BDA-淡马锡中国美妆市场洞察研究China's Beauty Industry-20151130

Confidential©BDA2015CapturingtheChineseConsumptionOpportunitythrough2020

PartIV:Deep-DiveStudyofBeautyIndustryinChina2TableofContentsSummaryDemandSideAnalysisSupplySideAnalysisNewO2OModelDemandSide:Consumersaretradingupbychoosingmasstige&prestigebrandsandconsideringmicroplasticsolutions;however,theyhopetohavemorereliableretailchannels&serviceproviders,andreceivereliable&accurateknowledgeabouttherisks&selectionovermedicalsolutions3TimeandBudgetAllocationPreferenceandBehaviorChangeTimeallocation:Increasingtimespentondailyfacialcareandmakeupbyperformingmoreprocedures;whiledailyhand,body&haircarereceiveslessattention.Visitingfrequencyforbeautysalons,hairsalonsandspawilllikelyremainflat.Budgetallocation:Totalbudgetonbeautyhasbeenincreasing.Facialcareandmakeuphavedisplayedclearconsumptionupgrades.Beautysalonsmayalsowitnessaslighttradeup.Spendingonhand,body&haircareproducts,andhairsalonswillremainstable.AnincreasingnumberofconsumersareconsideringmicroplasticsolutionsCosmetics:ConsumersaretradinguptomasstigeandprestigebrandsinfacialcareandmakeupFunctionalityistheprimaryKPC,andcustomersalsoconsidervalue-for-money.ConsumersincreasinglyvaluenaturalingredientsandhaveboughtinontheconceptofChineseherbalConsumerspreferforeignbrands

overdomesticbrands,andKoreancosmeticsaregainingshares,especiallyamongyoungconsumersChannel-wise,onlinepurchasesandduty-freeshopsarerapidlygainingtractionBeautyservices:LocationisthetopKPC,anddecorationandreputationarealsoconsidered.High-endchainbeautysalonsbenefitfromconsumers’tradingupinbeautysalons.Hairsalonswillremainstable.SpasalonsandbodyreshapingareoflittleappealMedicalbeauty:Microplasticsurgeriesarelikelytoboomthankstolowerrisks.Publichospitalsandreputableprivatehospitalsaretrusted.ConsumerDynamicsConsumerPainPointsSource:BDAresearchandanalysisCosmetics:Consumershavetobalancefunctionalityvs.value-for-moneywhentradingup;theyhaveboughtinonthenaturalconceptbuttheydesirestrongerfunctionality,especiallywhenchoosingChinesetraditionalmedicineConsumers’majorpainpointisoverchannelswhentradingupforbetterproducts.Theyareconcernedaboutlowreliability(e.g.lowqualityorfakeproducts)ofshoppingcosmeticsonline,andhopetofindmoreeconomical&reliablechannelsforprestigeproductsBeautyservices:Primarypainpointonbeautyservicesisexcessivepromotionsduringtheservice,whichinfluencestheuserexperienceSomeconsumerscomplainaboutfrequentchangesinhairdressersorbeauticiansForspasalons,consumersarenotsatisfiedwithpricingandconsiderthepurerelaxationservicestobenotworthwhilePlasticsurgeries:Consumersarehighlyconcernedaboutthesafetyofmedicalbeautysolutions.TheyarealsoworriedaboutunsatisfyingfinaloutcomesDifficultyinacquiringvaluableinformationabouttherisksandreputationofdoctors

isalsoamajorpainpointSupplySide:Cosmeticsareexpectedtobefurtherconsolidatedbyglobalplayers;beautyserviceswillstayfragmentedgivenlimitedinnovationsinstandardization;medicalbeautyhospitalsareexpectedtobeconsolidatedbyleadingplayers,withtheirtalentpoolandprovenrecordsCosmetics:R&Dandbrandingknow-howbecamethetopKSFs,astheyaredirectlyrelatedtoconsumer’sperceptionsoffunctionality;globalbrandsarethereforepreferredSpecificallyintheskincaresector,KoreancompaniesaretakingsharesfromdominatingUS/EUplayersandChineseplayersarealsoimprovingtheirpositionsinthemasstigesegmentInthemakeupsector,L'Oréalhasover30%ofthetotalmarketshare;leadingChineseplayerslikeCarslanandKoreancompaniesaregainingsharesattheexpenseofwesternandJapanesecompaniesBeautyservice:Islocation-basedandheavilylabor-reliant,soPOScoverageandpeoplemanagementknow-howarethetopKSFsForthehairdressingsector,noplayersareexpectedtoemergeandfurtherconsolidatethesectorForthebeautysalonsector,majorplayersattheirownpricelevelsareatasimilarlevelregardingKSFs,withnoonestandingoutMedicalbeauty:ReputationisthetopKSF,assafetyremainsthebiggestconcern,indicatingthatleadingplayerswithsuperiortalentpoolsandlongprovenrecordsarelikelytostandoutAmongthefourleadingchainplayers,Mylikeisslightlybetterthanitspeersduetoitslargepooloftopsurgeonsandsuccessfultrackrecord4Supplier/ChannelDynamicsKSF&ImplicationsConcentrationlevelandconsolidation:Cosmetics:Moderatelyconcentrated,withglobalplayersleadingthesector;KoreanplayershavebeengainingsharesBeautyservice:Boththehairdressingsalonandbeautysalonsectorsarehighlyfragmented,andareexpectedtoremainthisway;specifically,thebeautysalonsectorisdistinctlysegmentedbypricelevel,andislikelytobestableMedicalbeauty:theproductsideismoderatelyconcentratedyetmoreplayersareenteringthemarketduetolooseningregulations;the

channelsideisfragmented,yetisexpectedtobefurtherconsolidatedbylargeplayersinthelongrunVerticalintegrationanddigitaldisruption:beautysalonsareslowlylosingsharestomedicalbeautyaspeopleseekimmediateeffectsandlesstime-consumingservices;O2Oservicescurrentlyattracttrafficwithlowprices,butlong-termpotentialislimitedStructuralChangeStrategicMovesCosmetics:LocalplayersareactivelycatchingupinR&Dcapabilities,strengtheningbrandawarenessandexploringnewopportunitiesinthemasstigesegment,buttheyareunlikelytotapintotheprestigesegmentintheforeseeablefuture;thosewhofocusontraditionalChineseconceptsarelikelytoemergeiftheycanprovetheefficacyoftheirproductsBeautyservice:Hairdressingplayersareexploringnewcategorieslikespaandmassage,whilebeautysalonplayersaretryingnewinitiativeslikeintroducingmedicalbeauty,reinforcingproductsales,andexpandingservicecategoriesMedicalbeauty:furtherpenetrationinlower-tiercitiesSource：BDAinterviewsandanalysisInvestmenthighlights:leadingprivatehospitals&drugproducerswithstrongreputations,andO2OmedicalbeautyAPPswillgreatlybenefitfromamarketboom;Koreancosmetics&medicalbeautyplayerswhoreinforceexposureinChinaarealsoworthlookinginto5InvestmentHighlightsRationaleCosmeticsMediumpotential,withopportunitiesmostlycenteredonKoreanplayerswhohaveaggressivelyexpandedinChina,likeAmorePacific,andChineseplayerswhohavebrokethroughwithtraditionalChineseconceptsinthemasstigemarket,likeCarslanandShanghaiJahwaLimitedpotential,asboththehairdressingandbeautysalonsectorsaregrowingslowlyandfurtherconsolidationisinsignificantBeautyServiceInvestmentPotentialLargepotential,asthemarketisgrowingfastwithconsolidationunderway;leadingplayerswhohavealargetalentpoolandlongprovenrecordsareexpectedtostandout,e.g.MyLikeThemarketisstillgrowingmoderatelyat~10%,drivenbyconsumptionupgradetothemasstigeandprestigesegmentsLeadingplayerswithstrongR&Dcapabilitiesandmarketingknow-howareexpectedtotakemoreshares,asconsumersseekabalancebetweenfunctionalityandvalue-for-moneyThemarketisunlikelytosurge,givenhighpenetrationratesandinsignificantconsumptionupgrades,andYoYgrowthisexpectedtodeceleratetoLSDinthefutureBothsectorsarebynaturefragmented,astheyarelocation-basedandheavilyreliantonlabor,makingthemdifficulttoconsolidatewithnoeconomiesofscaleThemarketisbooming,andthegrowthinvisitnumbershasbeenthemajordriver;amplepotentialexistsforpenetrationintolower-tiercitiesAssafetyisthemajorconcern,topplayerswhohaveastrongreputationandtopsurgeonsarelikelytogainsharesSource:BDAresearchandanalysisLargestSmallestMedicalBeautyO2OMediumpotential,withpotentialinmedicalbeautyappswhichhavesucceededinbuildingupanupstreamcredibilitysystem;O2OmanicurehaslimitedpotentialThemarketpotentialofO2Omanicuresislimited;inthelongterm,itmightbehelpfultoattracttraffictomoreprofitableservicesfortheplatformMedicalbeautyO2Oappsthatcansolvecustomers’painpointsinknowledgebuildingandhospital/doctorscreening,andbuildupanupstreamcredibilitysystemaswell,maytakealargemarketshareandmonetizetraffic6TableofContentsSummaryDemandSideAnalysisChinesePreferenceforBeautySize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisNewBusinessModelTypicalChinesefemaleconsumersstarttocareaboutbeautyfrom16-20,seekingsolutionsforacneremoval;during20-30,theirtopconcernsaremoisturizingandwhitening;after30,consumersareincreasinglyfocusingonlifting,brighteningandanti-aging716-20years20-30years30-45years>45yearsUndergraduateorhighschoolstudentswithnoincomeAcneisthemajorfacialissueSeveralyearsofworkingexperience

withrisingincomelevelMoisturizingandwhiteningaremajorappeals;begintopayattentiontoanti-agingafter25BegintowearmakeupUsuallyoccupymid-highlevelpositions;higherincomelevelthan20-30yearsManyfacialissuesincludingwrinkle,stainandskinsaggingManypeopleretiredwithrelativelylowincomelevelLessfocusonpersonnelappearancethanbeforeTypicalChineseFemaleConsumersSource:BDAresearchandanalysisYoungerconsumersusuallystartusingcosmeticsfrommassmarketbrands,andgraduallytradeuptomasstigeoncetheyreach20-30;after30,seriousconsumersseekmoreefficientandfastersolutionsviaprestigebrands,beautysalonsorevenmedicalsolutions8MedicalBeautyBeautyServiceCosmeticsHighpenetrationFocusonacneremovalUsuallyprefermassbrandsFocusonmoisturizingandwhitening;

anti-agingbecomesincreasinglyimportantafter25Usuallyprefermasstigebrands,withsomeconsumerstradinguptoprestigeafter25Requirecomprehensivefunctions,focusonanti-agingandliftingAnincreasingnumberofconsumerspreferprestigebrandsLowpenetrationRelativelyhighpenetrationRequirecomprehensivefacialandbodytreatments,placingemphasisondeepcleansingandmoisturizingHighpenetration,majorconsumergroupRequirecomprehensivefacialandbodytreatments,placingemphasisonanti-wrinkleandliftingLowpenetrationMainlyconducteyeandnoserelatedprocedures,suchasdoubleeyelidandcanthusoperations,andnosereshapingIncreasingnumbersofconsumersareconsideringmicroplasticsurgeriesAlsoconductbodyproceduressuchasbreastaugmentationsandliposuctionMajorconsumergroupMainlyconductinjectionsofhyaluronicacidorbotoxtoremovewrinklse;andlasersurgeriestoremoveblemishesLittledemandforfacialcareMainlyusenormaldailyfacialandhandcreamUsuallymassbrandsLowpenetrationLowpenetration16-20years20-30years30-45years>45yearsPreferenceforBeautyProductandServicebyAgeGroupSource:BDAresearchandanalysisFromtheperspectiveofaesthetics,Asianfemaleplacemuchemphasisonskincare,especiallyonfacialcare;Westerners,ontheotherhand,havestrongdemandonbodyreshaping9GlobalBenchmarkingCosmeticsandPersonalCareMedicalBeautyHighlightsSource:BDAinterviewsandanalysisSkincareismoreimportantforAsianconsumersthanforUSandEuropeanconsumersChineseconsumers’spendingonmakeupfallsbehindothermajorcountries,takinglessthan10%oftotalbudget,signifyingfurthergrowthpotentialInAsiancountries,facialplasticsurgeriestakes~70%oftotalnumberofplasticsurgeryprocedures,andeyeandnoseproducesarethemostpopular;breastprocedurestakelessthan15%InwesterncountriessuchasUSorEurope,consumersconductmorebreastproceduresandlessfacialprocedurescomparedwithAsianconsumersSkincareMakeupOthersUS17%17%SouthKorea44%14%Japan41%16%China47%7%“Asianpeoplecareabouttheirfacialconditions,theynormallyperformseveralfacialcareprocedureseveryday.Theyalsopreferwhiteskinsotheyfocusonsunscreening.Caucasian,ontheotherhand,caremoreabouttheirbodyshapeandlessonface,sotheyhavefewproceduresonfacialcare.Theyalsoliketobetan,manyofthemwillchoosetanningservice.”--IndustryExpertSpendingAllocationonCosmeticsandPersonalCare~15%BreastproceduresFace(eye&nose)proceduresOthersUS30%42%SouthKorea78%13%9%Japan77%14%9%China~70%<15%PlasticSurgeryProceduresBreakdown1“ManyAsianpeoplelikebigeyesanddoubleeyelid,andpreferhighbridgednoselikeCaucasian,sothemajorityofplasticsurgeryisoneyeandnoseinAsiancountries.”--IndustryExpert“Westernpeoplewanttobemoresexy,sonearly50%ofplasticsurgeryisaboutbreast,suchasbreastaugmentation.”--IndustryExpertNote:1.NumberofproceduresincludingmicroplasticlaserandinjectionsThedifferenceisalsoreflectedontheirbeautysolutions;westernerspreferfastermicroplasticsolutionstotacklefacialissueandfavorSPAsforpurerelaxation;whileAsiansoptforself-improvementviaregularbeautyservicesandSPAs10GlobalBenchmarkingRev.BreakdowninBeautySalonBeautySalonvs.SPASalonHighlightsSource:BDAinterviewsandanalysisAsChineseconsumerscaremoreaboutfacialskincondition,facialcarecontributestonearly70%oftotalrevenueofbeautysalonsinChinaForbeautysalonsinwesterncountries,bodycareusuallytakesmorerevenueportion.USandEuropeanconsumerspreferquickermicroplasticsurgeriestotacklewithfacialissues.Inwesterncountries,SPAsaremainlyforrelaxation.TherearemoreindependentSPAsalonsthaninChinaInChina,consumerspreferdoingbodytreatmentandSPAinbeautysalonandtheseSPAsareforbodyskincareandrelaxation.TherearemuchfewerindependentSPAsalonsinChinathaninUSFacialcareBodycareUSandEurope~50%~50%China~70%~30%“Facialcareaccountsforaround70%ofChinabeautysalon’srevenue,withmoisturizing,anti-agingandlighteningeachtakes35%,25%and10%respectively.BodycareservicessuchasSPA,weightlossandbreastcare,contribute~30%oftotalrevenue.”--IndustryExpert“Westernpeoplefocusmoreontheirbody,suchasbreastcareortanning.Alsobecauselaborcostsarehigh,manuallyfacialcareispricyandnotworthyforthem.Iftheyhaveskinissue,theywillprefermicroplasticsolutions.”--IndustryExpertRevenueContributionforBeautySalon#ofSPAsalon#ofbeautysalonChina<95%US~80%~20%~5%NumberofSPAvs.BeautySalon“UnlikeinChina,wherebeautysalonusuallyprovideSPAservices,westerncountries’SPAaremainlyoperatedindependentlyandprovidebodyrelaxationservices.ManypeoplegotoSPAresortduringvacation.”--IndustryExpert“IusuallyenjoySPAsinbeautysalonafterIfinishfacialtreatments,Idon’tthinkIgotoaseparateSPAjustforrelaxation,becauseit’snotveryworthyandIthinkbeautysalonisconvenientenough.”---FGDconsumer11TableofContentsSummaryDemandSideAnalysisChinesePreferenceforBeautySize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisNewBusinessModelCosmeticsiswidelyusedfordailybeautycareamongallthefemaleconsumers;lessthan20%ofthemalsoreceivebeautysalonservicesatamonthlybasis,andlessthan5%ofthemevenconduct(micro)plasticsurgeryafterseriousconsideration12MedicalBeautyBeautyServicesCosmetics#ofPopulation1(Multiple)<5x<20x100xAnnualSpendingperPersonRMB10,000~15,000ASPformajormicro-injectionsisaroundRMB5,000~6,000andofteninjectedsemi-annuallyPriceforone-offplasticsurgeriesvariesbutusuallyfallswithinRMB10,000~15,000RMB3,000~5,000Facialskincare~70%Bodyandnailcare~30%RMB1,000~3,000Facialskincare70~80%Makeup10~15%Handandbodycare5~10%Haircare5~10%FrequencyofUsageAnnualorsemi-annualMonthlyorsemi-monthlyDailySource:BDAinterviews,researchandanalysisNote1:Forbeautyservices,numberofpeoplevisitinghairsalonnotconsidered,onlyconsiderpopulationvisitingbeautysalonIn2014,Chineseconsumers’totalspendingforbeautycareisRMB500BN,includingcosmetics,beautyserviceandmedicalbeauty13BeautyServiceCosmeticsConsumers’TotalSpendingDefinitionPlasticsurgeries,micro-plasticlasertreatmentandmicro-plasticinjections(suchashyaluronicacidorBTX)Facialandbodycare(e.g.SPA,massage,etc.)servicesprovidedbybeautysalon,SPAsalonandothers(e.g.nailsalon)Cosmeticsproducts,includingskincareandmakeupproductsThecosmeticsmarketalsoincludepremiumhaircareproductsSource:Euromonitor,BDAresearchandanalysis+28%Unit:RMBBN+9%SkincareMakeup201416314221201315113119201213812018201112610916+3%+9%HaircareandstyleprovidedbyhairdressingsalonsMedicalBeautyChineseconsumersallocatenearly50%oftheirtotalspendingonskincare;andfacialcareaccountsfor95%ofskincare14ChineseConsumers’SpendingonCosmetics&PersonalCare(2014)Source:Euromonitor,BDAresearchandanalysisOthers

4%Men’sgrooming4%Baby&child7%Bath&Shower7%Makeup10%Oralcare16%Haircare48%Skincare2%HandCare95%FacialCare3%BodyCareChineseConsumers’SpendingonSkinCare(2014)Intermsoffunctionality,moisturizersisthelargestproductsegment,accountingfor45%oftotalfacialcare,followedbyanti-agers(25%),facialcleansers(10%),facemasks(10%)andtoners(8%)15ChineseConsumers’SpendingonFacialCare(2014)Source:Euromonitor,BDAresearchandanalysis25%FacialMoisturisers45%AcneTreatmentsLipCare1%0%8%Toners10%FacialMasks10%FacialCleansersAnti-AgersFutureTrendAsconsumersbecomeexperienced,theirchoiceswilldiversify,benefitingsub-sectorslikelipcareortonersFunctionalanti-agingproductswillgrabmoresharesthankstoconsumptionupgrade“Iperformmoreskincareproceduresthan2yearsago,Ibegintousetonerthisyearandinfuture,Iwilladdmorefacialcareprocedures.”--IDIconsumer“Iwillusemoreanti-agingoranti-wrinkleproductsinfuture,theyareusuallypricybutverynecessaryforme.”--FGDconsumerIntermsofpricerange,massbrandmarketdominatestheskincaremarketby73%share;infutureitsproportionwillbesqueezedbymasstigeandprestigebrandsthankstoconsumers’tradingup16MarketShareofPrestige,MasstigeandMassSkinCareBrand,2014Source:Euromonitor,AlphaWise,BDAresearchandanalysisConsumerTradingUpUnderwayConsumershavedisplayedaclearpremiumizationandconsumptionupgradetrendPrestigeMasstigeMassMainbrandinnext12months20%13%Currentmainbrand16%11%Q:Whichskincarebranddoyoucurrentlyusemostoften?Inthenext12months,whichskincarebrandwillyouusethemostoften?N=920PrestigeMasstigeMass16%11%Intermsoftheoriginsofbrands,China’sskincaremarketisdominatedbyglobalplayers;shareofKoreanbrandsissmallforthetimebeingbutisexpectedtogrowrapidlyasyoungconsumershavehighpreferenceforKoreanbrands17BreakdownofCountryofOriginforSkinCareProducts,2014Source:Euromonitor,AlphaWise,BDAresearchandanalysisPreferenceofBrand-originsbyAgeGroupKoreanbrandsappealtoyoungerconsumerswhileolderconsumerspreferEuropeanbrandsN=920JapaneseChinese20%Korean2%USEuropeanOthers1EuropeanUSJapaneseKorean35-44yrsChinese17%41%25-34yrs25%27%16-24yrs35%20%Note1:OthersincludingbrandsofothercountriesandbrandsoflistedcountriesbutwithtrivialmarketshareIntermsofpurchasingchannel,departmentstoreremainsthemostimportantchannelforskincareproductdistributioninChina;ecommercehasbeencatchingupatanamazingpaceinrecentyears18ChannelBreakdownofChina’sSkinCareMarket(2014)Source:Euromonitor,BDAresearchandanalysisPharmaciesOthers1%6%Hyper/Supermarket13%BeautySpecialistRetailers15%InternetRetailingDirectSelling20%DepartmentStores29%FutureTrendDepartmentstoresremaintheprimarysaleschannelbuthasbeengraduallyloosingsharestoemergingchannelslikeonlineretailingInternetretailingisrapidlygrowingandwillcontinuegainingsharesfromdepartmentstoresandhyper/supermarket,thankstoitsconvenienceandlowerpricingShareofhyper/supermarketislikelytodecreaseundertheimpactofonlineretailingDirectselling,pharmacies/drugstoresaswellasspecialtystoresremainconstantsharesLookingforward,asChineseconsumerscaremostabouttheirface,andbelievepremiumhandandbodycareproductwon’tmakemuchdifference,theywillcontinuetotradeupforfacialcareratherthanbody/handcare19FacialcareBodycareHandcare95%3%2%ChineseConsumers’SpendingStructureOnSkinCare(2014)Source:Euromonitor,BDAinterviewsandanalysisCAGR2010-2014GrowthpotentialHighlights11%5%8%~2-3xpotentialspacethroughconsumptionupgrades~3xpotentialspacethroughpercapitaconsumptionvolumeincreases,thoughtheconsumptionupgradehaslimitedpotential5-6x

morepotentialspaceasbothpercapitaconsumptionvolumeandconsumptionupgradesstillhaveroomTypicalconsumersarenotusedtospendingmuchmoneyonpremiumbodyproducts,becausetheybelieveitwon’tmakemuchdifferenceConsumersaregraduallyfocusonhandcare,buttheconsumptionupgradeprocessisrelativelyslowFacialcaredominatesconsumer’sspendingandhaswitnessedclearpremiumizationtrend“WhenIplanmybudgetforskincareproducts,Itendtospendalmostallofmymoneyonmyface,sinceitisthemostimportantanddelicate.Iwon’tspendmuchonbodyandhandcaresinceitwon’tmakemuchdifference.”--IDIconsumerSkinCareWhenvisitingbeautysalons,theywillcontinuetospend70%ofthetotalspendingonfacialcareandtheother30%onbodytreatment,i.e.bodyreshaping,SPAandChinesetraditionalbodytreatment

20BodycareFacialcare70%30%ChineseConsumers’SpendingonBeautySalonSource:BDAinterviewsandanalysisGrowthPotentialHighlightsConsumersmainlyfocusonfacialtreatments,buttheyaregraduallypayingattentiononbodycare,especiallySPAandChinesetraditionalmedicaltreatmentsHigherpotentialduetoconsumptionupgrade,consumerswilltradeupformoreexpensiveandfunctionalservicesAsconsumerstradingup,theyarelookingforrelaxingSPAChinesetraditionalmedicaltreatments

andmassagearepopularamongstressfulyoungconsumersFuturegrowthwillbemainlydrivenbyrisingASP,aspenetrationofbeautysalonalreadyhighButsomedemandmightbedivertedbymicroplasticsolution,whichismoreefficient“Thetraditionalbeautysalonservicesisthreatenedbyrisingofmicroplasticsurgeries,manybeautysalonsareillegallyconductingmicroplasticinjectionstocapturegrowthopportunities.”-IndustryExpertMajorItemsMainlyincludeSPA,breastcareandweightlosing40~50%formoisturizing30%foranti-aging15%forlightening“IworkovertimealotandIalwayshavebackpain,soIgotobeautysalonformassageandChinesemedicaltreatment,whichisquiteeffective.”--FGDconsumerBeautySalonIntermsofmedicalbeautysolutions,Chineseconsumerswillspendmoreintacklingthefacialissue(70-80%)suchasanti-agingandbrightening;butmicroplasticsolutionswillbecomemorepopularthanplasticsurgeryforitslowrisksandcosts21MicroplasticinjectionMicroplasticlaserPlasticsurgery50%30%20%ChineseConsumers’SpendingBreakdownonMedicalBeautySource:BDAinterviewsandanalysisGrowthpotentialHighlightsConsumershavegreatconcernoversafetyissueSmalleyeandnoseproceduresarerelativelypopularamongyoungconsumersHighgrowthmomentumthankstolowerrisksandimmediaterecoveryHighriskofinfection,outcomeirreversibleConsumersarehighlyconcernedonsafety,alsotheyareworryingoutcomemightnotbesatisfyingLowinfectionrisk,irreversibleeffectandimmediaterecovery“I

wanttotryhyaluronicacidinjectioninfuturebecauseitiseffectiveandcarrieslowrisk.Thepriceisalsoaffordableforme.”--FGDconsumerMajorItemsEyeprocedures40~50%Noseprocedures~20%Breastprocedures<15%Mainlyfacialsolutions40~50%ofhyaluronicacidinjection~20%ofBTXinjection~10%ofothers,includingcollagen,evolutionandotherinjectmaterialsHighgrowthpotentialastherisksarelowerthanplasticsurgeriesandlasertreatmentrequirelittlerecoverytimeLowriskofinfection,outcomeirreversibleFacialprocedures70~80%Bodyprocedures20~30%“Ihavetriedphotorejuvenation(光子嫩肤)andIcanfeelimmediateeffect.Ihastried10timesanditreallyworked.ButIheardthatdoinglasertreatmentsooftencouldcauseskinbecomethinnersoIstopped.Iwillconsideritinfuture.”--FGDconsumerMedicalBeauty22TableofContentsSummaryDemandSideAnalysisChinesePreferenceforBeautySize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisNewBusinessModelChinesefemaleconsumerscanbedividedintothreesegments:mass,masstigeandprestige,accordingtotheirchoiceofbeautyproductsandservices;maleconsumersarethefourthsegment23Source:BDAresearchandanalysisCosmeticsMenWomenMassPrestigeMasstigeDemographicsBeautyServicesPurchasecosmetics<RMB100peritemLowerincomelevel:RMB1~3KPurchasecosmeticsofRMB100~400peritemMidtohighincomelevel:RMB3~6KPurchasecosmeticsoverRMB400peritemHighincomelevel:>RMB6KLessdemandforcosmetics,mainlyfocusedongroominganddeepcleansingMedicalBeautyMassproducts<RMB100peritemMasstigeproductsRMB100~400peritemPrestigeproducts>RMB400peritemNormallymassormasstigeproductsMainlydomesticbrands,KoreanbrandsrisingPreferKoreanbrandsPreferEuropeanbrands,andalsoconsiderKoreanbrandsL’orealdominates;alsousedomesticbrandsMainlypurchaseoverth