and excessive dependence on Wang Yibo are the practical difficulties faced by Lehua. In this case, it is particularly important to find new growth points. Whether it is Du Hua's live broadcast or investment in consumer brands, this logic is all this.
Busy "out of the loop" and investing
In 2020, both Lehua Entertainment and Du Hua himself took a new step: Lehua began to invest, and Du Hua came to the front from behind the scenes.
The background at that time was that the artist Wang Yibo became the top with "Chen Qingling", and trainees Wu Xuanyi and Meng Meiqi successfully debuted in "Creation 101", and the limelight was booming. Lehua Entertainment, to which they belong, and Du Hua, the boss, have also been known by more people from a niche fan group.
In an interview, Du Hua said that she is not used to appearing in the camera, and she prefers to be the person behind the star than the scenery in the foreground, and behind the scenes gives her a sense of accomplishment. It was not until the program group of "Sister Riding the Wind and Waves" invited her to be the manager of the girl group that Du Hua participated in a reality show for the first time. In that show, Du Hua brought two souvenirs to the "sisters" as a judge, one was Minayo brand gummies and other products; The second is fragrant world snail powder.
These two brands are the first two projects that Lehua Entertainment has invested in.
Among them, Minayo is a functional food brand, its products include iron gummies, lutein gummies, probiotics, etc., founder Hu Ran was the vice president of NetEase Kaola. In 2020, Lehua participated in its angel round of investment.
In addition to Tianjin Yihua, a subsidiary of Lehua, which invested 800,000 yuan to own 8% of the shares, Du Hua himself also invested 1 million yuan and held 10% of the shares.
Tianjin Yihua is the main subject of Lehua's foreign investment. Tianyan investigation shows that Tianjin Yihua has made a total of 14 foreign investments, and there are still 11 invested enterprises still in existence, in addition to the main business of Lehua, which involves virtual idols and cultural media, other basic consumer goods are food and beauty. From the perspective of investment rounds, Tianjin Yihua basically shot early in the angel round, and the amount of capital and shares held were not large.
After investing in Minayo and Huihua Food in 2020, in 2022, Tianjin Yihua's investment began to expand from food to beauty.
Founded by Lin Wenwei, who has held senior positions at Unilever and Alibaba, Tianjin Yihua invested about 67,000 yuan in 2022 to acquire a 6% stake in the brand. The SEVENCHIC fragrance pen founded by Qi Wei also received an investment of about 1.17 million yuan from Tianjin Yihua in 2022, and the current shareholding ratio of Tianjin Yihua is 10%.
In 2023, Tianjin Yihua invested in the trend brand BF and also set up a subsidiary with Bloomage Biotechnology.
(BF store)
Combing through Lehua's investment projects, we will find that young people's related consumption is the focus of its layout. It is not difficult to understand that Lehua controls idols and traffic with one hand, invests in consumption with the other, and allows idols and traffic to bless products, which will be relatively easy to do.
Too dependent on Wang Yibo
Behind Lehua's frequent investments, it is also related to Duhua's current anxiety.
At the beginning of this year, Lehua Entertainment was listed on the Hong Kong stock market. At that time, Du Hua said in an interview that his anxiety was the diversification of the company's business after going public and how to expand the third and fourth growth curves. The reason why business diversification makes Duhua anxious is because Lehua's business model itself urgently needs other business support.
Artist management is Lehua's largest business, accounting for a large proportion of the company's revenue. The latest data is that in 2022, its artist management business achieved revenue of 850 million yuan, accounting for about 87% of the company's total revenue.
As of the beginning of this year, Lehua had 69 signed artists such as Han Geng, Wang Yibo, Meng Meiqi and Fan Chengcheng and 62 trainees who were undergoing training. Trainees are equivalent to products in the incubation period, basically do not bring income to the company, the income of artist management of this part of the business mainly comes from its artists endorsement and other commercial activities, as well as the income from TV series, movies, etc.
Artist management is the "secret" of Lehua Entertainment's fortune. In 2009, shortly after the establishment of Lehua, Du Hua put a lot of effort into signing Han Geng, who was preparing to return to China for development. Later, Han Geng not only brought a lot of income to Lehua, but also helped Lehua establish the same trainee selection and training system as South Korea. Wang Yibo is the first trainee signed by Lehua.
In 2018, talent shows became popular, and Lehua, who specializes in artist management, enjoyed dividends. Coupled with Wang Yibo becoming the top stream, Lehua Entertainment's revenue has also grown rapidly from 630 million yuan in 2019 to 1.29 billion yuan in 2021, and the corresponding net profit has increased from 120 million yuan to 340 million yuan.
Although the artist management business has made Lehua a lot of money, its risks are also obvious.
First, after the artist becomes popular, it is very likely to terminate the contract with the company and establish a studio; Second, there is great uncertainty about whether trainees can cultivate into big stars for monetization.
According to data disclosed by Lehua Entertainment, in 2020, 2021 and the first three quarters of 2022, the top-ranked artist (most likely Wang Yibo) contributed 36.7%, 49.5% and 58.8% of the company's total revenue. For Lehua as a company, over-reliance on Wang Yibo is obviously not a good thing. First, every artist has a life cycle; Second, there is a risk of non-renewal after the contract expires, and after the artist has a greater right to speak, the dividend ratio will become higher.
This has been reflected in Lehua's operation in 2022. In 2022, the gross profit margin of Lehua artist management business will be 34.7%, down 11.3 percentage points year-on-year. This is mainly because in 2022, a part of the share payment settled in equity, and the share ratio of the head artists has also increased.
As for whether he is worried about the departure of artists after becoming popular, Du Hua once said in an interview that the current Lehua will not change the structure because of the departure of any artist. Indeed, Lehua has a mature system in terms of trainee selection and training mechanism, but whether it can cultivate the next top in this system is a very uncertain thing.
From the perspective of the industry environment, the suspension of talent shows in the past two years will also have a slight impact on Lehua.
Fan Fan told Tiger Sniff that talent shows are an important "export" for brokerage companies to cultivate trainees, and when the talent show caught fire a few years ago, a Beijing company suddenly found hundreds of amateurs and signed 5 people, but the talent show stopped, and how to monetize the signed artists became a problem.
An industry insider who did not want to be named believes that the suspension of the draft will weaken the explosive influence of artists on the stage to a certain extent, and make the development of fan economy cold.
According to Tiger Sniff, after the suspension of talent shows, many small companies in the industry that do trainee training can no longer pay salaries. For an industry leading company like Lehua, although it will not hurt the bones, its artists do lack a platform for debut.
Xiang Kai's observation is that in the past two years, the film and television industry has obviously paid more attention to content and powerful actors in the past two years. In his opinion, this may be a hidden danger for a brokerage company like Lehua that takes the traffic star route.
Diversified operation + create personal IP
The uncertainty of artist management business makes many people in this industry urgently need to find a more certain "side hustle".
Fan Fan's experience is, to some extent, a microcosm of the artist management industry in recent years: he transformed from an agent of a head artist to a boss, opened an MCN agency, and cultivated Internet celebrities who brought goods live. Because in his opinion, artists, like Internet celebrities, are essentially doing traffic monetization business, and live streaming is the most direct way to monetize.
However, Internet celebrities, like trainees, are unknown whether they can monetize and what the monetization effect is. This made Fan very anxious, and in order to combat this uncertainty, he began to invest in a restaurant and a plastic surgery agency.
Du Hua is also planning other business models for Lehua Entertainment beyond artist management, and the second growth curve she found is the virtual artist business. At present, Lehua has launched the virtual artist girl group EOE and the virtual artist boy group Quantum Boy with partners.
An industry veteran who did not want to be named said: "Virtual idols are indeed a very different rice circle for slightly older people, and may be more focused on the needs of young generation Z for idols, and the development of this format needs positive guidance and time, but there is also a certain rationality in existence." ”
Compared with the future of virtual artists, investment and the creation of personal IP may be the "certainty" that Du Hua can grasp.
Long Danni, Du Hua and Yang Tianzhen are known as the "godmother of entertainment" and are often compared to each other. Among them, Long Danni is good at program planning; Du Hua is at the forefront of the industry in the field of "star making"; Yang's ability to naïve marketing and "establish people" is obvious to all. Although the three of them are good at different things, they all come to the front of the stage actively or passively. Among them, Yang Tianzhen and Du Hua have also become regular guests in variety shows.
For the trend of behind-the-scenes agents going to the front of the stage, Fan Fan believes that there are two reasons, one is that most of the agents have star dreams; Second, since the era of media, everyone knows the importance of creating personal IP. "No matter how good the relationship between the artist and the boss is, the boss becoming a star can generate more stable income for the company." He said.
Yang Tianzhen walked to the front of the stage and made his own plus-size women's clothing brand; Du Hua set up his own face mask brand and began to bring goods to the brands he invested.
Whether it is training trainees to debut, or becoming an IP himself, in essence, Du Hua is doing the business of traffic and fan monetization. "I met Han Geng in the first half of my life, and I met Wang Yibo in the second half of my life." Netizens often use this phrase to ridicule Du Hua's good luck.
For Du Hua, who is eager to find a new growth curve, the good news is that on the evening of April 20, four trainees under Lehua successfully debuted in the Korean talent show "BOYS PLANET", and one of the trainees debuted in the C position. And the actor Lee Zhihan in the hit drama "Dark Glory" is also an artist under South Korea's Lehua.
As for its artists and Du Hua himself, whether they can generate income for Lehua like Han Geng and Wang Yibo not only tests Du Hua's vision and the efforts of artists, but also requires the right time and place.