Brisk demand for beauty services in China

The beauty industry is witnessing rapid growth on the Chinese mainland. As at the end of 2010, there were 1.17 million beauty and hair salons and 7.42 million people working in the industry. Total turnover exceeded Rmb370 billion. The Ministry of Commerce projects that the total turnover of beauty and hair salons will grow at 15% a year during the “12th Five-Year Plan” period, reaching more than Rmb770 billion in 2015. A survey report released by HKTDC Research, “At your service: a rising sector for the Mainland middle class”, in 2011 also indicates that mainland consumers care for their looks and paying visits to beauty parlours has become a routine. For some consumers, the frequency of visits is increasing. 91% of the female respondents patronise beauty parlours at least once every month.

Presently beauty parlours mainly cater to women customers. With China’s growing business interactions with the world, however, men also feel the need to look neat and pleasant as part of business etiquette. Further, many international brands of skincare products have launched dedicated lines for men. So the development potential for beauty services is not to be overlooked.

The beauty services market on the mainland is promising. Hong Kong companies wishing to develop the mainland market must have a good understanding of the mainland consumers. HKTDC Research conducted a survey in early 2013 through focus groups in Guangzhou and Shanghai with a view to gauging the demands and consumption patterns of female and male consumers for beauty services and the characteristics of this market. Focus groups aside, HKTDC Research also interviewed the managers of beauty parlours in these two cities, tapping their insights on market development and changes in consumer demands. This study aims to understand the development potential and direction of the industry for the reference of Hong Kong companies in their attempt to develop the mainland market.

Participants of the focus groups said that Hong Kong companies have rich experience in servicing. Service management and credibility are obviously the two areas where they outshine their mainland counterparts. Products provided Hong Kong companies are of better quality. More up-to-date technological products and techniques are imported. It shows that Hong Kong beauty services providers venturing into the mainland market enjoy an innate advantage. Focusing on target customers’ needs, selecting suitable shop locations, introducing competitive services and products such as “organic beauty” treatment and “natural products”, designing standardised service flow and segmented services, together with promotions including group buying, first-time customer discounts for treatments etc, companies are able to successfully enter the mainland market.

1. Market overview

In the 1980s the budding beauty industry started as family business in residential areas on the mainland. In the 1990s beauty and hair salons which were run as small independent small shops were seen mostly on street level or in malls in business or residential districts.

Meanwhile, some skincare and cosmetics brands began to diversify from product sales to beauty services such as Herborist of the mainland, and Natural Beauty and Jourdeness of Taiwan. After 2000, Hong Kong chain stores (eg. Sau San Tong and Perfect Shape), and foreign skincare products (eg. Ingrid Millet of France) also entered the market. Retail shops are mostly in major malls, hotel shopping centres and business districts. At present, there are many beauty salons on the mainland, providing increasingly diversified and sophisticated services. Facial treatment aside, there are body massage, body shaping, spa treatment etc. The Ministry of Commerce said that as at the end of 2010, there were about 1.17 million beauty and hair salons, employing 7.42 million people with turnover at Rmb370 billion.

On the other hand, training of beauticians on the mainland has been systemised towards a more professional qualifications system. Before, beauty parlours adopted the apprentice system, where new entrants learnt by practice from the more senior beauticians. There was no industry standard or institution to evaluate their qualifications.

In the 1990s, professional training schools for beauticians (eg. Monita Academy, Beijing China National Institute of Beauty Therapy) were set up. Students could obtain various certificates through different routes, including diplomas issued by beauty schools, certificates of professional qualifications issued by China’s Ministry of Labour and Social Security¹, and beautician’s diplomas awarded by overseas institutions (such as CIBTAC and City & Guilds of the UK, and CIDESCO). After 2000, the major beauty and body shaping centres on the mainland opened their own beauty training schools (eg. Elizabeth Beauty School and Balincan) to develop talents. Young people graduated from beauty training schools will normally get retraining from beauty parlours before starting work. Each beauty parlour provides a host of treatment services of different grades and operates their instruments differently. So the parlours will train their personnel to meet their own requirements.

1.1 Tech-driven beauty treatment

In the early days facial treatments were done by hands. Beauticians would clean the face of their clients, and then massaged in beauty products. This was followed by pore enlarging with a steamer. Face masks and skincare products were applied afterwards. In the 1990s, professional technology became available. Beauty equipment using technologies such as ultrasound, nano ion and biological factors, as well as meridian health instruments were quickly adopted by the industry. Consumers tend to associate beauty equipment with “hi-tech, high quality and good results” and are willing to pay more for better performance. Beauty parlours nowadays offer facial treatment combining traditional beauty practices with the use of hi-tech beauty instruments. For example, beauticians massage by hands and then clean the face of clients, followed by other treatments using instruments (eg. amino acid replenishment for the skin, collagen regeneration and protein extract import).

Female respondents said that they would judge the strength of beauty parlours by their implements. They reckoned it is necessary for the parlours to acquire new beauty instruments or upgrade existing ones every year to keep pace with technology advances. New instruments represent better efficacy and results. For those parlours which are not well-equipped, consumers tend to dismiss them as not up to standard. On the other hand, operators of beauty parlours said they will launch new treatment courses whenever new instruments are introduced. Promotion will then be stepped up (eg. price discount or trial offer price) to retain old clients and attract new ones.

1.2 Diversified services

City dwellers who lead a stressful life and have heavy work pressure are more aware of the need to keep healthy. Facial treatment aside, women customers also like to keep fit. They wish to relieve stress and have body maintenance with some kinds of body treatment. At present beauty parlours on the mainland provide two types of services: facial treatment and body treatment. According to the beauty enterprises, beauty parlours have three main sources of income: facial treatment, body massage and product sales; the ratios are about 35-45%: 40-55%:10-20%.

As mainland women are increasingly concerned with their body shape, body massage has become the main income source for beauty parlours. Generally, body massage charges more than facial treatment. So beauty parlours continue to offer various types of massage services (eg. deep muscle massage, hot stone massage, shape-up massage etc) in order to increase clients’ consumption. On the other hand, clients have higher expectations for their physical appearance. Beauty parlours subdivide treatment processes to cater for different needs. For example, eye treatment covers eye pouches, eye wrinkles, dark under-eye circles etc; forehead care includes wrinkles, oil control, pimple marks etc; neck care covers wrinkles, moisturising, firming etc. Apart from giving clients more choices, the provision of more types of treatment will induce clients to consume more frequently and spend more.

Beauticians/technicians will apply various types of products during facial and body treatments. For example, for facial treatment, cleansing lotion, toner, facial mask, essence, eye cream and facial cream are used. Most beauty parlours also offer products for sale. However, most respondents said they were not enthusiastic in buying products from these parlours because they already patronised other skin care brands which they considered of higher quality. Beauticians/technicians usually place products used for treatment in small bottles beforehand. There is no way for customers to know what brands they are using. Also, these products are mostly from the lesser known brands. Customers are not able to compare and share with friends. So product sales won’t bring in much income. Those parlours operated by the renowned brands which use their own products for treatment are another story. Customers may have already patronised these products and want to try their beauty services. Or they may patronise the beauty service first and switch to these products afterwards. So these parlours are able to generate more income from product sales.

1.3 Gender differences in demand for beauty services

Rather than basic skin care, female consumers seeking beauty services expect more of healthy skin and well-being, for example by improving skin quality, reducing wrinkles, eye bags, skin complexion, flexibility etc. Male consumers are more basic in their requirements, such as tackling skin problems like acne, pimple marks, comedo, oil control etc. According to the beauty enterprises, growing numbers of mainland women have paid more attention to well-being and body nourishment since 2005. They believe a good skin complexion is the result of both skin care and health care. So beauty parlours offer the relevant treatments, such as meridian massage by herbal doctors on the acupuncture points to stimulate metabolism. Physical health will affect skin quality. For example, chronic sleep deprivation and poor-quality sleep will give rise to dark under-eye circles. More women receive facial treatment as well as other body nourishment treatment (eg. lymphatic drainage massage, aromatherapy massage and spa) to better their health. Beauty instruments help to get more effective results.

2. Consumer attitudes towards beauty services

2.1 Trigger point for visiting beauty parlours

There is little doubt that the love of beauty is in a woman’s nature. The focus group discussions show that women in the mainland come into contact with the services of beauty parlours from the age of 20 or so. However, it is only after they have entered the workforce, become financially stable (at age 25 to 27), or after giving birth that they develop the habit of visiting beauty parlours on a regular basis. Some respondents said they begin to seek the professional services of beauty parlours because work pressure is causing the quality of their skin to deteriorate, and they want to give a favourable impression to people by being well-groomed. Other respondents indicated that after childbirth their complexion has become dull and their figure has changed. They become regular patrons of beauty parlours, hoping that the use of professional equipment would help them regain their “prenatal” figure.

On the other hand, younger generation women come into contact with beauty parlour services at an earlier age. According to the beauty enterprises interviewed, more teenage girls are visiting beauty parlours in recent years. Some of these young customers have come to treat their skin problems (such as acne or comedo), while others are accompanying their mothers to enjoy the beauty services. They are paying more attention to skin care as more of them are suffering from the pressure of school work and environmental pollution. The younger generation believes that the earlier they receive professional care and treatment, the longer they can maintain their beauty and youthful look. Based on age distribution, the consumption ratios of age groups “30 or below”, “31-45” and “45 or above” are 20:60:20 respectively. Women aged 31-45 remain the main patrons of beauty parlours.

Compared to women, men become aware of skin care at an older age. Male respondents indicated that they begin to pay attention to facial skin care during university or after they join the workforce. They would use cleanser, toner, moisturiser, and facial mask as part of their basic skin care routine. In the past the beauty and skin care products supplied in the mainland market were mainly for women, and it is only in recent years that international brand name facial cleansing and skin care products for men have appeared on the market. Whenever beauty products for men are introduced, the respondents are happy to give them a try. Under the influence of trends in advertisements and Japanese and Korean stars, they begin to look for firm and smooth skin and a clear complexion. Those who have to work with foreign clients frequently are paying more attention to grooming and outfits than before. Male respondents begin to go to beauty parlours regularly at about age 28 in order to obtain better results. They consider that receiving professional facial care and treatment on a regular basis is a necessity, just as it is necessary to take a bath every day.

2.1.1 Beauty parlours are “havens” for women to relax

“Enjoying professional services” and “making oneself look prettier” are the main reasons for women to visit beauty parlours. For some women, beauty parlours can solve their skin problems such as acne, freckles and dark under-eye circles. Even those who do not have any obvious skin problems consider regular care and treatment necessary to keep their skin moisturised and flexible and to prevent/reduce the development of wrinkles. Many women have the habit of getting body massage regularly, because work pressure and other anxieties have caused their bodies to be strained for prolonged periods, especially in the neck, shoulders and back areas. Some women would make use of equipment to help improve their body shape, targeting especially at such areas as tummy, arms and legs.

As a matter of fact, apart from helping women to pursue outward beauty, beauty parlours are becoming “havens” for women to relax physically and mentally. Female respondents said beauty treatment or massage can help them relax their body and mind, and let them rest peacefully. Also, they feel “pampered” and “cherished” and their feelings of anxiety and fatigue were relieved. After the beauty treatment or massage, they would feel recharged and ready to carry on with hard work. Some of them would even treat the beauticians or technicians as trustworthy confidantes, and talk to them about their pressures and unhappiness. The elegant surroundings of the beauty parlours, the soft lighting and the soothing music help them rest and relax.

2.1.2 Men look for professional services in beauty parlours

In contrast to women, men visit beauty parlours to receive “professional care” and “skin cleansing” service in order to solve skin problems such as acne, blackheads, under-eye circles, etc. They believe that with the help of beauticians and the use of professional equipment, their skin can be “deep-cleansed” more effectively, such that it will become firmer, more radiant and more flexible. They consider that generally men have more oily and coarse skin than women, and are in greater need of professional facial care services. In their view, women should not have a monopoly over professional beauty service; if given proper care and maintenance, men can have better quality skin than women.

Male respondents agree that the surroundings and ambience of beauty parlours can help people relax physically and mentally, but they attach more importance to the effectiveness of treatments. Men tend not to confide in beauticians; they would take the opportunity to obtain beauty tips from them, such as how to take care of their skin and what health foods to consume when weather changes. It should be noted that men seldom visit beauty parlours for massage/body treatment; they would choose other venues such as spa, health clubs and fitness centres for such purposes.

2.1.3 Beauty services help boost self confidence

In the focus group discussions, both male and female participants indicated that the main reason they continue to visit beauty parlours is because they believe the skills of the professional beauticians and the use of advanced equipment can help improve their personal appearance. They hope to look younger and full of vitality, which can in turn enhance their popularity and raise their self-confidence in social circles and at work. At the same time, visiting beauty parlours has become a part of the middle-class lifestyle, and a reflection that the person knows how to enjoy life and pursue quality. Colleagues and friends often share their experiences of patronising beauty parlours, just as they would share their knowledge on cosmetics and skin care products. A male respondent said that he has received praise from women friends about his good skin: apart from feeling proud of himself, he finds that this makes it easier to start a conversation with women. Female respondents indicated that good quality skin can give one a sense of superiority; being well-groomed is also a reflection of one’s responsibility towards oneself.

There are many beauty machines suitable for home use in the market, such as ion import instrument, facial steamer, facial slimmer, radio frequency beauty equipment, etc. However, female respondents believe the professional equipment at beauty parlours can produce better results. Even if they have beauty equipment at home they seldom use them. Male respondents indicate that it is too troublesome for them to operate the equipment themselves. It is much more convenient to visit beauty parlours.

2.2 Ideal location of beauty parlours

The majority of female respondents indicate that they tend to choose beauty parlours located near their office or residence (within walking distance or public transport ride of about 10 minutes), mainly because it is convenient for them to visit the venues during lunch time or after work. Beauty parlours close to home make it easy for them to go home immediately after the beauty treatment, before their skin is polluted by the filthy air outside; it is also convenient to visit such beauty parlours during holidays. Some respondents indicate that they also visit beauty parlours in large shopping centres or malls, provided there is convenient public transport or sufficient parking facilities.

These respondents have the membership of two to three beauty parlours, as they want to undergo facial care and body treatment at different venues. Generally speaking, they would choose smaller beauty parlours close to their office or residence for facial care, and large scale/chain beauty parlours or spa centres for body massage. Because body treatment requires professional equipment, and large scale/chain venues are better equipped, they find it acceptable even if the venues are farther away.

The situation of male respondents is different. Most beauty parlours in the mainland provide service to female members only, although some of them also serve the husbands or boyfriends of female members subject to the condition that they use double rooms in the company of the members. Men who patronise beauty parlours chosen by their wives or girlfriends usually do so in the evening or at the weekend in the latter’s company. There are a few beauty parlours/hair styling salons in the mainland which accept male members, but men do not seem to have any special preference for these venues. In visiting beauty parlours which accept male members, male respondents usually go after work or at weekends, rather than during lunch break. Of course men also prefer beauty parlours close to their office or residence mainly for reasons of convenience.

2.3 Consumption habits

Both male and female respondents indicate that they usually visit beauty parlours by themselves. Few people go with friends, as everyone has his/her own familiar venues and his/her own time schedule. One female respondent indicated that she would go with her husband during holidays, because a combined session of facial treatment and body massage takes two to three hours, and she does not want her husband to waste time in waiting. She would book a double room in advance and have facial treatment and body massage together with her husband. These sessions have become a recreational activity (similar to watching a movie) and an additional topic of conversation between them. However, other female respondents indicate that although they do not find anything wrong with men using beauty parlours, they find it difficult to accept if the beauty parlours they patronise were to also provide services to male clients. Although the treatments are carried out in different rooms, they feel that their security and privacy are being compromised.

Female respondents indicate that on average they visit beauty parlours for facial treatment every seven to 10 days, and on top of that they have body massage or treatment once or twice every month. The charge for a basic facial treatment for members is Rmb88-120. Each session lasts about 60-90 minutes, depending on whether there are additional special treatments. Because beauty parlours break down the treatments by item and by part of body/face, the total cost for a facial treatment package is about several hundred yuan. The basic charge for a body massage is about Rmb200. The total amount spent by female respondents at beauty parlours is about Rmb600-1,500 per month. In comparison, the frequency of male respondents visiting beauty parlours is significantly lower. On average they visit beauty parlours once every one or two weeks. The charge for a basic facial treatment for male members is Rmb100-200. Most men go mainly for facial cleansing and basic care, and there is no additional special treatment. The amount spent by male respondents at beauty parlours is about Rmb400-800 per month.

2.4 What consumers look for in beauty parlours

2.4.1 Hygiene and cleanliness

During beauty treatments, beauty parlours would require clients to change into bathrobes or shawls, to avoid staining the clients’ clothes. Some female respondents have expressed concerns about the cleanliness of the bathrobes and bed sheets provided by the beauty parlours. They have worries about hygiene because these items come into direct contact with their skin. Some respondents suspect that the beauty parlours do not wash the bathrobes properly because of the stains found; others suspect the bed sheets have not been changed because of their untidy arrangement on the beds. Although there is no concrete evidence, these have given clients poor impressions about the beauty parlours. On the other hand, one female respondent said that the beauty parlour she patronises has sewn her name on the bathrobes reserved for her use. Every time after use the beauty parlour would wash and disinfect the bathrobes and seal them in disposable vacuum bags, giving her the impression that its hygiene management is very professional.

2.4.2 Product safety

Except for those who go to beauty parlours which are operated as an extension of skin care/cosmetics brand names, the respondents do not quite know the brands of products used by their beauty parlours. As compared to the well-known brands that they use at home, respondents believe the beauty parlours use only ordinary brands. This is because if well-known brands had been used, the beauty parlours would have emphasised this to their clients. Moreover, the beauticians would often blend the products beforehand and put them in small bottles. When asked about the brands, the beauticians would only say that they are imported products without giving details. Consumers consider it reasonable for beauty parlours to buy economy size products to save on cost. They also accept that as part of their marketing tactics the beauty parlours often exaggerate the effectiveness of the products. However, they find it unacceptable and deceitful for beauty parlours to present ordinary products as high quality products. Some respondents indicate that because of their doubts about the quality of the products supplied by beauty parlours, they have brought their own skin care products to the beauty parlours; however, the inconvenience involved has made them stop doing this after a while.

2.4.3 Environment of privacy

Women regard beauty parlours as havens for them to relax physically and mentally. Some of them even confide in beauticians/technicians. If they can hear the conversation in the next room during treatments, they would not be able to relax, and their own conversations with the beautician/technician may be overheard by the people next door. Where this is the case, the beauty parlour would not be able to serve as a haven for relaxation, and the beautician/technician would not be able to develop a personal relationship with the client and may even lose her business. One of the respondents said that she once overheard beauticians/technicians talk about the private matters of clients, and considered this a breach of professional etiquette.

2.4.4 Professional services of beauticians/technicians

As beauty services are a service industry, the professional expertise and service attitude of beauticians/technicians have a direct effect on the degree of satisfaction of clients for a beauty parlour. Female respondents indicate they find it most unacceptable for beauticians/technicians to keep on marketing the services during treatment, thereby preventing them from taking a rest. They find that when the balance in their membership stored value card is low or almost used up, the beauticians/technicians would become very “proactively” in marketing the products and services, irrespective of whether they are suitable or not. The respondents indicate that the more aggressive the marketing, they find it the more objectionable. On the other hand, if they like a beauty parlour’s services or are satisfied with the results of the treatment, they would take the initiative to make enquiries. To them consumption of beauty services is already a “necessary” expenditure, and they prefer to make their own choice.

It is important to note that female respondents consider that the skills and techniques of beauticians/technicians in different beauty parlours not much different, as facial treatment becomes more equipment-based and skills training increasingly standardised. Nowadays they are paying more attention to the professional knowledge of beauticians/technicians, such as the skin problems targeted by different equipments, the techniques in operating the equipments, the effectiveness of different treatments, and the day-to-day care and maintenance after treatments. For example, a client would consider the beautician very “sweet and caring” if, after a whitening essence facial treatment, the latter calls her up the next day to remind her to avoid sunlight, apply sun block and use moisturising facial mask.

All the female respondents indicate that every time they visit beauty parlours, they would ask to be served by the beauticians/technicians they are familiar with, because these beauticians/technicians have a good understanding of the characteristics of their skin and the conditions of their body, and even their habits or requirements. For example, one of the respondents said she does not like having her ears touched by anyone; beauticians/technicians she is familiar with already know this special requirement of hers and there is no need to remind them every time. Other respondents indicate that they regard their beauticians/technicians as their confidantes, and they would follow these beauticians/technicians when the latter transfer to other beauty parlours. That is why beauticians/technicians are a key factor in retaining clients for beauty parlours.

2.4.5 Treatments designed for men

In the mainland beauty services for men is still in an initial stage of development. Fewer men visit beauty parlours on a regular basis than women, and their frequency of visit is lower than that of women. As a matter of fact, there is a scarcity of beauty parlours serving male clients, few cleansing and skin care products for men, and not many beauty treatments targeting at men’s skin characteristics. Male respondents indicate that since the characteristics of their skin are different from women’s, the procedures and steps used in their beauty treatment, the products and even the equipment should be different. Therefore, they hope that the beauty parlours in the mainland can bring in more services and products for men. They also hope that there are more beauty parlours which provide service to male members, such that they can have greater choice and enjoy better services.

3. Operating modes of beauty parlours

3.1 Size and equipment

After years of development, different types of beauty parlours on the Chinese mainland have all built up their unique features to cater for different kinds of customers with different needs. Overall speaking, as the beauty market is going for larger size and moving towards professionalism, the development of those beauty parlours that operate in the form of family business or beauty and hair salon is somewhat restricted because they are inferior to conventional beauty parlours in terms of equipment and facilities, treatment items, and professional standards of beauticians/technicians. Yet according to the male respondents, since most beauty parlours do not provide beauty services for men, they still go to beauty and hair salons for facial treatment. However, as men’s beauty services are growing in popularity, it is believed that more and more beauty parlours will tap this market niche in the days to come. At present, the mainland beauty market is dominated by small-sized, independent beauty parlours and chain beauty groups.

3.1.1 Characteristics of small-sized independent beauty parlours

Small beauty parlours run by independent operators are usually smaller in size with an area of several hundred square feet. Most of the store owners were beauticians/technicians themselves, and their management style and services are more personalised. During an in-depth company interview, the owner of two beauty parlours in Shanghai with more than 20 years of experience in the beauty industry pointed out that small beauty parlours also have their beauty equipment, such as photon skin care device and slimming instruments. Yet the strength of these small parlours lies in the skills of the beauticians/technicians and their services are more personalised. For example, the beauticians will design specific treatment combos for customers to cater for their individual needs. As the treatment prices of small beauty salons are more competitive than those of chain beauty groups, most customers visit these beauty parlours for facial treatment weekly and for body treatment bi-weekly. The average monthly consumption of the customers is about Rmb1,000. Small beauty parlours usually accept small top-ups of Rmb500 to Rmb1,000 from customers so as to build up their confidence.

3.1.2 Characteristics of chain beauty groups

The selling points of beauty parlours run by large chains are their professional equipment, ongoing introduction of advanced technology and instrument, as well as continuous updating of treatment items so as to provide customers with more experience and choices. Customers are always willing to try new instruments and treatments because they think that when the skin or body has got used to an instrument or treatment, its effect will diminish irrespective of how effective it was originally. In terms of customer management and staff training, chain beauty groups are more systematic and professional. For example, there is a standard flow of services that right from the beginning when a customer steps into the beauty parlour, she will be greeted by a receptionist who will take her to a rest room where flower tea and snacks will be served. After change of clothes, the customer will be escorted to a treatment room by a beautician/technician. There is a prescribed set of procedures to show customers the professionalism of the beauty chain. As the beauticians/technicians have received standardised training, their skill and dexterity will not differ much and therefore the services they provide can maintain a stable quality.

3.2 Payment methods

Irrespective of their operating modes, all beauty parlours adopt some forms of prepayment in order to speed up the payback period and vie for market shares. To the beauty parlours, the prepayment arrangements not only generate operating capital and thus minimise business risks, but can also build up long-term relationships with customers and minimise loss of existing customers. Customers can also enjoy treatments at special prices through prepayment which undoubtedly brings benefits to both parties.

“Stored-value card”: Beauty parlours attract customers to buy stored-value cards through the offer of preferential rates under a membership system. Some beauty parlours will have their member customers classified by the top-up amount to stored-value cards. For ordinary members whose top-up amount is below Rmb5,000, they are entitled to a 20% treatment discount. For members of a higher tier whose top-up amount is between Rmb5,000 and Rmb10,000, they are entitled to a discount of 30%. VIP members whose top-up amount is more than Rmb10,000 are entitled to a discount of 40%. Higher top-up amount per transaction will be granted a higher discount or more offers. Besides, members of different tiers will have access to rooms with different facilities. For example, VIP members can have access to treatment rooms with private washroom, bathroom and locker. Other members will also have access to private treatment rooms but have to share the changing rooms, washrooms, bathrooms and lockers with other members. The greatest benefit of stored-value cards is that members can choose any treatment available at the beauty parlours and the charges will be deducted from the stored-value cards. It offers greater flexibility and can encourage customers to try new treatments.

“Coupon set”: Customers can enjoy different discounts according to the number of treatment coupons bought. For example, a single deep-cleansing facial treatment will cost Rmb300. But a coupon set for 10 treatments will entitle the customer to a 10% discount or one free treatment. For a coupon set good for 20 treatments, the offer will be a 20% discount or five free treatments. The more treatment coupons are purchased, the higher the discount will be. Yet if customers are having multiple treatments, such as facial cleansing, eye care, body massage and lymphatic drainage massage, they need to buy several sets of coupons for the discount offers. In order to encourage customers to buy more types and greater number of coupons, the beauty parlours will bundle their offers, such as combination of body massage and lymphatic drainage massage in one set of treatment coupons, or further discount upon purchase of coupons good for two or more types of treatment.

“Prepaid treatment card”: This kind of treatment card involves a smaller value and fewer treatments, which is suitable for beauty parlours of smaller scale and young consumers with limited purchasing power. The treatment cards for most beauty parlours are only applicable to specific treatments. For example, the purchase of a treatment card in the value of Rmb500 will entitle the customer to enjoy five times of deep-cleansing facial treatment but not other items. Some beauty parlours also offer “treatment card consumption” discounts through some group buying websites to draw in consumers in the hope that they will eventually become stable customers after experiencing the service of the beauty parlours. Although the purchasing power of young consumers is limited, yet if the beauty parlours can build up the loyalty of these young customers, their future clientele and income can be more stable. New members of beauty parlours usually purchase “prepaid treatment cards”. After building up their confidence in the beauty parlours, they would turn to “stored-value cards” or “coupon sets” that involve a higher payment but with more discount offers.

Some respondents indicate that they have greater confidence in the beauty parlours operated by chain groups, thinking that even if their stored-value cards involve a higher payment or more sets of treatment coupons have to purchased, the chain group can provide the assurance. Yet for beauty parlours of some chain brands, their stores are classified into self-operated and franchised. The “stored-value cards” or “coupon sets” are not transferrable from one kind of store to another, and will thus cause inconvenience.

3.3 Marketing and promotion

According to the beauty enterprises interviewed for this report, only chain beauty groups would advertise on television and in newspapers or use celebrity endorsement. In general, the most common strategy is to distribute promotional leaflets in the neighbourhood of the beauty parlours, offer try-out price to attract new customers, or offer special discounts for existing members to try out new treatments. The most effective way to draw in new customers is for existing customers to refer their friends and relatives to the beauty parlours for trial treatment, where most new customers will become new members of the beauty parlours. In recent years, online group buying is very popular on the Chinese mainland and many beauty parlours are promoting their services through online marketing or group buying activities. Some operators of beauty parlours point out that as the group buying rates are very competitive, many young ladies in the age group of 18 to 25 are attracted to try out the treatments and subsequently, about half of the group buying consumers are converted into customers.

As the peak hours of beauty parlours fall on the afternoons of weekdays as well as weekends and holidays, some beauty parlours will offer “happy hour” rates before noon on weekdays to attract the patronage of housewives and freelancers during that period. This strategy helps stream the customers to different time periods, keep the beauty parlours in clean and quiet conditions, and maintain the service quality of staff. As well, it also attracts young consumers with a limited budget. To attract consumers, beauty parlours also introduce discount offers during festivals, particularly those related to females such as Lantern Festival, Valentine’s Day, Women’s Day on 8 March and Mother’s Day. On average, beauty parlours run promotional offers every two to three months. Periodic welcome offers to draw in new customers are also an effective way to expand the clientele.

4. Recommendations to Hong Kong companies

The beauty service industry on the mainland is thriving with great opportunity. Hong Kong beauty service companies interested in opening up the mainland market should take note of the following:

4.1 Location determines customer profile

Most consumers visit beauty parlours after work or during weekends and thus the beauty parlours they choose are those in the vicinity of their offices or residences, or those conveniently located. It should be noted that the consumption characteristics, demands and purchasing powers of customers in different areas are different. Beauty parlours should first understand the positioning of their target customer groups before choosing their locations of operation. According to the store manager of a chain beauty parlour in Guangzhou, customers of its Tianhe branch are mainly shoppers, and about 60% of its customers are below 30. They mainly come for basic skin care treatment and therefore their average spending is not very high. For the branch at Taojin Metro Station in Guangzhou, customers are mostly those working at the nearby hotel and business district, and 40% of them are below 30 and another 40% between 30 and 50. These customers have stronger purchasing power and their average spending is higher since they require more facial care and body treatment items.

4.2 Equal weight on service attitude and treatment effects

Female customers find patient listeners in beauticians/technicians, and so they like to book those beauticians/technicians familiar to them. Hong Kong companies should bear in mind that the turnover of beauticians/technicians is high on the Chinese mainland, particularly those young technicians below the age of 23. As this is the case, beauty parlours have to try their best to retain the experienced beauticians/technicians, which in turn help retain existing customers. Since service quality is difficult to assess, Hong Kong companies may standardise and break down the service process so that the beauticians/technicians can follow step by step. Besides, beauty parlours should encourage their staff members to upgrade themselves and receive training. Further delegation of authority and responsibilities should be made to the staff and their working conditions be improved. Actions should also be taken to build up their sense of achievement and sense of belongings to the beauty parlours.

In fact, complaints of customers generally focus on the attitudes and process of service provided by beauticians/technicians, rather than the effectiveness of treatments. According to a female respondent, “The skin and body conditions of individuals vary. Some people may need more treatments before they can get some discernible result”, and thus no complaint is made of the treatment effect. On the contrary, if the working attitude of the staff of beauty parlours is not good or if excessive marketing is made to push the customers, the customers’ desire to patronise will be directly undermined. Consumers on the Chinese mainland have positive perceptions of the service sector of Hong Kong². Participants of the focus groups also think that the beauticians/technicians of Hong Kong are very knowledgeable, and their services are very professional and meticulous, which is a competitive edge of Hong Kong in leading the market. Yet in terms of the hardware of beauty parlours, such as decoration and design, equipment and facilities, as well as the atmosphere created, they think that the quality of those on the mainland are also of a good standard.

4.3 Emphasis on product safety and quality

In the past, there were stories about some beauty parlours using inferior beauty products or those with mercury ingredients in order to make more profits. Consumers have thus become quite alert about the products used in beauty parlours. The respondents point out that they are willing to pay a higher price if the products used by the beauty parlours are imported or from international brands because the skin care products and cosmetics they are using at home are also from international brands which they think are more trustworthy. This requirement will mean a higher cost to the Hong Kong companies. Yet it can draw in mid- to upmarket customers. Besides, middle-class consumers on the mainland are interested in trying organic beauty products and skin care products. According to the survey report Shopping for green products on the Mainland published by HKTDC Research in 2011, 53% of the respondents indicate that they have purchased green personal care products before, such as skin care products made of plant ingredients, additive-free face cleansing milk and natural skin care products. Under the circumstances, beauty parlours run by Hong Kong companies can enhance their competitive edge by adopting the themes of “organic beauty” and “natural products” with the use of appropriate products.

4.4 Online advertisements

The growing popularity of the internet provides mainland consumers with easier access to beauty information, particularly when middle-class consumers have already formed the habit of looking up information on the internet.³ For Hong Kong companies that are already operating beauty parlours in Hong Kong or in other regions, they can publicise their store information, treatment and services, and product brands on the internet. Photographs can be attached to show the internal decoration and design, as well as the equipment and facilities of the beauty parlours for the information of mainland consumers so as to boost their confidence in the Hong Kong companies. To cater for the characteristics of mainland consumers, Hong Kong companies should provide detailed descriptions of each treatment service, such as its characteristics, products used, care procedures and effects, so that consumers will have a clear picture of the service.

4.5 Meeting both male and female customers’ needs

Although the saying goes that “women beautify themselves for those who love them”, beauty care is no longer the privilege of women. There is a growing demand for beauty and skin care services among the male consumers on the Chinese mainland. In particular, the introduction of men’s products on the mainland by some international skin care brands in recent years has stimulated the demand for professional beauty care among middle-class male consumers. Some male consumers already have the habits and awareness of skin care. They are now looking for professional beauty services, in the hope that there will be experienced beauticians to design personalised beauty treatments for them to suit their individual skin features. Hong Kong companies should note that in the opinion of the male respondents, the skin types of men and women are basically different, and therefore they need specific beauty products, skin care products or even treatment that are different from women’s. Since only a few beauty parlours serve male customers exclusively, they do not mind if the beauty parlours serve both male and female customers. But female respondents feel quite uncomfortable with this arrangement. A compromise may be for the beauty parlours to separate the male and female customers through special layout design. For example, the reception area can serve as the buffer where its left side is the treatment area for male customers (including changing rooms, bathrooms, washrooms and treatment rooms); and its right side is that for female customers. In this way, the male and female customers will only see each other at the reception area. There should not be any chance for a female customer to bump into a male customer in the hallway or hear the conversation of the male customers receiving treatment next door. Thus female customers will have a stronger sense of safety.

While the male beauty market is only at its initial stage of development in China, it has a great potential for development because there is a lack of beauty parlours and treatments designed specifically for male customers on the mainland. At present, male customers can only have their beauty treatment at some medium- to low-end beauty and hair salons, or go to some beauty parlours that also serve male customers with their girlfriends or wives, thus limiting their choices of beauty service operators. As the male consumers on the Chinese mainland are paying more and more attention to grooming and outfits, the beauty market for men offers immense opportunities for Hong Kong companies.

5. Law and regulations

Hong Kong residents meeting the criteria under the Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) may set up individually-owned businesses to provide hairdressing, beauty treatment and health care services in all mainland provinces, autonomous regions and municipalities directly under the central government. From January 1, 2013, Hong Kong residents are allowed to set up individually-owned businesses in accordance with the relevant laws, regulations and administrative rules of the mainland, and restrictions on the number of persons engaged and the business floor area have been lifted. Details (in Chinese) are available at:
http://www.tid.gov.hk/english/cepa/tradeservices/files/individual_factsheets.pdf

Relevant regulations on beauty treatment:

Interim Measures for the Administration of Beauty Treatment and Hairdressing Industry (Order of the Ministry of Commerce [2004] No. 19)

These measures came into force on January 1, 2005. The term "beauty treatment" as mentioned in these measures refers to the business activities of providing such services as skin cleansing, without hurt, of the surface of the body or non-invasive skin care and make-up and beautification for consumers by applying hand techniques, appliances and equipment with the help of make-up, cosmetics, skin care products, etc. All beauticians and other professional technical staff of beauty parlours should be properly licensed or registered by the relevant state authorities. Other employees should have been properly trained and issued qualification certificates. They should have passed health checkup by the health authorities and have obtained health certificates. Operators should display in full view the relevant business licence, health permit, list of service items and charges. All products for cleansing, moisturising and make-up as well as related apparatus should comply with the quality, safety and sanitation requirements of the state. Details are available at:
http://www.mofcom.gov.cn

Hygienic Standards for Public Bathroom; Hygienic Standards for Barber Shop and Beauty Shop (Wei Jian Du Fa [2007] No. 221)

Jointly issued by the Ministry of Health and Ministry of Commerce, the above two standards came into force on 25 June 2007. Hygiene Standards for Public Bathroom are applicable to barber shops and beauty parlours operating inside public bathrooms (such as clubhouse, spa and sauna house). Hygiene Standards for Barber Shop and Beauty Shop are applicable to barber shops and beauty parlours. These two standards list out hygiene requirements (eg. sewage facilities, ventilation, lighting, cleanliness and disinfection), implements (eg. ratio of towels to client’s beds higher than 10:1) and hygienic operation requirements (eg. storage and disinfection of public items). Details are available at:
http://www.moh.gov.cn/mohwsjdj/s3585/200804/17048.shtml

Appendix

Focus group participant profile:

Guangzhou
Group 1: Women aged 25-35
Group 2: Women aged 36-45

Shanghai
Group 1: Women aged 28-40
Group 2: Men aged 25-40

Monthly personal income: Rmb6,700 or above
Monthly family income: Rmb11,000 or above

Visit beauty service centre/beauty parlour for facial treatment at least once a month

Enterprise interviewee profile:

In-depth interviews were conducted with managers in the beauty industry in Guangzhou (two enterprises) and Shanghai (two enterprises).

The interviewees, at middle and senior management level, have at least three years of experience in the beauty industry.

¹ Work qualification certificates of five levels: junior (state level 5); intermediate (state level 4); senior (state level 3); technician (state level 2) and senior technician (state level 1).
² According to the “Survey on China’s middle-class consumers” conducted by HKTDC Research in 2013, 51% of the respondents agree that the service concepts of Hong Kong are more advanced; services are more human-based and personalised with better management systems in place.
³ According to the “Survey on China’s middle-class consumers” conducted by HKTDC Research in 2013, 66% of the respondents say that “online ads” is the channel through which they obtain information about latest products/services.