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For proof of China’s $50bn obsession with cosmetic surgery, look no additional than a “little red book”.
That is the English translation of Xiaohongshu, the beauty-focused ecommerce and social media app well-liked amongst younger Chinese ladies on which the hashtag #PreAndPostOp has garnered greater than 290,000 posts. Many of them flaunt before-and-after images of overhauled jawlines, plumper lips and reconstructed cheekbones.
But for the reason that begin of July, the market worth of the nation’s three greatest publicly traded medical aesthetics firms has fallen by a 3rd, representing a collective lack of greater than $17bn, regardless of the recognition of cosmetic procedures.
That shift in investor sentiment suggests the times of China’s youth going underneath the knife in pursuit of facial perfection is perhaps numbered, as President Xi Jinping tries to reshape the nation’s cultural and enterprise panorama as a part of a “common prosperity” drive.
Investment financial institution Citic estimated gross sales revenues in China’s aesthetic drugs market have been greater than Rmb330bn ($51bn) in 2020. But analysts warn that the industry might take a heavy blow if Beijing concludes that the sector’s unfavourable social affect is on a par with non-public tutoring and on-line gaming — industries the place strict rules have incinerated the dominant teams’ market values in current months.
“It is perfectly possible we may see another industry disappear,” mentioned Mark Tanner, managing director of China Skinny, a advertising and marketing firm.
State media have stepped up criticism of the industry for selling the idolisation of bodily appearances and piling additional distress on younger individuals already self-conscious about their appears to be like.
In a commentary revealed on Tuesday, get together mouthpiece the People’s Daily warned that cosmetic surgery industry promoting had “crossed the regulatory bottom line”. The paper warned towards adverts that includes before-and-after images of Chinese celebrities designed to “lure in consumers” and referred to as for “standardised regulation of this lucrative new industry without delay”.
Tanner, a veteran analyst of China’s magnificence sector, mentioned that many within the nation would greet a crackdown on cosmetic surgery positively. “[If] everyone is not so ‘perfect looking’, then there is not as much pressure for you to spend your hard-earned savings and do the same,” he mentioned.
Investor unease has mounted alongside well being officers’ considerations over the proliferation of unlawful surgical procedures carried out by unlicensed clinics, which have drawn stern reproof from Beijing over “appearance anxiety” and “younger-age surgical clients”.
Last month, exchanges in Shanghai and Shenzhen banned structured debt merchandise linked to shopper loans for cosmetic procedures.
Traders attempting to find regulators’ next goal have homed in on So-Young, the Nasdaq-listed app that lets customers charge their very own facial options, draw up plans for tweaks and discover plastic surgeons. The ratio of brief curiosity in So-Young relative to complete share turnover — a measure of bets towards the corporate — has surged in current weeks as its inventory has tumbled to a document low, down greater than half this yr.
“The market is right to be cautious here”, mentioned Brock Silvers, chief funding officer at Kaiyuan Capital. Silvers mentioned a disappointing restoration in shopper spending in China this yr had helped hobble the shares of cosmetic surgery firms, whereas the newest indicators from Beijing “can’t bode well for near-term growth prospects”.
Officials have additionally expressed unease about tendencies in Chinese magnificence requirements. Go Youn-jung, a 25-year-old South Korean actress, is the preferred mannequin for “copy surgeries”, which search to copy the options of celebrities, in keeping with So-Young. Pre- and post-op footage on social media of males typically showcase delicate options that resemble idols from South Korea and, more and more, China — a development state media have lambasted for supposedly undermining Chinese masculinity.
There are additionally indicators of rising public consciousness of physique picture sensitivities. Posts on social community Weibo with hashtags resembling #DoYouHaveAppearanceAnxiety and #SayNoToAppearanceAnxiety have been considered about 490m occasions and drawn tens of 1000’s of responses.
Some Chinese youths welcome an industry reckoning. “The education industry has been hit so hard [by regulators]”, Weibo consumer Camry wrote in a current submit. “Please take more vigorous measures against the cosmetic surgery industry.”
A crackdown from regulators might undo years of speedy enlargement within the cosmetic industry and upset expectations for blockbuster progress. So-Young has already been downloaded greater than 400m occasions in China since its launch in 2014, in keeping with Qimai Data, a supplier of on-line knowledge providers.
Estimates of the worth of China’s aesthetic drugs market differ, however industry analysts agree the sector has grown at a searing tempo that had been broadly anticipated to proceed. A report launched in January by Deloitte forecast the worth of licensed cosmetic surgery companies in China to exceed Rmb310bn by 2023, a greater than 50 per cent improve from 2020 and a greater than tenfold rise from 2012. Citic, whose estimates additionally embrace unlicensed companies, projected the industry may very well be value greater than Rmb1tn by 2030.
But as expectations that regulators will intervene develop, investor considerations have already unfold past public markets, pushing aside non-public funds usually desperate to throw cash at cosmetic surgery start-ups.
“We had previously been looking . . . into potential investment targets among plastic surgery or aesthetic medicine companies,” a China-focused non-public fairness investor advised the Financial Times. But within the face of a looming regulatory backlash, the fund has determined to take the complete industry “out of the equation” for future portfolios, the investor mentioned.
Reporting by Hudson Lockett in Hong Kong, Sherry Fei Ju in Beijing and Edward White in Seoul
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