|
Editor's note: China's beauty sector has enjoyed rapid growth since the late 1980s, when beauty salons suddenly popped up in many corners of Guangzhou, the capital of southern China's Guangdong Province.
The All-China Federation of Industry and Commerce's China Beauty and Cosmetics Chamber carried out a nationwide survey last year, which revealed some dazzling developments in this sector.
A report was compiled based on the 26,000 copies of the survey that were returned. The following is a summary of the report, issued at the end of last month.
Sector's structure
The beauty sector includes hairdressers, beauty salons, individual cosmetology practitioners, day spas and massage parlours.
Due to the low investment threshold required to establishing such businesses and the labour-intensive nature of the industry, it has been relatively easy for individuals to enter the sector, which has grown rapidly to around 1.72 million businesses throughout the country.
About 51 per cent of these businesses opened just within the past five years.
Most beauty businesses are small fish swimming in a vast ocean of competition within the huge market.
Some 63.31 per cent of beauty stores used less than 200,000 yuan (US$24,155) in capital to register their businesses, while 11.41 per cent spent 1 million yuan (US$120,773) to register.
The business area of 17.74 per cent of stores is less than 50 square metres, while 30 per cent have between 50 and 150 square metres.
Stores with a business area of between 150 and 300 square metres account for 34.79 per cent of those surveyed.
Large-scale stores have appeared in the market, with 0.96 per cent having an business area exceeding 1,000 square metres.
Some 52.6 per cent of beauty salons make a profit, 38.5 per cent break even and 8.9 per cent say they are losing money.
The average annual revenue of each beauty store is 116,300 yuan (US$14,046).
In some major cities, 43.84 per cent of large stores achieve an annual revenue of 600,000 yuan (US$72,464), while the revenue of small stores ranges from 50,000 to 100,000 yuan (US$6,038 to US$12,077).
There are generally three types of ownership in the sector: family businesses the dominant mode of ownership, professional managers and shareholding companies.
Management within the sector has become increasingly diversified in recent years: 87.98 per cent of stores are either part of a chain or franchised.
Small and medium-sized stores continue to dominate the market, which indicates that it is taking time to introduce standardization and mass-production to the industry.
Membership is becoming the major marketing trend for stores, with 80.25 per cent of businesses surveyed using the membership method to develop their business.
All stores larger than 200 square metres use membership.
The membership fees that stores can collect when they find new customers are an effective way to gain an immediate financial input.
But how to offer a consistent quality service remains an important issue to tackle.
There are so far no rules or an industrial standard to regulate the market.
For many small-sized stores, owners' random management is a widely existing phenomenon.
They normally run the family businesses, with labour coming from other parts of the country.
The structure of employees within the beauty sector turns to be a large obstacle to hindering the industry's development.
Most employees are relatively unqualified and have a poor educational background.
China still lacks beauty-related courses in colleges or universities.
Almost half - 46.08 per cent - of the employees have never had any systematic professional training.
And only 3.83 per cent have an educational background in healthcare.
The survey indicates 31.53 per cent of staff have only completed a middle school education and 31.61 per cent have graduated from high school.
Some 21.92 per cent joined technical schools and 11.25 per cent have college degrees.
And 3.57 per cent of the employees have only completed a primary school education.
Most employees within the beauty sector are young, with the average age being 25 years old.
The ratio between female employees and male employees is 79:21.
The mobility of employees is also a bottleneck for the development of the industry.
More than half - 51.52 per cent - of the employees have worked in the industry for less than three years, which cannot guarantee the industry's sustainable development.
As for employee welfare, some 95 per cent of beauty enterprises fail to provide medical insurance or pensions to their staff.
In line with the fast-growing beauty industry, cosmetics sales also enjoy a great market potential.
Global per capita spending on cosmetics is US$50.
But in developed countries, such as the United States, Germany and Japan, the figure is more than US$100.
In China, per capita expenditure on cosmetics is a mere US$7.
By the end of last year, there were 3,140 enterprises with business licenses to produce cosmetics with as many as 150,000 brands on the market.
About 300 of them are foreign-invested companies, according to the report.
Revenue from cosmetics was 85 billion yuan (US$10.27 billion) last year.
The major products are skincare products, which are at 38 per cent of the industry's output, hairdressing products at some 30 per cent, and perfume at 20 per cent.
Beauty market
The market capacity of the beauty service industry is vast and can grow at an exponential rate, with current total revenues at 220 billion yuan (US$26.57 billion) for beauty shops and 85 billion yuan (US$10.27 billion) for cosmetic sales last year.
Women, mainly aged from 20 to 50, are the major consumers of beauty services, although men are playing an increasingly larger role in the sector.
Customers normally have relatively better educational opportunities, while income does not seem to play a major role in determining beauty consumption habits, since there are similar numbers of people from different income brackets.
China's vast rural areas remain a blank slate for the beauty industry.
The survey indicates the ratio between female and male consumers is 80:20.
People aged between 31 to 40 account for 40 per cent of the total customers, following by those aged from 21 to 30, who account for to 31.43 per cent.
There are 28.6 per cent of the surveyed customers aged between 41 to 50.
As for the jobs of customers, 28.58 per cent of the market is comprised of government workers and civil servants, 18.78 per cent are white-collar staff, and 14.15 per cent are entrepreneurs or freelancers.
Only 1.75 per cent of the surveyed customers said they were farmers.
People with the monthly incomes of 1,500 to 2,900 yuan (US$181 to US$350) are the major group of consumers of services, and they account for 23.11 per cent.
The percentage for those with monthly incomes of 1,000 to 1,400 yuan (US$121 to 169) is 16.72 per cent, those with the incomes of 500 to 900 yuan (US$60 to US$109) is 14.28 per cent.
Some 40.26 per cent of customers receive beauty services once a month, and 30.66 per cent twice or three times a month.
The following three aspects are major factors that help customers decide which beauty organizations to choose: professional service (28.6 per cent), advanced and reliable equipment (15.2 per cent) and hygiene (12.1 per cent).
More than half of customers surveyed wish to try and are able to accept new technology and new beauty service items, on the condition that the service is safe and effective.
Good service is the major satisfaction to customers, while poor management and honest business practices are of major concern.
Over 90 per cent of interviewees have an tendency to go to beauty organizations, while 60 per cent have experienced beauty services.
Solving problems
In spite of the rapid development momentum, creating substantial and effective rules and regulations is something the industry needs to do now. It is essential for the future of the sector.
At the moment, the sector is growing unsystematically.
Some 88.69 per cent of organizations surveyed wish their business practices could be carried out under the legal framework overseen by the government or other relevant authorities.
The small investment scale within the industry also hinders the development of the businesses.
There are not many strong brands or large-scale stores. The competitiveness of the stores should be further strengthened.
The low professional threshold cannot guarantee quality service.
An effective educational system has not been established, with teaching qualities vary largely among different educational institutions.
About one-fifth of the beauty shops surveyed are on the brink of bankruptcy, and there is a lack of sufficient capital.
Large foreign investment has yet to cash in on the potential offered by this sector.
(China Daily March 18, 2005)
|
