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Beauty treatment heading up
(China Daily)
Updated: 2004-11-04 08:44

Wang Shanying, a 25-year-old woman working in an overseas-based consulting company with a monthly salary of 8,000 yuan (US$964), enjoys a facial at a Natural Beauty salon every week.

"My mother also comes here when she has time. I believe beauty and hairdressing will help people not only improve their appearance but also stay vigorous and psychologically self-confident," said Wang.

Her boyfriend also receives beauty services at the salon, Wang said.

Wang is just one of the millions of Chinese consumers who visit beauty shops nearly every week.

Professional studies show the hairdressing and beauty industry has become the fifth hot growth area in China in recent years, following real estate, automobile, tourism, and telecommunications industries.

Rapid development

China's beauty and hairdressing economy has experienced rapid development during the past two decades, with the annual increase rate of revenue standing at 15 per cent from the mid-1980s.

It stands much higher than the growth rate of the nation's gross domestic product (GDP) and its tertiary industry as a whole, which were about 8 per cent and 9 per cent respectively on average in recent decades.

According to the China Beauty and Hairdressing Industry Survey Report conducted by the China Beauty and Fashion Paper, by the end of last year, there were 1.54 million salons, 3,750 cosmetics enterprises and 673 related professional training institutes in China.

The salons created 7.3 million jobs and total salon revenue amounted to 154.4 billion yuan (US$18.6 billion) last year.

Experts estimate the nation's beauty and hairdressing service sector is expected to provide 8 million jobs this year and the number of beauty and hair salons will exceed 1.6 million.

Meanwhile, the combined revenue of the salons will reach 176.2 billion yuan (US$21.23 billion), which is to contribute 84.7 billion yuan (US$10.2 billion) and 5.6 billion yuan (US$674 million) to China's GDP and tax revenue respectively.

The fast growth of the beauty and hairdressing industry accelerates the progress of the relevant sectors, involving hairdressing and beauty product manufacturing, research and development, professional training, logistics, media, advertisement, exhibition, as well as marketing and consulting.

The relevant sectors will offer jobs to 14 million people and stimulate social consumption demand by 125 billion yuan (US$15.06 billion) to China's economy in 2004.

Citing the cosmetics sector as an example, the sales volume of China's cosmetics industry was just 200 million yuan (US$24.1 million) in 1982 and surged to 52 billion yuan (US$6.27 billion) last year.

Zhang Xiaomei, editor-in-chief of the China Beauty and Fashion Paper, pointed out, to date, beauty and hairdressing salons in China were generally small in scale and the market admission threshold was rather low.

The survey shows the business area of 65.04 per cent of the beauty and hairdressing salons in China is less than 50 square metres.

On average, the number of employees is 5.1 and the number of clients that can be accommodated at the same time is 8.7.

"Private enterprises or individuals are the main force in the industry," said Zhang.

About 87.13 per cent of the beauty and hairdressing salons are operated by private enterprises or individuals.

Chain or franchise operation has not been popularized in China, as only 4.2 per cent of the salons are part of a franchise.

"The traditional and fashionable items, including spa treatments, hair dying, nail decoration and colour consulting, all have their targetted consuming groups and are equally popular in salons," said Zhang.

Reasons for prosperity

The growing process of China's beauty and hairdressing industry is in pace with the nation's rapid social and economic development.

"When the economy develops to a certain stage people's basic living demands can be met, they may seek to enhance life quality, which provides a huge market margin for the tertiary industry, including the beauty and hairdressing sector," said Zhang Guoqing, professor with the Government Administration Institute of Peking University.

Official statistics show that China's average GDP growth rate was 9.3 per cent from 1989 to 2001, standing at 9.1 per cent last year.

The nation's GDP exceeded 11 trillion yuan (US$1.33 trillion) in 2003, as the GDP per capita surpassed US$1,000.

The economic development results in changes of the social consciousness, which expand the consuming group of the beauty and hairdressing industry.

The new consumption culture, upgraded with economic and social growth, catalyzes the beauty and hairdressing industry to become the such a hot market in China.

"So far, a group of new items, including medical and men's beauty products, emerged and were welcomed in key cities," said the professor.

Stimulation to growth

The beauty and hairdressing industry's development will stimulate social demands, attract more private investment and ease job pressure to some extent.

"Various items suitable for different consuming groups lead more people to enter salons," said He Fan, president assistant with the World Economy and Politics Research Institute affiliated to the Chinese Academy of Social Sciences.

"In addition, the operators are making efforts to develop new services and products, in a bid to lure more clients."

The products and service upgrading make the industry vigorous and promising, which is a strong force to spur people's consumption.

Taking the characteristics of the hairdressing and beauty industry into account, private investment may play an active role during the expansion of the sector.

"The characteristics of the sector involve a low market admission threshold, a short business cycle, flexible operation and massive market potentials," said He.

Meanwhile, as a labour-intensive industry, the industry can absorb both rural and urban surplus labour resources.

According to experts' neutral estimation, by the end of 2004, there will be a total of 4.99 million people engaged in the hairdressing and beauty industry, which is expected to reach 6.57 million by 2007.

More rural people entering the beauty and hairdressing industry in urban areas will improve the current job structure in rural areas and help increase the farmers' revenue.

"On the other hand, increases in farmers' revenue may facilitate beauty and hairdressing operators to exploit the new market," said He.

Problems to be resolved

Though China's beauty and hairdressing industry is developing on the fast track, certain problems still exist and are urged to be resolved as soon as possible to guarantee the sustainable and healthy development of the sector.

Zhong Wei, professor and director of the Finance Research Centre of Beijing Normal University, said the problems should be solved on the top agenda, formulating a set of industrial standards and establishing complete and transparent administration and legal systems.

"The standards should be concerned with market admission, qualify certification, service standards and skill criterion," said Zhong.

Up to now, there is no national level administrative rules or laws for the beauty and hairdressing industry, resulting in fragile administration and supervision.

Moreover, there is no specific government department responsible for the administration of the industry, thus the operators are often puzzled where and from whom they can obtain support and clients usually can not find help to protect their interest efficiently when met with disputes.

Besides standards and regulations, experts and insiders call for establishing a scientific and practical statistics index system to strengthen market guidance and information exchange.

"The system will facilitate the analysis, evaluation, guidance, standardization and structure optimization of China's beauty and hairdressing industry," Zhong said.

Shortage in professionals is another problem hindering the industrial progress, as a large part of hairdressing and beauty salons function in a workshop style and the operators and employees usually have not received higher education or professional training.

Fan Xinxin, a boss of a small beauty and hair salon in Beijing, told China Daily the majority of small salon bosses employ several technicians, with beauty and hairdressing experience.

"Then, we employ some young female migrant workers as apprentices and let the technicians train them based on their own experiences," said Fan.

A raft of fake products and exaggerated advertisements infringe upon the reputation of the sector as a whole.

Challenges and opportunities

Similar to other industries, China's hairdressing and beauty sector is faced with challenges taken by the nation's market liberalization.

So far, a group of foreign hairdressing and beauty enterprises have entered key cities, such as Beijing, Shanghai and Guangzhou.

In 2001, there were only 10 overseas hairdressing and beauty salons.

Another five and six were launched in 2002 and 2003 respectively.

"Overseas competitors are generally large in scale, with robust capital support, equipped by world advanced technologies and facilities, with rich marketing experiences and high-level services," said Zhao Zhenhua, president of the Asia Hairdressing and Beauty Industrial Association.

They will lure some high-end consumers and occupy a part of the high-end market.

"It is a sign that the overseas operators pay much attention to localization, for examples, they have begun using traditional Chinese medicine and developed products suitable to the physical conditions of local people," Zhao said.

However, Zhao believes they can not be the key stream in the local market, as the hairdressing and beauty industry is different from other sectors and the workshop-style outlets may occupy a certain market share over a long period of time.

Promising future

It is good news that the central government has given attention to problems within the industry.

The Ministry of Commerce is organizing a group of department officials, experts and beauty and hairdressing operators to draw up related regulations and clarify the administrative purview.

Last October, the first session of the National Hairdressing and Beauty Working Conference was held and industrial administration rules and standardization criteria were drafted.

Concerning the developing trend of China's hairdressing and beauty industry, experts and insiders all believe comprehensive large-scale institutes, professional beauty salons, chain outlets, community hairdressing and beauty stores can co-exist to meet the various demands of consumers.

"A group of famous brands are expected to emerge in the sector due to market standardization and enhanced consumer consciousness of safe service," Zhao said.

Franchise operation is expected to be popularized in the coming decade," said Cheng Mingming, chairwoman of the Hong Kong-based Monita International Group, a professional beauty giant with a worldwide network.

Such a model can guarantee the quality of products and services and keep specific brand characteristics.

"It may be regarded as an efficient and practical way for business expansion of a brand," said Cheng.

High-quality professionals in expertise, management and marketing will be welcomed along with the industrial upgrading and standardization.

Experts also predict professional training institutes to mushroom.

According to Cheng, Monita has opened a chain of beauty and hairdressing salons on the Chinese mainland and is concentrating on launching high-level training institutes around the nation.

Its first professional training school was set up in 1989 in Beijing.



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