Chinese Mega Hair and Beauty Chains
Chinese Beauty Buyer
Chinese Medicalised Beauty Market

Beauty, Spa, Skin, Hair; Biggest Chains in China
(Beauty, skin, spa, massage, makeup, nails, hair colouring, perm/wave, straighten/relax, Traditional Chinese Medicine, product retail, professional brands, market segments)

June 2015

TABLE OF CONTENTS 2
REPORT STRUCTURE 9
SECTION 1 – SUMMARY 12
TABLE 1 Professional beauty channel at a glance 12
Market size and trends 12
TABLE 2 Market share (%) of the top salon/spa chains 12
Chains’ growth forecasts 13
Why chains can command a high market share 13
Market specific service menus 13
Chains market importance opaque 13
Chains can benefit from major changes in pipeline 14
Main content of official measures 14
Currency 14
Date of publication 14
SECTION 2 - SIZE OF MARKET, AND MARKET FORECASTS 15
TABLE 3 Professional or salon/spa market size 15
TABLE 4 Professional market (% variations) historical and forecast 15
TABLE 5 Salon/spa market revenues forecasts 2007-2020 16
SECTION 3 - MARKET DRIVERS 17
Principal growth drivers 17
Growth economy and population 17
The urban population trendsetters 17
Regional development sustains growth 18
Social attitudes make grooming a job requirement? 18
Pay for the appropriate image 18
Demand for anti-ageing beauty 18
Anti-ageing and stress, Shanghai (quotes) 18
SECTION 4 – BEAUTY, SPA, AND HAIR CHAINS 20
TABLE/GRAPH 6 Chains as % of the professional beauty channel 20
Importance of chains can be “under recognized” 20
Market share of the biggest chains (beauty and hair) 21
China chains no counterparts in rest of world 21
Chains have big expansion plans (quotes) 21
TABLE/GRAPH 7 The top 25 chains – units owned/operated 22
The five biggest chains, named and ranked 22
Chains can be active in many sectors 23
Many domestics, and a few foreign companies 23
China chains compared to chains in other countries (selected) 23
The chain operated salons/spas (typical size of units) 24
TABLE 8 Benchmark data on the size of chain operated salons/spas 24
Staff numbers in flagship units and during peak hours 24
Opening hours 25
Unit sizes - market actualities versus “data averages” 25
TABLE 9 Employees per unit in Tier One cities 25
TABLE 10 Benchmark data Dessange International 25
Requirements of prospective franchises (example) 26
Chains employ professionally trained/licensed staff (quotes) 26
Only 46% of staff are professionally trained/licensed 26
TABLE 11 Price bands and staff experience (example) 26
Basic versus diploma certification 26
Chains support professional training 27
Chains and training (quotes) 27
Training attracts talented youth 27
Strengths of chains 29
Chains’ market presence 29
Chains development strategies tailored to different markets 29
Diagonal Reports 2003 research singled out chains 29
Quality matters (services, products, and staff) 30
Quality products 30
Product retail sales 30
Quality standards -national- that chains aim to meet 30
Quality standards –international– achieved in China 31
Salon/spa membership system boosts sales 31
Salon/spa membership system explained 31
Data on membership systems % of clients and client numbers 31
Membership system – benefits for salons/spas and clients 32
TABLE 12 Membership fees minimum / discounts (examples) 32
Membership discounts and frequency of visits 32
The spin offs of memberships are more than monetary 32
Services can be restricted to members 33
Rise of membership system not untroubled 33
Personalized services crucial to quality experience 33
The one-on-one service proves popular 33
Chains are industry-aware and consumer-aware 34
SECTION 5 – SALON/SPA CHAINS THE BIGGEST IDENTIFIED IN CHINA 35
Criteria used to identify top chains 35
Speed of growth makes it hard to maintain up-to-date figures 35
Chains that specialize in hair care 35
TABLE 13 The “top 25” companies (units operated and www) 36
Top 25 companies (alphabetical order) short profiles 36
TABLE 14 Salons/spas Shanghai, Guanghzhou, Beijing (10 identified) 41
TABLE 15 Salons/spas Beijing (10 identified) 42
Salons/spas with a cutting edge reputation (Shanghai, Beijing) 42
SECTION 6 – THE CHAINS’ ROLE IN THE PRODUCTS MARKET 43
Chains are players in beauty products market 43
Definitions of “professional,” “semi-professional,” “own label” 43
China a market-specific feature - manufacturers specialize in professional channel 43
Companies that supply “professional” and “semi-professional” lines 44
Chains’ own labels 44
Own labels as % of products handled 44
Why chains use own label brands 44
Own labels and quality control (quotes) 44
Chains unique position in quality product segment 45
Chains could build lifelong loyalty to their brands 45
Chains and product retail strategies 45
Stylist’s recommendation 45
The importance of assisted sales in professional channel (quote) 46
How Chinese formulations build loyalty 46
Chinese consumers (like all consumers) are unique 46
Measures to avoid counterfeits 46
TABLE 16 Share (%) of counterfeits in hair and beauty product categories 47
Reasons why some salons/spas could use counterfeits (quotes) 47
Problems when estimating market share of premium and foreign brands in salons/spas 48
Claim to use, but do not use, prestige brands (quote) 48
Arbitrary classification as foreign or domestic 48
SECTION 7 – SALON/SPA MARKET SIZE AND STRUCTURE 49
“China a big topic” (quote) 49
What’s counted as part of salon/spa market? 49
Salon or spa - any difference? 49
Questions about data accuracy and actual market size? 50 Data conflict not unique to China 50
Views of industry experts 50
Segmentation of hair salons and beauty salons/spas (no data) 50
Segmentation – geographical (limited data) 51
Saturated markets/cities in China 51
Previous research identified saturation 51
Best prospect cities identified 51
TABLE 17 Population concentration in top ten provinces and cities 52
TABLE 18 Geographical origin of visitors to major beauty expo 52
TABLE 19.i Provinces/cities with above average income 52
TABLE 19.ii Cities where the beauty chains are concentrated 53
China-specific - location and impact of car ownership 53
Country-specific - seasonal and other peaks in beauty business 53
Student holidays 53
Another peak - 15 million weddings and graduations 54
Age – legal age marriage 54
SECTION 8 - MARKET STRUCTURE CHANGES ON THE WAY 55
TABLE 20 Profile of the salon/spa sector in China 55
Micros a barrier to market development 55
Comparison with USA 55
Newness of businesses and staff 56
Employees lack training 56
Possible risks to consumers 56
Many consumer complaints 56
Official and industry policy to change and develop the industry 57
Medicalized beauty businesses (TCM, foot clinics) 57
Salon/spa training a global problem? 57
The central planks of official policy for salon/spa industry 57
Economic importance of beauty industry in China 58
Salons/spas one in 26 service industry jobs 58
Summary of regulations and quality standards for salons/spas 58
Consumer protection legislation 59
Salon/spa numbers could tumble 59
Quality standards in beauty product manufacturing closed 1/3 of sector 59
Quality standards for beauty equipment 59
Projections of future numbers of salons/spas 60
TABLE 21 Salon/spa units per capita in selected cities and nationally 60
TABLE 22 Salon/spa (% of sector) slated for closure? 60
Units that could be a front for other activities? 60
TABLE 23 Current and projected numbers of salons/spas per capita 61
TABLE 24 Per capita comparisons Korea and Japan 61
TABLE 25 Per capita comparison, selected countries, Europe and the Americas 61
The “grey” market not unique to China, some examples 61
SECTION 9 – BUSINESS ACTUALITIES IN THE CHAINS 63
Salon/spa sources of income 63
Service menus - China specific packages 63
Hair care menus 63
Different menus in big chains and micros 63
Beauty menus 64
Beauty spas can offer more than beauty 64
“Core” and “limited” menus of services 64
Body and spa care - any differences? 64
Examples of body, spa (hydrotherapy) services 64
Medicalized beauty services (TCM) 65
Body shaping, and slimming, services 65
High tech skin renewal services (lasers, IPL) 65
Wedding related services 65
Beauty in hair salons and vice versa 65
Why salons/spas choose to specialize (quote) 66
TABLE 26 Salon/spa revenues (%) from services and from retail 66
SECTION 10 - BUSINESS ACTUALITIES IN THE CHAINS (BEAUTY SALONS/SPAS) 67
TABLE 27 Business menus in beauty salons/spas 67
Historical comparison (2004) 67
TABLE 28 Beauty salon/spa revenues (%) services and products 68
Product retail lines 68
Historical comparison (2003) 68
TABLE 29 Beauty salon/spa revenues (%) by service category 68
TABLE 30 Growth rates forecast for different service categories in chains 69
Forecasts supported by chain wide surveys 69
TABLE 31 Revenues (%) breakout and growth forecasts - a large beauty chain 69
Face and skin care business and forecasts 69
Skin care - consumers, culture, climate 70
Skin whitening (quotes) 70
Body and spa care revenues 70
Spa service prospects and drivers (quotes) 70
Other services, including body shaping 71
SECTION 11 - BUSINESS ACTUALITIES IN THE CHAINS (HAIR SALONS) 72
TABLE 32 Business menus in hair salons 72
Men’s hair care 72
Forecasts for professional hair care compared to beauty 72
TABLE 33 Hair salon revenues (%) services and products 73
TABLE 34 Hair salon revenues (%) by category 73
Chemical / technical hair services 73
Hair treatment and other services 73
Hair extension services 74
TABLE 35 Hair salon revenues (%) services – historical comparisons 74
Haircuts and styling business in sample 74
How salons grow cut and style business 74
Hair perming techniques listed 75
Thermal perming services 75
Hair perming consumer demand 75
Hair straightening motivations 75
Hair perming seasonality 75
Hair colouring techniques listed 76
TABLE 36 Hair colouring services (%) revenues 76
Popular hair colour choices in 2008 77
Preferred contrasts hair and skin tones 77
Dramatic contrasts in highlights 77
How salons help their colour clients 77
SECTION 12 - BRANDS IDENTIFIED AS BEING USED IN PROFESSIONAL CHANNEL 78
TABLE 37 Brands skin care, whitening, anti-age (16 names, ranked) 79
TABLE 38 Brands hair care and colouring (15 names ranked) 80
TABLE 39 Brands hair styling (11 names) 80
TABLE 40 Brands hair relaxing and perming (21 identified) 81
TABLE 41 Brands identified listed, and www where available (47 names) 82
TABLE 41 Brands identified and www where available (continued) 83
SECTION 13 - EXPERT SAMPLE AND PROFILES 84
Data sources 84
Interviews 84
Confidentiality 84
Criteria for choosing interviewees/sample 84
Breadth of expertise 85
Geographical expertise 85
Geographical expertise - cities 85
Industry expertise 85
Why focus on chains? 85
What the experts represent 85
TABLE 42 Expert sample size (units operated) and specialization 86
TABLE 43 Expert sample (%) distribution by units operated 86
TABLE 44 Expert sample profiled (number of staff, M2, clients) 86
TABLE 45 Expert sample size of units operated 87
SECTION 14 – THE BEAUTY MARKET AND DATA RELATED ISSUES 88
Data - lack of and conflict 88
Reasons for data conflict 88
Underreporting / tax avoidance 88
Impact of counterfeits on data 89
Data problems - tax and price adjustments 89
The grey / unofficial beauty market 89
Data conflict - beauty salon/spa employment/numbers 89
SECTION 15 – DATA SOURCES ON THE MARKET 90
Data sources for report 90
Data sources - salon market authorities 90
SECTION 16 – MARKET SURVEYS AND DATA 92
First comprehensive salon industry surveys 92
Businesses counted in salon industry surveys 92
Salon market 2002 92
Salon market 2003 92
Salon market - 2004 (summary) 93
Salon market 2006 93
TABLE 46 Salon/spa sector (%) by units operated and ownership type (2005) 94
TABLE 47 Salon/spa sector (%) profit making and other (2001, 2004) 94
TABLE 48 Salon/spa sector (%) by revenues, CNY per year 94
TABLE 49 Salon/spa sector (%) businesses by investment level, 2001 94
TABLE 50 Salon/spa sector (%) businesses by size (M2) 2001, 2005 95
TABLE 51 Salon/spa sector (%) employee by training level (2004, 2005) 95
TABLE 52 Salon/spa (%) staff professional qualifications in different segments 95 Occupational skills authorities 96
Professional beauty certificate/diploma levels 96
Third level beauty qualifications (basic and clinical) 96
TABLE 53 Salon/spa sector by type and unlicensed (Shanghai) 97
TABLE 54 Salon/spa sector by type Wuhan city, Hubei province 97
SECTION 17 – BEAUTY MARKET BEYOND THE SALON/SPA 98
China beauty economy 98
TABLE 55 “Beauty economy” selected segments, revenues 98
China counterfeit goods 99
TABLE 56 The many different businesses providing beauty related services (units) 99
Massage parlours – results of police investigations 99
The bath houses 100
Names of companies operating TCM chains 100
Names of foot massage clinics 100
Medical beauty in China - TCM competes with high tech 100
The upmarket hotels and salon/spas 101
Sports facilities and health channel 101
TABLE 57 China general retail channel (size) 101
SECTION 18 - REGULATORY FRAMEWORKS AND SALONS/SPAS 102
Regulatory requirements are becoming more stringent 102
Regulations beauty salons/spas, and bathhouses (2007) 102
Summary of the regulations for hair and beauty salons/spas 102
Regulations about massage in salons 106
Public meetings before opening a salon 106
Salons and prostitution (Shenzhen) 106
Summary of regulations for bathhouses 107
SECTION 19 – COUNTRY DATA 108
TABLE 58 China GDP data, population and labour force 108
TABLE 59 China population by gender and age structure (2008) 108
TABLE 60 China population (millions) by age structure (1995-2050) 108
TABLE 61 The top 14 cities in China, ranked by population 109
TABLE 62 China the “Top 10 Provinces,” ranked by population 109
TABLE 63 China 31 administrative divisions/capitals population 110
Administrative divisions 110
TABLE 64 China 31 administrative divisions/capitals incomes (average and disposable) 111
TABLE 65 China numbers enrolled education (2005) 112
TABLE 66 Third Level/higher educational institutions - HEIs 112
TABLE 67 Chinese students abroad and returnees 112
SECTION 20 - NATIONAL HOLIDAYS 113
TABLE 68 The holidays - 11 national public and 16 legal holidays 113
Educational calendar 113
School day 113
SECTION 21 – PROMOTIONAL SUMMARY – BEAUTY, HAIR, SPA SKIN – CHAINS IN CHINA 2008 114
SECTION 22 - GLOSSARY 117
Symbols used in tables 117
Report formats 117
SECTION 23 - INDEX OF COMPANIES, BRANDS, SELECTED PUBLICATIONS, AND ORGANIZATIONS (REGULATORY, TRADE, PROFESSIONAL) 118
DIAGONAL REPORTS STATEMENT 121


Title: Beauty, Spa, Skin, Hair; Biggest Chains in China


Diagonal Reports tracks the total beauty (spa, medicalised beauty, wellness, professional hair and skin care) market worldwide. It identifies changes in consumer demand and emerging market opportunities globally.

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Beauty, Spa, Skin, Hair; Biggest Chains in China
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