Analysis of the Mao Geping Family's Share Reduction Incident and the Strategic Dilemmas of Personal IP-Driven Beauty Brands

Based on the latest market data, I will provide an in-depth analysis of the Mao Geping family’s share reduction incident and the issue of building a second growth curve for personal IP-dependent beauty brands.

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On January 6, 2026, Mao Geping (Stock Code: 01318.HK), known as the “first stock of domestic high-end beauty products” on the Hong Kong Stock Exchange, released a share reduction announcement that sent shockwaves through the market. The company’s actual controllers, Mao Geping and his spouse, along with 4 other family members and senior executives (6 people in total), plan to reduce their holdings by no more than 17.2 million shares within the next 6 months. Based on the closing price of HK$82 on the day, the total cash-out amount reaches

(approximately RMB 1.3 billion) [1][2].

Share Reducing Party	Relationship to Mao Geping	Estimated Cash-Out Amount
Mao Geping	Self	Approximately HK$770 million
Wang Liqun	Spouse	HK$100-200 million
Mao Niping	Elder Sister	HK$100-200 million
Mao Huiping	Elder Sister	HK$100-200 million
Wang Lihua	Wife’s Younger Brother	HK$100-200 million
Song Hongquan	President	Approximately HK$100 million

Except for Song Hongquan, the other 5 of the 6 individuals are close relatives of Mao Geping, and together they hold

, forming an absolute controlling alliance [1].

The reasons for the share reduction stated in the announcement include “investments in beauty-related industrial chains” and “improving personal living standards”, which has sparked strong doubts among investors [1][3]. The main points of controversy are:

• Top-Tier Compensation in the Industry
  : According to the 2024 financial report, Mao Geping’s annual salary is RMB 6.534 million, President Song Hongquan’s is RMB 5.282 million, both elder sisters earn over RMB 4 million each, and even the “lowest-paid” Wang Lihua (wife’s younger brother) has an annual salary of RMB 1.469 million. For comparison, Hou Juncheng, Chairman of Proya, the leading A-share beauty company, had an annual salary of only RMB 3.15 million in the same year [1].
• Large-Scale Dividends Previously
  : Shortly before its listing, the company distributed a special dividend of RMB 1 billion, and in 2024, it distributed another RMB 353 million in dividends. Family members have accumulated approximately RMB 250 million in dividends. Based on their shareholding ratio, the family has pocketed nearly RMB 2 billion through dividends over two years [2][3].
• Sensitive Timing
  : The share reduction was rushed just one month after the restricted shares were unlocked, while the company’s stock price has dropped from a peak of HK$130.6 to around HK$82, with a market value evaporation of nearly HK$20 billion [1].

This “dividend + share reduction” operation trajectory stands in stark contrast to the vision of “R&D upgrading and brand globalization” outlined in the prospectus, and has been questioned by investors as a “family wealth feast” [3].

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The success of the MAOGEPING brand is built on the strong influence of founder Mao Geping’s personal IP. As a representative figure of China’s “magical makeup artist”, Mao Geping has been deeply engaged in the makeup art field for over 40 years. His most famous masterpiece is the “age-defying” makeup created for Liu Xiaoqing in the TV drama Wu Zetian, which established the market perception of “face-transforming makeup” [2].

• The founder’s IP is directly converted into brand premium capability
• MAOGEPING’s pricing directly targets international first-tier brands such as Clé de Peau Beauté (CPB) and Chanel
• The gross profit margin is as high as
  82.5%
  , far exceeding that of international giants like L’Oréal and Shiseido, earning it the reputation of “the Moutai of the beauty industry” [3]

However, this deep integration also constitutes the company’s biggest strategic risk. Financial report data shows:

Indicator	Data	Industry Comparison
MAOGEPING Brand Revenue Ratio	Over 96%	Proya, Kans main brands account for approximately 80%
R&D Expense Ratio	0.6%-0.8%	L’Oréal 2%-3%, Proya over 2%
Sales Expense Ratio	Approximately 50%	Industry average

This

is extremely rare and risky in the beauty industry [1], with main risk points including:

1. Vulnerability of Personal IP
   : Once the founder faces negative public opinion, or the brand ages, the company’s performance will face a devastating blow
2. Intergenerational Inheritance Issues
   : As the founder ages, there is doubt whether his energy and creativity can continue to support the brand’s high-end positioning
3. Ceiling on Innovation Capability
   : High dependence on the founder’s aesthetic and technical output limits the brand’s independent evolution space

To break free from single-brand dependency, Mao Geping once launched a second brand “Forever Love” (Zhiai Zhongsheng), attempting to enter the mass market. However, the brand’s performance has remained sluggish, with its revenue ratio lingering in

for years and showing a downward trend [1].

• Proya: Through acquisitions of Caitang and Japanese hair care brand off&relax, and incubation of Yuefuti and Keruifu, it has built a product matrix covering skin care, color cosmetics, and hair care [4]
• Shangmei Group: Its Kans brand accounts for 82.3% of revenue, while it also cultivates Red Elephant (5.5%), Newpage (5.5%), and has launched new brands such as Tazu and Nan beauty [4]
• Mao Geping: Long-term absence of a second growth curve, 96% of revenue still relies on a single brand

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The development trajectory of global beauty giants shows that a multi-brand matrix is a key strategy to resist single-brand risks:

• Has nearly 40 brands under its umbrella
• 12 brands have annual sales exceeding US$1 billion
• Covers multi-level markets including high-end (Helena Rubinstein, SkinCeuticals), mass (L’Oréal Paris), and professional (Kérastase)
• Achieves global expansion through strategic mergers and acquisitions [4]

• The main brands of four companies (Proya, Shangmei Group, Botanee, Giant Biogene) contribute approximately 80% of their respective revenues
• Single-brand dependency is still at a high level
• There is an order of magnitude gap compared to the multi-brand matrices of international giants [4]

Combined with industry practices, personal IP-driven beauty brands can consider the following diversification paths:

Direction	Specific Strategies	Case References
Category Expansion	Expand from color cosmetics to skin care, fragrance, hair care, and other categories	Mao Geping launched skin care lines such as caviar masks
Price Range Expansion	Launch new brands targeting the mass market	Attempted with “Forever Love” but unsuccessful
Channel Expansion	Strengthen online channel layout and balance online-offline proportion	Mao Geping has a relatively balanced structure: 48.3% offline, 45.2% online
Geographical Expansion	Leverage cooperation with LVMH’s L Capital Asia for overseas expansion	Mao Geping reached a strategic cooperation with LVMH
Service Expansion	Extend from product sales to beauty training and image design services	9 makeup schools enroll over 6,000 students annually

Industry research shows that R&D capability is a core element for beauty brands to build a competitive moat:

Company	2024 R&D Expense	R&D Expense Ratio
Bloomage Biotech	RMB 446 million	8.68%
Botanee	RMB 295 million	5.15%
Shangmei Group	RMB 180 million	2.6%
Proya	Approximately RMB 210 million	Approximately 1.95%
Mao Geping	Not Disclosed	0.6%-0.8%

In comparison, L’Oréal’s global R&D investment is approximately RMB 10.5-11 billion, almost equivalent to Proya’s annual revenue [4]. Mao Geping’s low R&D investment means its “high-end” positioning is more driven by marketing rather than technological innovation.

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In response to the market impact of the share reduction incident, the company has taken the following measures:

• Emphasized that Mao Geping’s personal share reduction funds will be used for
  industrial chain investments
• On the day after the announcement, the stock price rose by over 8% at its highest point, closing at HK$87.95, with a market value of HK$43.1 billion [2]

• Reached a strategic cooperation with LVMH’s L Capital Asia
• Attempting to leverage the resources of international giants to achieve brand globalization
• However, the acceptance of Chinese high-end beauty products in overseas markets and the difficulty of channel construction are both unknown challenges [1]

• 378 self-operated counters maintain offline channel advantages
• Balanced online-offline development (48.3% offline, 45.2% online)
• Private Domain Operations: 1.51 million members, 32% of revenue comes from private domain channels

The fundamental challenges facing Mao Geping are:

1. De-IP Transformation
   : How to establish independent market recognition for the brand while maintaining the value of the founder’s IP
2. R&D Capability Building
   : Increase R&D investment and build a technological moat for product strength
3. Multi-Brand Matrix Construction
   : Successfully incubate second and third growth curves
4. International Breakthrough
   : Establish brand recognition and channel networks in overseas markets

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The Mao Geping family’s share reduction incident reflects the typical strategic dilemmas of personal IP-driven beauty brands:

• IP is Both a Boon and a Bane
  : The founder’s IP is both the core source of brand premium and the biggest bottleneck for the company’s development
• Absence of a Second Growth Curve
  : The 96% single-brand dependency is at an extremely high level in the industry
• Insufficient R&D Investment
  : The 0.6%-0.8% R&D expense ratio is difficult to support long-term high-end positioning
• Tension Between Cash-Out and Development
  : There is a potential conflict of interest between the family’s large-scale share reduction and the company’s long-term development

1. Pay attention to the implementation progress of the company’s multi-brand strategy, especially the performance of second brands such as “Forever Love”
2. Track changes in R&D investment, which is a key indicator for measuring the company’s long-term competitiveness
3. Evaluate the implementation effect of the internationalization strategy and whether the LVMH cooperation can be converted into actual business growth
4. Pay attention to risks related to personal IP, including unexpected events such as the founder’s health status and negative public opinion

The Mao Geping case provides important warnings for personal IP-driven beauty brands:

• The value of personal IP needs to be converted into brand assets as early as possible, rather than relying solely on the founder’s personal aura
• Strategic layout of multi-brand, multi-category, and multi-channel should be planned early in the enterprise’s development
• R&D investment is the cornerstone of high-end positioning; brand premium cannot be built solely through marketing

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[1] Futu News - “Cash-Out of HK$1.4 Billion for ‘Improving Living Standards’, Mao Geping’s Relatives Sold Shares First” (https://news.futunn.com/post/67229075)

[2] 21st Century Business Herald - “Mao Geping Family Cashes Out HK$1.4 Billion, Has High-End Domestic Beauty Entered the ‘Value Harvest Period’?” (https://www.21jingji.com/article/20260108/herald/5d3ae796c1a98ab9d3ccc71a38b8b88b.html)

[3] Sina Finance - “Needs RMB 1.3 Billion to ‘Improve Living Standards’? The Listing Wealth Feast of the Mao Geping Family” (https://finance.sina.com.cn/roll/2026-01-12/doc-inhfzysp6780106.shtml)

[4] 21st Century Business Herald - “Battle for the RMB 10 Billion Throne of Domestic Beauty: Proya Defends, Shangmei Surges” (https://www.21jingji.com/article/20250819/herald/1cae5f65c5c9f4c192469bdd0159f7fe.html)

[5] Eastmoney.com - “Mao Geping: A Model of High-End Domestic Beauty Driven by Brand and Channel Strengths” Research Report (https://pdf.dfcfw.com/pdf/H3_AP202502061642823428_1.pdf)