China’s cosmetic surgery platform SoYoung lists on the Nasdaq
This April 8th, a company from China called “SoYoung” was listed on the Nasdaq Stock Market. SoYoung has built up an O2O platform for cosmetic surgery services that is gaining a strong user base. One of the main factors for the platform’s speedy growth is its social media-style credit evaluation system.
According to a medical aesthetic industry white book released by SoYoung, the size of the cosmetic surgery market in China grew by 27.6% in 2018 to US$32.4 billion. In their financial report for the first quarter of 2019, CEO Xing Jin predicted that the company will reach US$52 billion by 2023.
A market rapidly changing through changes in attitude
In China, up to 71% of cosmetic surgery procedures carried out in 2017 were actually non-surgical procedures that didn’t involve a scalpel, as reported by the “2018 Medical Aesthetic Industry Research Report” released by Chinese research agency MobData.
Popular procedures in China include hyaluronic acid injections, botox, double-edged eyelid surgery, nose-related surgery, liposuction and laser hair removal. The above-mentioned SoYoung white book also revealed that, as of late, demand for female genitalia surgery (labiaplasty) is growing at a remarkable rate of 127%.
The driving forces behind this boom are the rise in procedures undergone by young people born after 1995 and the average person’s change in attitude towards cosmetic surgery. Indeed, in terms of attitude, China is beginning to resemble South Korea, a country where cosmetic surgery has become highly-advanced. Nowadays, for Chinese people cosmetic surgery procedures are no longer something to hide, and when showing before and after photos, people are less likely to bother blacking out their eyes to hide their identity and will instead show their face to the world.
Also, in terms of motives for undergoing surgery, while in 2015 the majority of 49% answered their reason was “work-related”, in 2018 that shrank down to 19%. Instead, now the top reason, at 57%, is “for my own satisfaction”.
However, the sudden growth of the market has brought about numerous harmful effects. Especially in the past several years in China, there has been a never-ending stream of troubles in relation to cosmetic surgery. These have included not only surgical mistakes, but also accidents, such as in 2010 when a patient suffocated during surgery due to large volumes of blood entering her windpipe.
Along with such incidents, reports have shockingly revealed that black-market clinics that operate without licenses have bulged into an industry worth US$19 billion, and not only do these clinics occupy roughly 60% of the overall market; black-market physicians outnumber proper, qualified physicians by over ten-fold.
However, despite the market’s infancy, it is starting to gradually head towards reform. One aspect that is leading the way is the rise of O2O platforms (Online to Offline). By introducing users only to qualified practitioners and encouraging trustworthy reviews online, these platforms are helping to steer the market towards a safer and more sound future.
The secret to SoYoung’s growth
According to the “China Medical Cosmetology O2O Market Analysis” released by Deloitte China, in 2016 the scale of the market for O2O platforms in the beauty industry was US$1.6 billion, and of this cosmetic surgery-related platforms made up 49.3%. Although this sector of the market is saturated, the two overwhelmingly largest players are SoYoung and GengMei (and both are backed by Tencent).
SoYoung, having launched in November 2013, was one of the latecomers. However, despite this they managed to get listed on the Nasdaq Stock Market before any others and they now boast an aggregate market value that exceeds US$1.65 billion.
Currently, SoYoung’s number of average monthly active users (MAU) is up to 1.92 million, a 78.7% increase from last year, and the number of users that have spent money through the app for surgery and other services is 127,300, an increase of 84.9%. The platform’s main sources of revenue come from advertising fees and the fees charged when a surgery reservation is made. Within the same period as the above statistics, sales from these transactions have totaled US$100 million, and the number of medical institutions that have paid service charges has risen to 2,701.
SoYoung has been able to reach the top of the industry through two main initiatives. First is their initial focus on user postings in order to strengthen the social media aspect of their platform. Second is their mimicking of the credit evaluation system from Alibaba Group’s online store Taobao, where “excellent store” badges are given out to superior businesses and sales performance records are visible to users. It’s been through these initiatives that they’ve succeeded in capturing over 35 million users.
Upon launching the SoYoung app on your smartphone, around twenty icons appear indicating categories such as hyaluronic acid injections and nose or eye-related surgeries. After selecting a category, you’ll get a list of surgical procedures with their prices and you can make a reservation. Selecting the “diary” allows you read a selection of articles from users on their experiences with different services. These testimonials have significant influence over which surgical procedures and clinics will become popular. Also, similar to many other social media platforms, it allows you to follow other users and be followed.
The app also features an AI diagnosis feature that instantaneously analyzes your selfie photo to measure the positioning, distance and angle of your nose and its different parts. On the profile pages of clinics and physicians, you’re able to view images of their operating licenses and medical qualifications, and a star-rating system indicates user ratings. You can also contact directly with physicians to receive advice and counseling.
Another way that SoYoung is helping in the reformation of the industry is in its “price visualization”. Having the prices of each clinic be displayed on the platform naturally stimulates competition. Between 2016 and 2018, the price of injections fell by 29%. For example, the average price of hyaluronic acid injections fell from US$204 to US$182.
The rate of permeation of medical cosmetology across China has differed by city size. In Shanghai and Beijing, this rate has grown to 21.2%. Though, in middle-sized cities, this drops to just a few percents, and smaller cities in regional areas are fewer than 1%. This means that cosmetic surgery in regional areas will no doubt continue to spread from here on — as has been the case with the cosmetics market — and as they do, O2O platforms are also likely to continue growing even more.
Text: Ching Li Tor
Original (Japanese): Team Roboteer
