May your feet always be swift, May you have a strong foundation, May you stay forever young.
- Bob Dylan
When 14-year-old Zhang Yu started his hair care business in 1999, no one expected that he would own China’s largest hair transplant franchises years later. Zhang’s company, Yonghe Medical Group, provides one-stop-shop hair-related healthcare services in both mainland China and Hong Kong. in 2020, it reported a revenue up to one billion RMB when listed in HK stock market in 2021.
Behind Zhang’s success is the flourishing of hair transplant in China, a seemingly niche market that actually has experienced barbaric growth in past few years. More important, its momentum will continue, as only half a million people received hair transplant surgery in 2020. In contrast, the National Health Commission of China estimated that one in six Chinese is disturbed by hair loss, which ranked the 7th most annoying health issue among Chinese. Frost and Sullivan gauges that China’s hair transplant market will grow at CAGR of 18.9% to 75.6 billion and non-surgical hair-care market will grow at CAGR of 28.3% to 62.6 billion in 2030.
What drives the hair care market is the so called “ beauty value economy”, which is resulted from rising income level and burgeoning awareness in health and beauty and which also leads to rampant social appearance anxiety.
Among all populations, Millennials and Generation Z contribute most to the market growth. Millennials, while at their golden age of career and a pivotal time for family life, are also under great work-life pressure from overwork , mortgage loan, kid’s education to insomnia etc. The fall out of hair, caused by hectic life style, is an embarrassing signal of aging thus intolerable by many as lush hair, a symbol of healthy, youth and charm in China, has always been what most Chinese yearn for. Hence it is no surprise that post-90s accounts for 57% of the hair transplant recipients.
Hair transplant is just the tip of an iceberg. Under the influences of Internet celebrities and KOLs, the urge to manage personal appearance at all ages creates much broader markets for novel concepts and products
Consumers are willing to spend more on products that prevents hair loss and stimulates hair growth. They ardently embrace the idea of scalp care, a concept now almost as important as skin care. According to Tmall, the sales of imported scalp care products increased by 340% in 2021.
New consumer brands mushroom in the market as well. Shampoo makers boldly test the market with all kinds of products formulated with natural ingredients from sea salt, vitamins, amino acids, herbs and algae to anti-agent compounds such as hyaluronic acid, collagen, resverator and nicotinamide. For some high-end brands, a hair care set is priced beyond 1,000 RMB and it sold out fast.
Med tech firm also came in. HairMax, a laser comb claimed to help regrow and maintain hair health, priced at 888 RMB per piece, sold over 10 million RMB on China’s Black day in 2017.
Rather than target at mass market, pharmaceutical companies choose to strategically focus on patients suffering from alopecia areata (AA), an autoimmune disease featured by severe hair loss. Despite the incident rate of AA is only 0.27%, the total number of potential use reaches to 38 million.
Baricitinib, a JAK inhibitors codeveloped by Eli Lily and Incyte, is expected to be the first-in-market drug for AA. FDA and NMPA (National Medical Products Administration) of China are likely to approve it in months. Other JAK inhibitors, discovered by local companies including Hengrui Medicine and Zejing Biotech, are in phase III trail and might bring in tons of cash once launched in market.
Hair just reflects one aspect of the vast opportunities in China’s “personal appearance management” market. People seeking all ways to look young and attractive as they start to believe that health and beauty pays. Hence they are enthusiastic to invest on personal health, appearance, fitness and try out a variety of products and services, from skincare, make-up, to health diet and nutritions, from body build-up, muscle skeleton training, gait improvement to dental care ( esp. teeth alignment), eye-care (esp.laser eye surgery), to aesthetic medicine, cosmetic surgery and stem-cell therapy: all are rifle with opportunities.
For instance, in 2020, China’s cosmetic market grew 13.6% to 340 Bn RMB and anti-aging products stand out as the most appealing category among females. Online sales data revealed the rapid growth of high-end anti-aging skin care products: the higher the unit price the higher the growth rate. Again, Millennials were the primary buyers for products over 1,000 RMB per piece.
The demand in anti-aging products and service are so strong that multiple companies and sub-sectors grow exponentially.
One case in point is Shandong-based Bloomage Biotech, the world largest Hyaluronic acid manufacturer that worth over 140 Bn at its peak since its IPO in 2019. Despite the impact of Covid-19, the company still reports an astonishing year to year sale growth of over 60% in the first quarter of this year.
The market of aesthetic medicine and cosmetic surgery, which can change one’s outlook at different levels, are also taking off in China. In 2019, China became the world second largest aesthetic medicine market. According to Chinese Association of Plastics and Aesthetics, the plastic surgery market will increase five fold from $46 billion USD in 2022 to $201 billion by 2030.
Stem cell therapy, which is well-known for its potential in tissue regeneration, is nothing but hot. Despite that cell therapy is newly regulated as medicine and no product has been officially approved in China so far, tons of people still rush to have stem-cell injected for rejuvenation purpose with one shot pricing from several thousand to several hundred thousand RMB.
Despite local companies may have the advantage in terms of the proximity to end users, oversea companies can still carve out a piece of cake from China’s thriving wellness market.
First and foremost, advanced economies still lead in health care and beauty industry and the learning curves for Chinese firms are still deep. Hence, local market leaders actually are quite open to acquire know-how and assets abroad and bring newest discoveries and inventions worldwide back to China.
Early in 2017, Yonghe bought London-based Svenson Hair to strengthen its new business line of non-surgical hair care and it then introduce ARTAS Robotic from U.S to assist hair transplant procedures.
At the same year, to expand product portfolios, Bloomage spent EUR 14.275 million to acquire Revitacare, a French skin-care products manufacturer. It has also forged strategic partnership with Laboratoires Vivacy SAS from France, Medytox Inc from Korean and Syneron Medical Ltd from Israel and won the exclusive right to distribute their products in China.
Secondly, the potential to build DTC (Direct To Consumer) brands is still high. As the overall anti-aging market is just taking off in recent years, to create a unique brand concept and communicate effectively to target users can still be rewarding. Think about the fast rollout of HairMax in China market!
Last but not least, sensitivity to local context including regulatory framework, business and social cultures are essential for business success in China.
For consumer brands, with the surge of sub-cultures and China-chic, mixing the right media outlets with KOLs can be crucial. For medical products, navigating regulatory landscapes is the first pivot step for Go-to-Market Strategy. While HairMax sold well online, one of its distributors were fined by local market supervisory authority as the product is required to be registered as medical device before any sales.
For suppliers along the value chain of broad anti-aging market, attention should be paid to adapt your business operation to China market and search trustworthy Chinese partners strategically to balance agility, reliability and efficacy.
Human will never stop the search for the fountain of youth and the treasury might be buried in the road rather than in the destination. Welcome to China, a land full of opportunities in looking young and beautiful!
Estella Ho is a senior associate with Crayfish.io. Based in China, she is a global-minded professional with solid consulting experiences in serving both private and public clients in the healthcare and wellbeing sector.