China’s beauty salon industry is readying for a facelift.
As women across the country spend more than ever on beauty treatments, local parlors are coming under intense pressure to raise the bar. There are tough times ahead for the majority of small operators offering little more than a couple of beds and one masseuse in a 555-sq.-ft. converted apartment.
But foreign companies that have started nibbling at the edges of this fast-growing market are poised to make serious progress in launching their own beauty salons.
In most of China’s major cities, they are already making their presence known. Japanese brands such as Nippon Menard have sought to tap the high end of the market, with eight salons in China.
Menard’s peer Pola just opened its second salon in Shanghai in September, where a two-hour treatment at 600 yuan (?62/£43/$75) outstrips the national average by six times.
Leading the charge, however, are salon chains from Taiwan and Hong Kong. Taipei-based Natural Beauty has rolled out 850 salons across China, while Hong Kong’s BAL Holdings plans to open 100 parlors over the next five years with joint-venture partners in cities such as Guangzhou, Shenzhen and Xian.
As they compete for mid-range clientele, an increase in disposable income is giving the larger chains an edge. Chinese women can now afford to avoid the smaller parlors that have for years been dogged by tales of botched treatments and dangerous mishaps.
Over the past decade, more than 300,000 people have been injured as a result of shoddy beauty treatments, according to the China Beauty and Hairdressing Association.
More than 200,000 disputes involving beauty salons have, moreover, been reported to the China Consumer Association since 1995.
“There are so many small enterprises that have got two beds and call themselves beauty parlors,” said Bernadette Lai, director of spa development at the Shangri-La’s Chi spa in Shanghai, which was opened in September. “They are using laser machines that should be handled by a doctor or professional.”
The government recently stepped in to force some kind of quality control. A draft notice was issued by the Ministry of Commerce last April demanding the industry set up a “blacklist” system, under which salons that failed to meet basic standards would be reported to the authorities.
The Chinese ministry is also drafting detailed standards for the industry, which is expected to result soon in a star-rating system. China’s 1.72 million beauty parlors will be under pressure to call it quits unless they improve their game.
The stakes are high. Rapid growth in China’s beauty business has turned the salon industry into a huge moneymaker. Sales in 2004 leapt 37.5% to 220 billion yuan in 2004 over 2003, according to China’s Beauty and Cosmetic Chamber.
A group of economists at Beijing Normal University in August, moreover, predicted the sector’s earnings will double over the next five years.
Such figures reflect a general boom in cosmetics demand. Average yearly spending on beauty items has increase from about 1 yuan in the early Eighties to 25 yuan in more recent years. Traditionally, 40% of customers will visit their local beauty salon once a month, while one-third will go two to three times monthly.
Body and neck massages are the most popular treatments.
“Massages are more important than facials [for customers],” said Amanda Teng, assistant director at the Evian Spa in Shanghai. “Even when it comes to a facial, they want a massage throughout.” Customers are also very particular about the facial products used in treatments. However, brand recognition is still low compared to what it is overseas.
Yet that’s set to change. Foreign companies with a quality track record look set to gain a definite edge as skills and service take on greater importance. Big multinational brands, such as Groupe Clarins, are rumored to be eyeing the possibility of opening a beauty salon in Shanghai.
And Teng expects foreign competition to intensify.
“I have been hearing news of a lot of spa companies coming in over the next half year,” she explained. This is echoed by Lai, who added, “I think it’s all happening. It’s all go-go out there.”
This article appeared in WWD Beauty Report International, a special publication to WWD.