Countries covered: China
The Chinese professional beauty market continues to grow strongly in double digits.
Chinese salon chains punch far above their weight. A handful of beauty salon chains account for more than a third of the professional hair and beauty market in the big coastal cities.
The beauty industry is the 5th largest consumer market in China, after real estate, automobile, electronics and travel. At current growth rates, it is estimated that the Chinese beauty market will overtake France, currently Europe’s biggest cosmetics market, by 2012 in value terms. China has the most salons of any country in the world. It has more than 1.5m salons compared to only 0.3m salons in the US.
In China as in every other market, independently owned salons account for almost all the professional beauty sector in unit terms. But it is the relatively few franchise chains which are the key players in the Chinese beauty market. According to Diagonal Reports recent research, the largest chains could, combined, account for more than a third of the professional beauty market in the megacities of Beijing, Shanghai and Guangzhou.
The top 5 chains alone operate almost 13,000 salons across China. But their importance has been under estimated due to the fragmentation of the market and because there are no counterparts to the Chinese salon chain system elsewhere in the world. These big chains, with a few exceptions, are Chinese owned and operated.
Key features of Chinese chain salon:
- Size (larger than average in terms of staff numbers and m2)
- Profitability
- Professionalism (with professionally trained staff)
- Compliance (with regulations)
Chains have accumulated extensive market experience. They have customised development plans for different regional markets and consumer segments. The chains do not have a “one size fits all.” strategy.
Salon chains are developing the salon industry and, indeed, wider beauty services market in China. They are the most important service providers to the key consumer segment, the trend setting, young urban, male and female consumers. These consumers, serve to further extend chains’ influence across China.
Salon chains are in a strong position to grow not just their share of the salon services market but also of the beauty products market in China, in particular the quality segment. Their market share will increase as these chains will be the main beneficiaries of market growth and of the ongoing quality upgrade of the cosmetics market.
As in other Asian markets, the salon membership system is an important feature of this sector in China. In some salons over half of clients are members which means they pay in advance for beauty and hair services. Salons benefit from this guaranteed revenue flow. The in-depth knowledge they have of their member clients' visits and service usage patterns allows them to target consumers, services and products more efficiently, advance plan and make more money.
Chinese beauty salons/spas tend to offer a wider range of services than their counterparts in the USA and Europe. These menus indicate a culturally specific concept of beauty.
Hair salon menus include
- Hair services (cut, style, colour, perm, straighten)
- Limited beauty services (typically face skin care)
- Product retail
Beauty salons menus include
- Face and skin care
- Spa (body massage)
- Full (TCM - Traditional Chinese Medicine) therapies
- Body shaping, firming and weight-control
- Other (e.g. cosmetic laser)
- Product retail
Almost every one of the big salon chains in China uses their own label products for in salon usage and in-salon retail. Salons prefer own label hair and skincare products for many reasons. They grow revenues, help salons to guarantee quality control, reduce risk of counterfeits, build client loyalty, and they create an entry barrier for competitors. A major feature of chains product marketing is the brands used were specially formulated for Chinese consumers, often by Chinese companies.
Experts consulted by Diagonal Reports are extremely confident about the future of the salon market. Strong market fundamentals - economics, demographics, social attitudes and lifestyle changes - will continue to drive growth rates of up to 15% each year.
This new report, Largest Hair Salon and Beauty Salon - Spa - Chains China 2008, focuses on the largest salon chains in China which hold the key to the Chinese professional beauty market and the quality skin and hair care product market.
This country report is based on an analysis of in-depth discussions with leading Chinese salon chains conducted in May -July 2008. The sample size is representative of the largest Chinese beauty salons which operate 10,000 salons across China and generate 17 millions salon visits weekly
This 08 report also compares and contrasts data from previous (01, 03, 07) Chinese professional beauty market reports.
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- REPORT STRUCTURE
- SECTION 1 - SUMMARY
- TABLE 1 Professional beauty channel at a glance
- Market size and trends
- TABLE 2 Market share (%) of the top salon/spa chains
- Chains’ growth forecasts
- Why chains can command a high market share
- Market specific service menus
- Chains market importance opaque
- Chains can benefit from major changes in pipeline
- Main content of official measures
- Currency
- Date of publication
- SECTION 2 - SIZE OF MARKET, AND MARKET FORECASTS
- TABLE 3 Professional or salon/spa market size
- TABLE 4 Professional market (% variations) historical and forecast
- TABLE 5 Salon/spa market revenues forecasts 2007-2012
- SECTION 3 - MARKET DRIVERS
- Principal growth drivers
- Growth economy and population
- The urban population trendsetters
- Regional development sustains growth
- Social attitudes make grooming a job requirement?
- Pay for the appropriate image
- Demand for anti-ageing beauty
- Anti-ageing and stress, Shanghai (quotes)
- SECTION 4 - BEAUTY, SPA, AND HAIR CHAINS
- TABLE/GRAPH 6 Chains as % of the professional beauty channel
- Importance of chains can be “under recognized”
- Market share of the biggest chains (beauty and hair)
- China chains no counterparts in rest of world
- Chains have big expansion plans (quotes)
- TABLE/GRAPH 7 The top 25 chains - units owned/operated
- The five biggest chains, named and ranked
- Chains can be active in many sectors
- Many domestics, and a few foreign companies
- China chains compared to chains in other countries (selected)
- The chain operated salons/spas (typical size of units)
- TABLE 8 Benchmark data on the size of chain operated salons/spas
- Staff numbers in flagship units and during peak hours
- Opening hours
- Unit sizes - market actualities versus “data averages”
- TABLE 9 Employees per unit in Tier One cities
- TABLE 10 Benchmark data Dessange International
- Requirements of prospective franchises (example)
- Chains employ professionally trained/licensed staff (quotes)
- Only 46% of staff are professionally trained/licensed
- TABLE 11 Price bands and staff experience (example)
- Basic versus diploma certification
- Chains support professional training
- Chains and training (quotes)
- Training attracts talented youth
- Strengths of chains
- Chains’ market presence
- Chains development strategies tailored to different markets
- Diagonal Reports 2003 research singled out chains
- Quality matters (services, products, and staff)
- Quality products
- Product retail sales
- Quality standards -national- that chains aim to meet
- Quality standards -international- achieved in China
- Salon/spa membership system boosts sales
- Salon/spa membership system explained
- Data on membership systems % of clients and client numbers
- Membership system - benefits for salons/spas and clients
- TABLE 12 Membership fees minimum / discounts (examples)
- Membership discounts and frequency of visits
- The spin offs of memberships are more than monetary
- Services can be restricted to members
- Rise of membership system not untroubled
- Personalized services crucial to quality experience
- The one-on-one service proves popular
- Chains are industry-aware and consumer-aware
- SECTION 5 - SALON/SPA CHAINS THE BIGGEST IDENTIFIED IN CHINA
- Criteria used to identify top chains
- Speed of growth makes it hard to maintain up-to-date figures
- Chains that specialize in hair care
- TABLE 13 The “top 25” companies (units operated and www)
- Top 25 companies (alphabetical order) short profiles
- TABLE 14 Salons/spas Shanghai, Guanghzhou, Beijing (10 identified)
- TABLE 15 Salons/spas Beijing (10 identified)
- Salons/spas with a cutting edge reputation (Shanghai, Beijing)
- SECTION 6 - THE CHAINS’ ROLE IN THE PRODUCTS MARKET
- Chains are players in beauty products market
- Definitions of “professional,” “semi-professional,” “own label”
- China a market-specific feature - manufacturers specialize in professional channel
- Companies that supply “professional” and “semi-professional” lines
- Chains’ own labels
- Own labels as % of products handled
- Why chains use own label brands
- Own labels and quality control (quotes)
- Chains unique position in quality product segment
- Chains could build lifelong loyalty to their brands
- Chains and product retail strategies
- Stylist’s recommendation
- The importance of assisted sales in professional channel (quote)
- How Chinese formulations build loyalty
- Chinese consumers (like all consumers) are unique
- Measures to avoid counterfeits
- TABLE 16 Share (%) of counterfeits in hair and beauty product categories
- Reasons why some salons/spas could use counterfeits (quotes)
- Problems when estimating market share of premium and foreign brands in salons/spas
- Claim to use, but do not use, prestige brands (quote)
- Arbitrary classification as foreign or domestic
- SECTION 7 - SALON/SPA MARKET SIZE AND STRUCTURE
- “China a big topic” (quote)
- What’s counted as part of salon/spa market?
- Salon or spa - any difference?
- Questions about data accuracy and actual market size? 50 Data conflict not unique to China
- Views of industry experts
- Segmentation of hair salons and beauty salons/spas (no data)
- Segmentation - geographical (limited data)
- Saturated markets/cities in China
- Previous research identified saturation
- Best prospect cities identified
- TABLE 17 Population concentration in top ten provinces and cities
- TABLE 18 Geographical origin of visitors to major 2008 beauty expo
- TABLE 19.i Provinces/cities with above average income
- TABLE 19.ii Cities where the beauty chains are concentrated
- China-specific - location and impact of car ownership
- Country-specific - seasonal and other peaks in beauty business
- Student holidays
- Another peak - 15 million weddings and graduations
- Age - legal age marriage
- SECTION 8 - MARKET STRUCTURE CHANGES ON THE WAY
- TABLE 20 Profile of the salon/spa sector in China
- Micros a barrier to market development
- Comparison with USA
- Newness of businesses and staff
- Employees lack training
- Possible risks to consumers
- Many consumer complaints
- Official and industry policy to change and develop the industry
- Medicalized beauty businesses (TCM, foot clinics)
- Salon/spa training a global problem?
- The central planks of official policy for salon/spa industry
- Economic importance of beauty industry in China
- Salons/spas one in 26 service industry jobs
- Summary of regulations and quality standards for salons/spas
- Consumer protection legislation
- Salon/spa numbers could tumble
- Quality standards in beauty product manufacturing closed 1/3 of sector
- Quality standards for beauty equipment
- Projections of future numbers of salons/spas
- TABLE 21 Salon/spa units per capita in selected cities and nationally
- TABLE 22 Salon/spa (% of sector) slated for closure?
- Units that could be a front for other activities?
- TABLE 23 Current and projected numbers of salons/spas per capita
- TABLE 24 Per capita comparisons Korea and Japan
- TABLE 25 Per capita comparison, selected countries, Europe and the Americas
- The “grey” market not unique to China, some examples
- SECTION 9 - BUSINESS ACTUALITIES IN THE CHAINS
- Salon/spa sources of income
- Service menus - China specific packages
- Hair care menus
- Different menus in big chains and micros
- Beauty menus
- Beauty spas can offer more than beauty
- “Core” and “limited” menus of services
- Body and spa care - any differences?
- Examples of body, spa (hydrotherapy) services
- Medicalized beauty services (TCM)
- Body shaping, and slimming, services
- High tech skin renewal services (lasers, IPL)
- Wedding related services
- Beauty in hair salons and vice versa
- Why salons/spas choose to specialize (quote)
- TABLE 26 Salon/spa revenues (%) from services and from retail
- SECTION 10 - BUSINESS ACTUALITIES IN THE CHAINS (BEAUTY SALONS/SPAS)
- TABLE 27 Business menus in beauty salons/spas
- Historical comparison (2004)
- TABLE 28 Beauty salon/spa revenues (%) services and products
- Product retail lines
- Historical comparison (2003)
- TABLE 29 Beauty salon/spa revenues (%) by service category
- TABLE 30 Growth rates forecast for different service categories in chains
- Forecasts supported by chain wide surveys
- TABLE 31 Revenues (%) breakout and growth forecasts - a large beauty chain
- Face and skin care business and forecasts
- Skin care - consumers, culture, climate
- Skin whitening (quotes)
- Body and spa care revenues
- Spa service prospects and drivers (quotes)
- Other services, including body shaping
- SECTION 11 - BUSINESS ACTUALITIES IN THE CHAINS (HAIR SALONS)
- TABLE 32 Business menus in hair salons
- Men’s hair care
- Forecasts for professional hair care compared to beauty
- TABLE 33 Hair salon revenues (%) services and products
- TABLE 34 Hair salon revenues (%) by category
- Chemical / technical hair services
- Hair treatment and other services
- Hair extension services
- TABLE 35 Hair salon revenues (%) services - historical comparisons
- Haircuts and styling business in sample
- How salons grow cut and style business
- Hair perming techniques listed
- Thermal perming services
- Hair perming consumer demand
- Hair straightening motivations
- Hair perming seasonality
- Hair colouring techniques listed
- TABLE 36 Hair colouring services (%) revenues
- Popular hair colour choices in 2008
- Preferred contrasts hair and skin tones
- Dramatic contrasts in highlights
- How salons help their colour clients
- SECTION 12 - BRANDS IDENTIFIED AS BEING USED IN PROFESSIONAL CHANNEL
- TABLE 37 Brands skin care, whitening, anti-age (16 names, ranked)
- TABLE 38 Brands hair care and colouring (15 names ranked)
- TABLE 39 Brands hair styling (11 names)
- TABLE 40 Brands hair relaxing and perming (21 identified)
- TABLE 41 Brands identified listed, and www where available (47 names)
- TABLE 41 Brands identified and www where available (continued)
- SECTION 13 - EXPERT SAMPLE AND PROFILES
- Data sources
- Interviews
- Confidentiality
- Criteria for choosing interviewees/sample
- Breadth of expertise
- Geographical expertise
- Geographical expertise - cities
- Industry expertise
- Why focus on chains?
- What the experts represent
- TABLE 42 Expert sample size (units operated) and specialization
- TABLE 43 Expert sample (%) distribution by units operated
- TABLE 44 Expert sample profiled (number of staff, M2, clients)
- TABLE 45 Expert sample size of units operated
- SECTION 14 - THE BEAUTY MARKET AND DATA RELATED ISSUES
- Data - lack of and conflict
- Reasons for data conflict
- Underreporting / tax avoidance
- Impact of counterfeits on data
- Data problems - tax and price adjustments
- The grey / unofficial beauty market
- Data conflict - beauty salon/spa employment/numbers
- SECTION 15 - DATA SOURCES ON THE MARKET
- Data sources for report
- Data sources - salon market authorities
- SECTION 16 - MARKET SURVEYS AND DATA
- First comprehensive salon industry surveys
- Businesses counted in salon industry surveys
- Salon market 2002
- Salon market 2003
- Salon market - 2004 (summary)
- Salon market 2006
- TABLE 46 Salon/spa sector (%) by units operated and ownership type (2005)
- TABLE 47 Salon/spa sector (%) profit making and other (2001, 2004)
- TABLE 48 Salon/spa sector (%) by revenues, CNY per year
- TABLE 49 Salon/spa sector (%) businesses by investment level, 2001
- TABLE 50 Salon/spa sector (%) businesses by size (M2) 2001, 2005
- TABLE 51 Salon/spa sector (%) employee by training level (2004, 2005)
- TABLE 52 Salon/spa (%) staff professional qualifications in different segments 95 Occupational skills authorities
- Professional beauty certificate/diploma levels
- Third level beauty qualifications (basic and clinical)
- TABLE 53 Salon/spa sector by type and unlicensed (Shanghai)
- TABLE 54 Salon/spa sector by type Wuhan city, Hubei province
- SECTION 17 - BEAUTY MARKET BEYOND THE SALON/SPA
- China beauty economy
- TABLE 55 “Beauty economy” selected segments, revenues
- China counterfeit goods
- TABLE 56 The many different businesses providing beauty related services (units)
- Massage parlours - results of police investigations
- The bath houses
- Names of companies operating TCM chains
- Names of foot massage clinics
- Medical beauty in China - TCM competes with high tech
- The upmarket hotels and salon/spas
- Sports facilities and health channel
- TABLE 57 China general retail channel (size)
- SECTION 18 - REGULATORY FRAMEWORKS AND SALONS/SPAS
- Regulatory requirements are becoming more stringent
- Regulations beauty salons/spas, and bathhouses (2007)
- Summary of the regulations for hair and beauty salons/spas
- Regulations about massage in salons
- Public meetings before opening a salon
- Salons and prostitution (Shenzhen)
- Summary of regulations for bathhouses
- SECTION 19 - COUNTRY DATA
- TABLE 58 China GDP data, population and labour force
- TABLE 59 China population by gender and age structure (2008)
- TABLE 60 China population (millions) by age structure (1995-2050)
- TABLE 61 The top 14 cities in China, ranked by population
- TABLE 62 China the “Top 10 Provinces,” ranked by population
- TABLE 63 China 31 administrative divisions/capitals population
- Administrative divisions
- TABLE 64 China 31 administrative divisions/capitals incomes (average and disposable)
- TABLE 65 China numbers enrolled education (2005)
- TABLE 66 Third Level/higher educational institutions - HEIs
- TABLE 67 Chinese students abroad and returnees
- SECTION 20 - NATIONAL HOLIDAYS
- TABLE 68 The holidays - 11 national public and 16 legal holidays
- Educational calendar
- School day
- SECTION 21 - PROMOTIONAL SUMMARY - BEAUTY, HAIR, SPA SKIN - CHAINS IN CHINA 2008
- SECTION 22 - GLOSSARY
- Symbols used in tables
- Report formats
- SECTION 23 - INDEX OF COMPANIES, BRANDS, SELECTED PUBLICATIONS, AND ORGANIZATIONS (REGULATORY, TRADE, PROFESSIONAL)
- DIAGONAL REPORTS STATEMENT
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