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Internet company helps boom in China’s medical beauty market
 
China’s medical beauty market began to gain momentum in 2015 with a 40 percent year-on-year growth, far exceeding the global average of 7 percent. In 2017, it is predicted that 14 million people in the country would use medical beauty services, according to a survey by China’s most engaged mobile app in the industry.

SoYoung, with 6,600 legitimate medical beauty institutions and 15,000 licensed doctors registered on its platform, is now being used by 20 million potential medical beauty consumers in the country. It has recently published its annual survey for the third consecutive year, showing that “among every 2.5 consumers worldwide, one is Chinese.” Sino-US.com reporter has recently talked with Jin Xing, CEO and founder of SoYoung to learn more about its role in China's booming medical beauty industry.


Sino-US: The recently released SoYoung White Paper predicted that China’s medical beauty industry would have 14 million consumers in 2017. How is the figure derived?

Jin Xing: Based on open data, there are nearly 10 million consumers last year. Several authoritative consulting agencies including Deloitte predicted China to have a 40 percent growth rate. With prices of medical beauty services slipping back, we estimate consumers would reach 14 million this year.

Meanwhile, Deloitte has estimated the market size for 2017 to be Rmb 176 billion. And we recorded the proportions of different age group consumers, their average consumption amount and frequency in the first half year. Using the aforementioned data to make the calculation, we reached the same conclusion, which is 14 million.

Sino-US: So, the 6600 medical beauty institutions registered on your platform are all legitimate, right?

Jin Xing: There are around eight thousand certified medical beauty institutions in China, with 80 percent of them having registered with us. Legitimate medical beauty services must be approved by both the Administration of Industry and Commerce and National Health Service. Their business license is required to specify that medical treatment is included in business scope.

Sino-US: Some people would think that China’s laws in the field remain incomplete. Is that the case now?

Jin Xing: That’s not true. China boasts quite strict regulation on medical institutions. In Beijing, it takes one year and a half to two years to get approved by regulators. On the other hand, Chinese government puts an emphasis on central planning. Like in Beijing, local government agencies would consider issuing certain number of license plates meeting demand of local population. Instead, in South Korea and Taiwan, there are areas known for have centralized medical beauty services. An avenue in South Korea has housed over 600 institutions, which would be impossible in China.

Sino-US: In a previous interview, you said the industry is accused of making exorbitant profits while guaranteeing no safety, SoYoung intends to put an end to the situation, providing consumers alternatives. Now, where are you? Have you achieved the initial goal?

Four years ago when we first started, no one in the industry knew who we are. We’re left out in the cold by doctors and their institutions. Then, we began to develop the platform to gather communities of consumers. Let the consumers tell then who we are. When they visited their doctors, they would show them our App. When many consumers installed the same App, the institutions became curious, and they got to know SoYoung. Now, all people in the industry know about us.

From the second year, we started to found awards and prizes. Some doctors would ridicule that we’re an IT company, not in the medical beauty business, so we’re not entitled to do that. Now, things have changed and they feel honored to receive awards from SoYoung. The reason is that, unlike guilds, netizens decide to whom the prize goes. Doctor of the Year by us gained votes from 6.6 million netizens last year.

These days, top manufacturers in the industry are reaching out to us. Restylane, the biggest Bolivian uric acid producer has been purchased by Nestle. Last month, the corporate vice president of Nestle had led a delegation to visit us. Allergen, another top player in the industry has assigned their marketing director here to talk with us. You’ll find all upstream manufacturers are developing interests in SoYoung.

Now, we’ve gained influence power in the industry and played positive roles in its maturation. Over the past three years, prices for micro plastic have dropped nearly threefold.

In the past, prices are not transparent. Hospitals would resort to marketing tools to lure people in and then let doctors to talk about prices. Since we built the platform, all medical institutions have to clearly mark their prices; if they refuse to do so, they’re not allowed in. Transparent prices have put an end to the era of excessive profits. All industry insiders have felt the dramatic change. If you refer to the several medical beauty hospitals that have recently gone public, you’ll find they net margin ranges between 7 and 15 percent, the same with a restaurant.

Sino-US: So, you’re like the beauty medical version of Taobao and JD.com right?

Jin Xing: We’re more like Tmall. The point is anybody could open stores on Taobao, but we’ve got much higher threshold. You must have permit and license to practice medical treatment for registering with SoYoung.

Sino-US: Would SoYoung be held legally liable if you bridged a consumer with his hospital and then his operation failed.

Jin Xing: Legally, we would not shoulder joint liabilities. We’ve confirmed related issues with the State Administration of Industry and Commerce (SAIC) and the National Health and Family Planning Commission. They did some investigation and made the conclusion that we’re an internet information platform. We’re held responsibility for the authenticity and veracity of information released through our platform.

Sino-US: Are you planning to cooperate with upstream manufacturers like the ones you’ve just mentioned?

Jin Xing: Yes. We hope we could work together in the formation and data field. Chinese consumers usually lack information about products and equipments. We intend to provide authentic and proper information to facilitate their process of making choices. We would work with manufacturers to set up product, pharmaceutical and equipment libraries. Performance parameter, authentication and country of origin, or patent about a particular product would be specified by us, so that consumers could then make their own decisions based on the information.

Sino-US: You’ve done field investigations in South Korea and Taiwan. Do they have similar platforms?

Jin Xing: No. They don’t have platforms like SoYoung. I talked with industry insiders there and they told me as long as they set up clinics in certain areas, their authorities could be relied on. In China, there is deep-rooted distrust between private institutions and patients.

Over the past years, negative news about private clinics and institutions always made headlines. In western countries, most hospitals are privately owned, and doctors are highly respected. People know that they’ve learned many years to become a certified doctor and so they must be qualified. In such cases, they may not need a platform like SoYoung to help them verify.

Sino-US: Does this mean a similar platform would not survive in Taiwan and South Korea?

Jin Xing: No. We find out there is a similar website in the United States called realself, which used to be the biggest internet platform for the medical beauty industry. Now, we’ve surpassed it by having more page views.

You’ll find out almost all medical beauty doctors have registered with it. The reason is such platforms disclose industry information and make them more transparent. In this way, they help reduce the marketing cost of the industry.

Even legitimate institutions need to do marketing. Through such platforms, people would have access to information like doctors’ area of expertise and reputation, which would facilitate work of both doctors and consumers. The marketing cost reduction would ultimately benefit consumers, which constitute one of the reasons for prices going down in the industry. In the past, hospitals would spend Rmb 3000-5000 on acquiring one consumer, now they only spend Rmb 3-500.

The 40 percent growth rate is definitely an explosive one. With the number of such institutions highly regulated by the Chinese government, there was a huge gap between demand and supply. This gave rise to the high pricing of legal clinics and booming of uncertified clinics. I believe this would change. In a few years, with consumers being allowed more information to the industry, all the illegal clinics would vanish.

Sino-US: Is that true that now SoYoung has no competitors in the market?

Jin Xing: Yes. We’re now occupying 70 percent of the market share. Our users used to search for information through Baidu, now we’ve risen to become their new entrance into medical beauty services. Considering this, I would say Baidu is our competitor.

Sino-US: Would you say that SoYoung is a product of the times?

Jin Xing: Yes. You’ll find out more and more people begin to identify with the so-called “good looks economy”. Especially for those young people born in the 1990s and 2000s, they think quite differently from the older generations. They’re becoming much bolder, believing people are entitled to become more beautiful. “A beautiful mind would not rest with bland appearance,” they would say.  

 


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