The perfect cut that also hurts

BEIJING – With annual growth rate of more than 15 percent and revenues in excess of 334 billion yuan ($51 billion), the hairdressing and beauty services industry in China should have been on the fast road to success. But the industry is in a piquant situation where despite the huge potential for expansion, it is plagued by lack of talented manpower and the absence of well-established domestic brands.

With growing purchasing power and strong economic growth, the Chinese are now realizing the importance of self-expression and looking good, the cornerstone of a mega industry.

Hairdressing and beauty currently ranks fifth after real estate, automobile, tourism, and telecommunications industries in terms of industrial importance. But in reality the industry is still unorganized and short of regulations.

The industry is set to be a 500 billion yuan industry in China by 2015, according to Lu Hongyan, an industry expert from the Chinese Academy of International Trade and Economic Cooperation.

Though hairdressing is a service business that has strong demand from customers, the government has not taken enough steps to regulate the industry or frame guidelines for effective supervision and management of hair salons, Lu said.

In spite of the unorganized structure, it is still a highly labor-intensive industry and as such an effective employer. With China undergoing the process of rapid urbanization, more and more young people are now flooding to big cities from the countryside, while many of the smaller cities are waking up to a new way of living.

All of these have underscored the importance of looking good and demand for hair care services is booming. Though much of the industry growth has been on the high end of the price spectrum, it is also possible for customers to get their hair cut or styled at the lower end.

Overall, the industry in China could be termed as a big business that is dominated by small players.

According to the latest available official data from China Hair & Beauty Association, by the end of 2009, there were nearly 1 million hair and beauty salons in China, employing some 6.5 million people, and more than 600 hairdressing and beauty academies.

“More than 70 percent of the hair and beauty salons are manned by the self employed, are small in size and started with minimal capital,” Lu said.

But for many like the 27-year old Moria Mao, surviving in the hair care industry has been a hair-raising tale. Starting off some 10 years ago, Mao has seen the industry go through its different phases even as competition intensified and the profit margins shrank.

Working as a hairstylist in a mid-sized salon in Beijing, Mao said many of the smaller parlors have gone in price cuts, while many others are selling unqualified hair products of suspect quality to customers.

One reason for such mistrust stems from the fact that the industry does not have any entry barriers. Aspirants do not need to pass any national certification examination, as there are no national standards for the profession, Mao said.

Lack of branding is another reason why the industry has not climbed the standardization peak, experts said. But one reason why there are no strong brands could be due to the personal nature of the industry. Client numbers are built on personal bonding between the stylist and client and hence not too dependent on the brand, Mao said.

Amid the disorganized world of Chinese stylists, overseas stylists stand in splendid isolation. Unlike their Chinese peers, many of them have seen their fortunes boom as the looking good wave has triggered a rush for their services. Adding fuel to the boom has also been the emergence of a strong middle-class who is not reluctant to spend money on such services as they think it would improve their professional and social standing.

Talent shortage

With demand growing, there is also an acute shortage of trained hair stylists, and this has opened up a wealth of business opportunities for Western hairdressing training institutes.

Frankie Chen, who opened the first Toni & Guy hair salon in Beijing eight years ago, said most of his customers are now local people who are well-informed about fashion and are aware of the latest fashion trends in the West.

“Most of my clients want to look like Hollywood stars,” the Taiwan-born Chen said. Currently he owns nine salons and a hairdressing academy in Beijing.

“The Chinese market is undoubtedly very big and lucrative, as the rising middle class is constantly looking for a hairstyle makeover,” he said.

Most hairdressers in China, however, believe that it was the British hairstylist Vidal Sassoon who is the godfather of the styling industry.

Sassoon launched a geometric, “Bauhaus-inspired” style, also called the bob, a stylish and simple cut that soon became the cynosure of every hairdresser.

Chen admits that there are enough opportunities for professionals like him to make money from the talent shortage in the industry.

He spent most of his time teaching at the hair care academy in Beijing and said that the institute has been one of the mainstays of his revenues.

“Most of my students are hairdressers. But since they feel they are not good enough to satisfy their clients they come to professionals like me. They believe that an association with a professional brand like Toni & Guy, which has distinct ties to British culture, would work wonders for their business,” said Chen, who was feted with an award for teaching at the Toni & Guy Global Annual Conference in 2010.

Such professional training services are by no means cheap. Chen’s academy charges each student 6,000 to 8,000 yuan for a week’s training. But the demand has been such that Chen said he has trained thousands of students nationwide so far.

In the salon business, clients are normally charged anything between 150 yuan and 1,500 yuan for a haircut or a new style depending on the name and skill of the hairdresser.

“Most of my clients are female film stars, models, TV anchors and some rich business people. I prefer to style their hair in such a way that it makes them look more feminine. Most of my clients believe that their hairstyle is an integral part of their image,” Chen said.

Unlike Westerners, Chinese consumers prefer to use more professional hair care products because they believe it makes their hair glowing and smooth. That trend also seems to find weight in the fact that prices of such professional hair care products are usually much more than the haircut itself.

Helen Wong, administrative manager of CCTV-IMG Sports Management Co Ltd, is one of the new breed of customers who frequent stylists such as Toni & Guy. The 30-year-old has no qualms in spending money for services that make her long straight black-layered hair look beautiful.

“Hairstyle is very important for my image and is the focal point of my style,” she said. She goes to the hair salon twice a week to get a professional hair care treatment and a new hairstyle. Sometimes, for convenience and a cheaper deal, she chooses to use a cheaper hair salon.

In general, it costs Wong at least 100 yuan to get a professional hair care treatment if she chooses to use L’Oreal professional hair care products and around 20-30 yuan for a new style.

But if she chooses famous hairdressers such as the ones from Toni & Guy or Tony Studio in Beijing, she would end up spending 10 times the general price for both hair care treatment and hair cut or new style.

Thanks to the booming hairdressing industry, hair care products, especially those from the West, are also selling well in China. Companies like the French cosmetics giant L’Oreal have gained from the beauty boom and now has three brands at different price points for hair salons in China. According to company officials, more than 1,000 salons in China use the products.

Alexis Perakis-Valat, CEO of L’Oreal China, said that according to the company’s findings, though the normal Chinese hair is stronger, it has lower hair density and hence more susceptible to damage.

Chen from Tony & Guy said some Chinese hair salons are different from their counterparts in the West. They have started to provide more services to customers like face and nail makeup and other beauty services.

By offering overall styling services, some hairdressers can become bigger celebrities. Li Dongtian, also known as Tony Li, is one such pioneer in China.

Li set up the first Tony Studio in 1999 to offer styling services. He became famous for helping Lu Yan, China’s top supermodel, to present her Oriental looks to win admirers on the international stage

Li said the Chinese used to go to the salon only to have their haircuts and they considered it as a basic need to be done every three to five weeks. Now the Chinese are seeking more personalized services in salons. “Customers want to know how to match their hair by wearing makeup. They want to get a pleasant experience at the salons, reading magazines, drinking coffee and listening to the latest trendy music.”

Source: China Daily

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