Spa Business: Eastern Evolution
China is on a growth upswing. But will that ultimately include the spa sector?
The world’s most populous country—1.36 billion as of November 2013—has seen some amazing changes over the last 10 years, and forecasters say there are still more to come:
- In economic development, growth from fifth to second largest in less than 10 years
- 350% rise in per capita income
- Almost 590 million active internet users
- 100 airports being built
- A predicted 600 million Chinese middle-class by 2022
As we know all too well, along with the new economic wealth come the usual trappings. Tourism spending in China was up 14% for 2012 over 2011, and these new tourists want to do all of the things that tourists the world over want to do: see the sights, stay in nice hotels (hundreds of hotels representing a host of major brands are in the pipeline) and, yes, visit spas.
The spa industry in China is still in its infancy, but it’s growing. Fifi Kao, editor in chief of SpaChina Magazine, estimates that China currently has more than 250 hotel and resort spas and about 200 day spa brands, many of which have franchised units numbering anywhere from two to a hundred. There are also an estimated 50 to 80 private club spas, which are not marketed to the general public. Last September the magazine held the country’s 4th Spa Industry Awards, which coincided with the SpaChina Summit 2012. Businesses were recognized for achievements in innovation, popularity, product excellence and more.
China also has several spa associations, but none have definitive data on what is happening in their market—and they don’t deal with regulation. There is no licensing for therapists in China, although spa facilities require a license, which is obtained from the police department.
All of this growth adds up to a tempting proposition for international spa and hotel operators. However, the business environment in China can be quite difficult. Foreign companies trying to do business there need to engage local human resource and legal officials, and still be prepared for an ever-changing regulatory environment. And the fines for non-compliance of laws are steep.
Given the lack of therapist education, spa operators are obliged to train staffs on their own. The big hospitality brands that operate spas in China spend between four weeks and three months getting their staffs ready to take care of guests, and have to provide continuing education not just on technical aspects, but on English language and communication skills as well. In spite of all this required investment, the staffs do not tend to be loyal, and seem to need a greater level of nurturing from their leaders and managers. This comes as a surprise to westerners and others, considering the client-centered nature of spa professionals that we know. But Kathryn Moore, director of operations for MSpa International, a spa concept developer and manager that operates throughout Asia, the Middle East, Europe and Africa, notes that the nature of the Chinese worker is different.
“The One Child policy has had a massive impact on the work ethic and value that the Chinese place on themselves,” Moore explains. “Very often, the child grows up being the center of attention, and when that child gets into work environments he or she is no longer the main attraction. One of the things we focus on at MSpa is to show recognition and to make each employee feel special at some point, being very generous with our praise,” she says. Moore’s spa management team focuses on building strong relationships with the staff members, so that the training investment is not wasted.
The Chinese people do love to spa, but their version of spa-ing looks very different from that of spa-goers in the U.S. In China, spa is a social activity, so guests want to enjoy treatments in groups with family and friends. There are large spas with dozens of treatment rooms where clients basically hang out, bathhouse style. They may play mah-jongg, watch television and even smoke cigarettes while at the spa. Some of the bathhouses reputedly have slot machines and ping-pong tables. Food is also an important part of a Chinese spa visit, and we’re not just talking about bowls of nuts—full meals are the norm.
One trend of the moment is the growth of hot springs spas: new resorts and hotels embrace the idea of having a hot spring at their properties. However, they’re not always keen to do any testing or research, preferring to just get the resort built and open. Speed to market is the key, and the approach seems to be “Get it built and we’ll fine-tune it later.”
Chinese Spa Clients
Spa treatments are supposed to make one look and feel different, and the Chinese embrace this philosophy whole-heartedly. Although the most popular spa services in China are reflexology and massage, the populace is beginning to experiment with the benefits of Western-style facial treatments. They place great value on treatments performed with equipment and machines, as opposed to human touch alone. And they’re not shy about letting their friends know they’re having treatments—no need for discretion here! They don’t mind submitting to numerous medical spa treatments and walking out of the spa sporting all of the bruises or redness that one might expect: this shows their friends that they have “arrived.” Anything considered new or trendy is of great interest to a well-heeled Chinese spa consumer.
In some less affluent cities, Chinese spa-goers place a greater emphasis on value, and will be more likely to book massages, foot treatments and tui na. Naturally, the Chinese middle class will not regularly patronize luxury five-star spas. This population is understandably more price-sensitive and less likely to purchase spa products. In fact, they may not even visit a hotel spa while on vacation, unless a treatment is included in the package. On the other hand, for those who do want to indulge, they may be disappointed when they arrive at a hotel and find that there are no appointments available—the concept of booking appointments ahead of time has yet to catch on. At that point, some people even check out of the hotel!
Interestingly, even though China is the home of Traditional Chinese Medicine (TCM), Chinese people would not consider receiving these particular services in a spa—services that we would regard as “spa wellness treatments” in the U.S.—but will go to a TCM hospital or doctor for such treatments.
Products are of great interest to the Chinese spa consumer, but not Chinese brands. Status-seeking Chinese consumers will look for high-end Western, and now Korean, brands. In fact, spa directors in China report that clients regularly come in and buy 10 or 15 bottles of a product they like, so they can share with their family. However, the regulatory status for products is a moving target, and it can take from 18 months to three years to get a product approved for distribution in China—only to have regulations change without notice and leave manufacturers left to start all over again.
Antiaging and detoxification are the big concerns in this rapidly industrialized giant, especially as worry and awareness grow about the effects of pollution. The middle-class Chinese female will purchase a series of facials and/or body treatments to assist with both aging and weight loss. As in the U.S., men are more likely to receive basic massages. Organic and health-oriented products are also growing in popularity, and the Chinese client is increasingly turning to the latest supplements and nutritional aides.
Advice for the Westerner
There are many factors to consider if you want to open a spa in China —way too many to list here. It isn’t the easiest proposition, and even companies that have been operating there for 10 or 15 years struggle. By and large the spa industry isn’t well regarded by the majority of Chinese. In fact, many women who work in it don’t let their loved ones know, and this only serves to further cripple the much-needed therapist supply chain.
A note about your spa’s name and logo: As an ancient culture, China presents many minefields in the form of word associations and phonics. Your business’s name may not translate well to Mandarin, for instance, or even the sound of the word may carry a bad connotation. In addition, sequences of numbers have special meanings, as well as some single numerals. So do your research and test that name, logo and tagline beforehand!
If you’re up for the challenge, there is some fertile ground for future spa success there. The industry continues to grow rapidly in spite of its built-in difficulties, and the indomitable Chinese spirit has shown time and again the ability to overcome obstacles, grow and thrive.