In-depth Analysis of the Impact of Product Quality and Safety Controversy on the Brand Value and Consumer Trust of Shangmei Group (Kans)

According to the latest media reports,

“Kans Plumping and Firming Essence Mask” 和 被央视《经济半小时》栏目曝光检出违禁成分，含量分别为 0.07pg/g 和 3.21pg/g[1, 2]。

• Conflicting Test Results:
  CCTV commissioned a third-party institution to detect EGF, but the two-way inspection report from the Shanghai Food and Drug Administration in November 2025 showed “no EGF detected”[1, 3]
• Clear Regulatory Provisions:
  EGF has been explicitly prohibited from being used as a cosmetic raw material by the State Food and Drug Administration since 2019[1]
• Products Removed from Shelves:
  The involved products can no longer be found on e-commerce platforms[2, 3]

According to brokerage API data, the recent stock price performance of Shangmei Group (2145.HK):

Time Period	Change	Reaction
1 Day	-1.22%	Direct negative reaction
5 Days	-2.01%	Sustained pressure
1 Month	-4.37%	Significant decline
3 Months	-13.66%	Mid-term trend weakening

The market value has adjusted from the annual high (HK$104.80) to the current level of HK$85.30, a decline of approximately 18.6%. In terms of average daily trading volume, the volume increased significantly after the incident was exposed, reflecting market sentiment fluctuations[0].

Kans is the

of Shangmei Group, with 2024 revenue reaching 5.591 billion yuan, accounting for 82.3% of the company’s total revenue[5, 6]. The quality controversy of core products directly threatens the company’s fundamentals:

• High Revenue Concentration Risk:
  A single brand accounts for more than 80%, making risk resistance fragile
• Douyin Channel Advantage:
  Kans’ 2024 Douyin GMV reached 5.48 billion yuan, ranking first in Douyin beauty for 12 consecutive months[6]
• Product Matrix Dependence:
  The mask category is Kans’ core flagship product line

The current beauty consumer group has entered the

, and consumers are highly sensitive to product ingredients[4]:

Consumer Trust Chain:
Ingredient Labeling → Efficacy Promise → Actual Experience → Brand Loyalty
         ↓ (Controversy Occurs)
         Doubt: Are real ingredients concealed?
         Suspicion: Is efficacy promotion exaggerated?
         Concern: Is long-term use safe?

• “AB Formula” Doubt:
  Although the company denies that “the formula for inspection is different from the production formula”[1], consumer trust has been damaged
• Ingredient Transparency Crisis:
  The inconsistency between ingredient labeling and actual test results shakes the foundation of “ingredient-focused” consumers
• Safety Concerns:
  EGF may cause risks such as abnormal proliferation and facial stiffness[2]

Kans’ official flagship store has

and annual sales of over 10 million pieces[2]. In the era of social media:

• Negative Information Spread Speed:
  Far exceeds the speed of positive clarification
• Consumer Public Opinion Field:
  Platforms such as Xiaohongshu and Weibo have become outlets for emotional release
• KOL/Blogger Attitude:
  The shift in endorsements from influencers will accelerate trust loss

Kans’ crisis PR response includes the following core actions[1, 3]:

Measure	Content	Effect Evaluation
Official Statement	Committed that no EGF was added to any products	⚠️ Basic response, lacks third-party authoritative endorsement
FDA Report	Presented the November 2025 two-way inspection report	✅ Relatively effective, but time point is lagging
SGS Test Report	Attached third-party institution test images	✅ Enhances credibility, but needs to explain differences
Product Removal	Involved products can no longer be found	⚠️ May be interpreted as “admitting there is a problem”
Commitment to Re-inspection	Re-inspect the involved products	⚠️ Passive response, insufficient initiative

1. Time Lag:
   The Shanghai FDA completed the inspection in November, but the report was not made public until December after CCTV’s exposure, missing the window for active disclosure

2. Lack of Authoritative Third Party:
   Although the SGS report was presented, when there is a contradiction with CCTV’s test results, a more authoritative national-level testing institution is needed to intervene

3. Insufficient Explanation:
   Did not elaborate on why the third-party institution’s test results differ from the FDA report, only emphasized that “the production formula is consistent with the record”[1]

4. Absence of Executives:
   No company executives came forward to apologize or explain, lacking emotional communication

According to industry research, effective crisis PR for beauty brands should include[4,7]:

• Rapid Response:
  Provide an official response within the golden 24 hours
• Transparency and Openness:
  Proactively release complete test reports and production records
• Authoritative Endorsement:
  Invite industry experts and regulatory agencies to jointly release explanations
• Compensation Measures:
  Provide return/exchange services for consumers who have purchased
• Long-term Commitment:
  Release a quality improvement plan and invite third-party supervision

Based on Kans’ 2024 revenue base of 5.591 billion yuan[5,6], assumptions:

Scenario	Revenue Impact	Duration	Explanation
Optimistic	-5%	1-2 quarters	Crisis PR is effective, consumers quickly restore trust
Baseline	-15%	3-4 quarters	Trust partially restored, takes time to rebuild
Pessimistic	-30%+	Over 1 year	Trust severely damaged, brand value suppressed long-term

Kans accounts for 82.3% of the company’s revenue. If Kans’ revenue drops by 15%, the company’s overall revenue will decrease by approximately 12.3%.

• Florasis (79-yuan Eyebrow Pencil Incident):
  Brand image damaged, recovery cycle over 1 year
• Perfect Diary (Product Quality Complaints):
  Stock price dropped by over 60% from its high, brand premium capacity greatly weakened
• International Brand Cases:
  L’Oréal and P&G also faced trust crises due to ingredient controversies, but quickly recovered with strong scientific research capabilities and crisis management experience[4]

As a “representative of domestic beauty brands”, Kans carries consumers’ expectations for domestic brands. Quality controversies may trigger a .

Regulation in the cosmetics industry tightened significantly in 2025:

• 203 cosmetics factories had their licenses revoked
  , accounting for 70% of enterprises in Guangdong and Shandong provinces[7]
• Unqualified rate in unannounced inspections was 27.9%
  (102 out of 366 enterprises in Guangdong Province in 2025 had serious defects)
• Increased Penalty Intensity:
  Enterprises that repeatedly fail to correct will face severe measures such as maximum penalties, license revocation, and 10-year business ban[7]

Against the background of tightening regulation, , the clearance of small and medium-sized brands has accelerated, and leading brands should strictly control quality risks.

1. Official Test Report Support:
   The two-way inspection report from the Shanghai FDA is strong positive evidence[1]
2. Rapid Product Removal Response:
   Shows the company attaches importance to the problem and has a relatively sincere attitude
3. Strong Kans Brand Foundation:
   Has a strong user base on channels like Douyin, with deep brand asset accumulation[6]
4. Overall Industry Trend:
   The general direction of domestic beauty brands’ rise remains unchanged, and consumers are still willing to give domestic brands a chance

1. Unresolved Conflicting Test Results:
   Lack of reasonable explanation for the difference between CCTV and FDA test results
2. Fragile Consumer Trust:
   In the era of ingredient-focused consumers, transparency is core competitiveness; any concealment may be fatal
3. Intensified Competition:
   Competitors like Proya and Winona are rising strongly and may seize market share
4. High Brand Concentration:
   Kans accounts for 82.3% of revenue; single brand risk is difficult to diversify

Short-term (1-3 months): Stock price fluctuates and bottoms out, sales under pressure
   ↓
Mid-term (3-6 months): Depends on re-inspection results and crisis PR effect
   ↓
Long-term (6-12 months): Brand rebuilding requires continuous investment

1. Closely Monitor Re-inspection Results:
   The third test result will be a key turning point
2. Track Sales Data:
   Focus on monitoring sales recovery in online channels (especially Douyin) in January-February
3. Observe Brand Strategy Adjustments:
   Whether the company will accelerate multi-brand layout to reduce single brand dependence
4. Evaluate R&D Investment:
   Whether the R&D expense ratio in the 2025 financial report increases (currently need to pay attention to whether it reaches the industry baseline of 2%-3%)[8]

• Uncertain Brand Trust Recovery Cycle
• High Single Brand Dependence (82.3%)
• Conflicting Test Results May Trigger In-depth Regulatory Investigation
• Negative Social Media Public Opinion May Continue to Ferment

• If crisis PR is successful, there is a rebound opportunity after the stock price is oversold
• Long-term growth trend of domestic beauty brands remains unchanged
• Tightening regulation accelerates industry clearance; leading enterprises’ market share is expected to increase

---

1. Brand Value:
   Obvious short-term damage, but long-term recovery depends on crisis PR execution and transparency
2. Consumer Trust:
   In the era of ingredient-focused consumers, the requirement for ingredient transparency is extremely high; any concealment will pay a heavy price
3. Crisis PR:
   The current response speed and intensity are
   above average
   , but there are still deficiencies in authoritative endorsement and emotional communication
4. Market Confidence:
   Effective maintenance depends on
   third test results
   and
   subsequent transparency construction

Under the dual pressure of unresolved conflicting test results and fragile consumer trust, Kans needs a higher-dimensional response —not just “clarifying the problem”, but also . This requires time and real investment.

For investors, this is an observation period of

. It is recommended to remain cautious and wait for clearer signals (re-inspection results, sales data recovery trend) before making decisions.

---

[1] Jinling API Data - Shangmei Group (2145.HK) Company Profile, Financial Data, Stock Price Performance
[2] Sina Finance - “CCTV Exposes Kans Masks Adding Prohibited Ingredients; Kans Responds with Test Reports to Prove Innocence” (https://finance.sina.com.cn/tech/roll/2025-12-27/doc-inhefqqf7027789.shtml)
[3] 21st Century Business Herald - “Kans Two Masks Alleged to Contain Prohibited Ingredients? Company Responds: No Prohibited Ingredients Detected” (https://www.21jingji.com/article/20251227/herald/370a28606b7a66c5970097d0ed3e935d.html)
[4] Jiemian News - “Zero Ingredients, Fake Endorsements: It’s Time to Wake Up to This 100 Billion Market’s IQ Tax”
[5] The Paper - “Kans Two Masks Alleged to ‘Illegally Add’; Customer Service: Relevant Products Have Been Removed from Shelves” (https://www.bjnews.com.cn/detail/1766674818129543.html)
[6] 163.com - “In-depth Research on Shangmei Group: Multi-brand Upward, Long-termism Pursues Perfection” (https://www.163.com/dy/article/KGJ1OOEK05568W0A.html)
[7] Sina Finance - “In 2025, 203 Cosmetics Factories ‘Disappeared’” (https://finance.sina.com.cn/roll/2025-12-26/doc-inhecrxc7920056.shtml)
[8] CBNData - “2025 Beauty Industry IPO Pattern: Boom and Blockage Coexist” (https://www.cbndata.com/information/294805)