Our business operations consist of two segments, namely new retail segment and IP creation and operation segment. Each segment can be a source of revenue of its own, while our IP creation and operation segment can also create a synergy effect by acting as one of our marketing tools to promote our new retail products.
We (i) develop and introduce suitable products to the market; (ii) establish sales channels, including extensive distributorship network and e-commerce channels; (iii) cooperate with celebrities for IP content creation; and (iv) utilize our celebrity IPs and associate IP contents for the marketing and promotion of our products, along with other sales and marketing strategies and activities.
Our new retail business
In respect of our new retail business, we focus on development and sale of low-carb health management products, as well as skincare products.
During the Track Record Period, a majority of our revenue for new retail business derived from sales of MODONG coffee, of which we started the nationwide distribution thereof in April 2019. MODONG coffee is a bulletproof coffee, which is a type of beverage containing high-fat specially designed for low-carbohydrate diet plan to meet the plan’s fat/energy ratio. In 2021, we were the largest company in China’s bulletproof drink market in terms of GMV, with a market share of 25.6%.
Leveraging our success with MODONG coffee, we launched a number of other low-carb drinks and food under the MODONG sub-brand that further exemplify our strategy to offer our end consumers a portfolio of complementary low-carb health management products. In 2022, we launched our matcha powder under a new product line, Ai Chi Xian Mo Ren (愛吃鮮摩人), featuring healthy and additive-free food products. In addition, we launched multiple product sub-brands in the skincare market, including Dr.mg and Chaxiaojie. The products under the Dr.mg sub-brand are designed to address various skin problems caused by skin aging which target aging population, whereas the products under Chaxiaojie sub-brand target younger generation. We will continue to develop and launch new products for our new retail business from time to time.
We primarily distribute our products through (i) a network of distributors and sub-distributors; and (ii) other e-commerce channels such as online stores operated on social media platforms. We conduct E-commerce Livestreaming through our Douyin account from time to time to promote the sale of our products. During the Track Record Period, we generated a substantial portion of revenue from sale of our products under the new retail segment through a network of distributors and sub-distributors. We consider our sales of products as a new retail business, as we primarily adopt a community-based social e-commerce model, where our distributors and the sub-distributors procured by them mainly promote and sell our products through a combination of online commerce elements (through social e-commerce channels, such as WeChat, Douyin and XiaoHongShu) and offline channels (through offline meetings among our distributors, sub-distributors and end consumers, such as annual events, conferences and/or face-to-face sales at distributors promotion meetings). Our distributors and the sub-distributors KOCs(1) are also consumers of our products. Some of them have further developed into and promote our products in their respective private domain traffic or PDT(2) through word-of-mouth by invoking their personal experience and exerting their personal influence over their followers, through which we can effectively extend the consumer reach of our products. Apart from our use of KOCs, we also collaborate with KOLs(3) to promote our products through sharing and posts and/or sell our products through E-commerce Livestreaming sessions on online platforms.
Our IP creation and operation business
Our IP creation and operation business comprises:
(i) IP content creation and management business, including provision of (a) media content creation; (b) event planning; and (c) celebrity IP management services; and
(ii) IP licensing and sales of related products.
In media content creation, we mainly provide organizing, planning and other project management services to the production of programs. For example, we are the lead creator and own the IPs of J-Style Trip season one, which is a 12-episode reality show starring Mr. Jay Chou aired on Zhejiang Satellite TV as well as Netflix and MGTV (芒果TV) in March 2020. J-Style Trip season one was well-received by TV audience. The average viewership rating of all 12 episodes ranked first among all TV programs broadcasted during the same timeslot from March to June 2020, according to the publicly available rating data. We were also involved in the planning and creation of a popular music talk show, namely You Can Run But You Can’t Hide (既來之則樂之) that was centered around Mr. Harlem Yu and a variety show, that was centered around Mr. Liu Keng-hung.
In event planning, we generally act as an event planning service provider, an investor and/or sub-contractor for large scale music concerts and other events. For example, we initiated and acted as a planning service provider to Zhanjiang Superstar Concert (湛江超級巨星演唱會) in August 2019, and initiated and acted as a planning service provider and an investor to Ningbo Superstar Performance Mega Night (寧波巨星行動超級夜) in January 2020. Through our experience and management’s networking in the Chinese entertainment industry, we are able to gather different units to organize the creation of media content, as well as music concerts and other events.
In celebrity IP management, we collaborate with celebrities and/or KOLs where we are responsible for the development of their respective IPs. We are involved in the planning and development of the public persona of celebrities and/or KOLs in, among others, Livestreaming sessions, online short videos and other online and offline performances on social media platforms, in order to attract audiences and/or followers with similar interests or concerns.
For celebrity IP licensing and sales of related products, we create bespoke brands and associated IP contents based on our proprietary unique celebrity IPs, including a nijigen-style personality, namely ChouMate. Nijigen-style personality is two dimensional anime, manga or real-life person inspired fictional character. We may license our celebrity IPs to our customers and receive licensing fees and create and sell products related to the celebrity IPs.
Synergy between our new retail business and our IP creation and operation business
Empowerment of our new retail business by our unique celebrity IPs is achieved through creating promotional effect at multiple complementary venues and platforms rather than a simple brand name association, which we believe lends credibility and marketability to our products, enhances the brand recognition of our products, and maintains the trust and confidence of our distributors and customers. In 2020, we promoted MODONG coffee in J-Style Trip season one by means of advertisement, spot cut and discrete product placement. We also leverage on the popularity of Mr. Liu Keng-hung and Ms. Vivi Wang to empower the sale of our products. For example, we promoted healthy eating and lifestyle through Livestreaming sessions of Mr. Liu Keng-hung and Ms. Vivi Wang, and promoted our products, such as Matcha powder and MODONG light brewed coffee, during E-commerce Livestreaming sessions conducted via our Douyin account under the name of “劉宏肥油掉” since July 2022.
Nevertheless, it is our strategy that Mr. Liu Keng-hung would not participate in any E-commerce Livestreaming as we consider that it would create the best value for him to devote his time in developing his popularity through Livestreaming, brand endorsement and participation in other IP programs. As advised by our PRC Legal Advisors, based on the confirmation of our Company and according to the public information search, no search results showed that, as of the Latest Practicable Date, Mr. Liu Keng-hung and Ms. Vivi Wang are subject to any restrictions imposed by the competent governmental authorities under the relevant laws and regulations in the PRC to conduct either Livestreaming or E-commerce Livestreaming. As part of our celebrity IP management, we would advise on the activities that would create the best value for the celebrities we cooperate with, including whether or not to participate in E-commerce Livestreaming.
In addition to ChouMate, we started to use nijigen-style personalities of Mr. Liu Keng-hung and Ms. Vivi Wang, namely “Coach Liu (劉教練)” and “Vivi” in the promotion of our products.
The judicious use of celebrity IP and our Group’s sales channels, including its distribution network, enabled us to achieve overall financial growth during the Track Record Period.
We plan to continue to create more media contents and concerts, which may empower our new retail business through creating promotional effect to promote our products. With our capability and experience in using the strengths of these different business components in an effective and efficient manner to create synergy effect, we believe we would be able to sustain our business and achieve growth in our business going forward.
The use of Livestreaming and E-commerce Livestreaming in our business
In view of their growing popularity in recent years, we have made use of Livestreaming and E-commerce Livestreaming in our business operation. During the Track Record Period, we mainly provide celebrity IP management services in respect of the performances of Mr. Liu Keng-hung and Ms. Vivi Wang. We were involved in originating and preparing the contents and presentation of the Livestreaming sessions and generated revenue from brand owners who engaged us to promote their products during the Livestreaming sessions of Mr. Liu Keng-hung. We also generate revenue from sharing of commission for the sale of products of third party brand owners by different celebrities and KOLs during the E-commerce Livestreaming sessions conducted on our Douyin account. In addition, our products under the new retail business would be promoted and sold through E-commerce Livestreaming sessions on our Douyin account.
Source: Star Plus Legend (06683) Prospectus (IPO Date : 2023/06/30) |