Summary of Key Points
Against the backdrop of a general decline in traditional offline beauty retail (with stores closing, losses, and withdrawals by companies like Sasa, Wanning, and Sephora), China Resources Vientiane Life (the leading commercial real estate developer) has taken the bold step to launch its own beauty brand, MIXC BEAUTY, transitioning from a landlord to a retailer. This move is not impulsive. On one hand, its self-operated beauty business is expected to grow by 331.5% by 2025, despite still being small in scale. On the other hand, it reflects the failure of the traditional commercial real estate model of acquiring land, building stores, and then leasing them out: international brands have gained more bargaining power, and rental income growth has peaked. However, China Resources' transformation also faces challenges, including past failures in self-operated beauty businesses, industry homogenization, and the need to bridge the gap between attracting tenants and managing retail operations.
Why Is Traditional Beauty Retail Having a Hard Time?
The past few years have been tough for offline beauty stores:
- Established chains are withdrawing: Sasa, which has been operating in mainland China for 20 years, completely closed all its offline stores in 2025; Wanning announced the closure of all its mainland stores by January 2026; Watsons closed 279 stores in 2025, with revenue declining for several consecutive years.
- Even international brands are struggling: Sephora China's revenue dropped to 6.5 billion yuan in 2025, resulting in losses of nearly 1.5 billion yuan over four years, or more than 300 million yuan per year.
- Industry growth has slowed down: The growth rate of cosmetics retail sales fell from 8.3% in March to 2.5% in May in the first half of 2026; during the 618 shopping festival, beauty product sales even saw their first decline nationwide in over a decade.
In short, offline beauty stores are either facing a lack of customers, difficulty in selling products, or insufficient profits, leading to an overall contraction in the industry.
Why Is China Resources Entering the Beauty Business Despite the Challenges?
China Resources Vientiane Life traditionally makes money by leasing out its malls and taking commissions. So why start selling beauty products itself? The main reason is that the traditional model is no longer effective:
- Beauty used to be a profitable venture: In the past, beauty stores were highly sought-after by mall owners, generating higher per-square-meter revenues (higher rental yields) compared to regular retail outlets. Malls would take 20%-25% of sales as commissions, while regular retail only took 8%-15%, providing a stable source of income.
- Brands are becoming more powerful: International brands like Chanel and Dior now have stronger channel capabilities and demand more from malls (such as lower rents and better locations), reducing the malls' bargaining power and limiting rental growth potential.
- Self-operation gives control: By launching its own beauty brand, China Resources can decide what products to offer, set prices, and manage inventory without relying on brands. The 331.5% growth rate of its self-operated beauty business in 2025 indicates this approach has potential.
What Are China Resources' Advantages?
China Resources has several advantages:
- Its own malls and a large customer base: It doesn't have to worry about issues like finding suitable locations, paying high rents, or attracting customers. MIXC BEAUTY can be located in the core areas of its malls, reducing costs significantly.
- Existing customer base: With 83.07 million mall members, these customers already visit the malls and can easily become buyers for MIXC BEAUTY products, eliminating the need to acquire new customers from scratch.
- Mall support: For example, the “Gao Hua Avenue” in Changsha Vientiane City already has luxury brands like Chanel and La Mer De Mer; MIXC BEAUTY can collaborate with these brands to attract higher-end customers.
In essence, China Resources is using its existing resources to give its beauty brand a head start.
Transformation Is Not Easy: Past Failures and Current Challenges
This isn't China Resources' first attempt at the beauty business, and it hasn't been smooth:
- Past lessons: In 2010, it launched the VIVO Cai Huo beauty chain, which opened stores in 18 cities but closed them down in 2015. Although the situation is different now, this shows that self-operated beauty businesses can be challenging.
- Industry homogenization: Beauty stores today look similar, with mostly branded samples and trendy products, lacking innovation. If MIXC BEAUTY simply replicates Sephora's offerings, it won't stand out.
- Cross-functional challenges: Attracting tenants and selling products are different tasks. While attracting tenants involves negotiating brand agreements, selling products requires managing product selection, inventory, supply chains, and staff training—areas China Resources has limited experience in.
Is the Shift from Leasing to Selling a Necessary Trend for Commercial Real Estate?
China Resources' move reflects a broader change in the commercial real estate industry: the era of passive rental income is over.
In the past, malls could rely on attracting brands to generate stable profits. Now, brands are more powerful, and malls must either develop their own retail businesses or form deeper partnerships with them to find new growth opportunities.
Whether MIXC BEAUTY will be successful is uncertain, but it signals a trend for the industry: if they want to avoid being left behind, they must transition from landlords to active operators. The success of this approach depends on China Resources' ability to address operational challenges and market acceptance.
In summary, China Resources' entry into the beauty business is both a response to the failure of traditional models and an attempt to find new growth opportunities. Although it's fraught with challenges, this could be one of the future directions for commercial real estate. For anyone observing this trend, it's clear that even leading players like China Resources are forced to adapt and innovate; otherwise, they will be surpassed by competitors.