Some of the largest salon and spa franchise in the world operate in China. Learn how they impact on the entire Chinesebeauty market

1. Mega Beauty Hair Salons and Beauty Spas in China
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2. 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 soon overtake France, currently Europe’s biggest cosmetics market, 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.
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
Diagonal Reports ©Mega Spas in China

3. make more money.
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
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Diagonal Reports ©Mega Spas in China

4. Diagonal Reports ©Mega Spas in China