Companies need to revamp, standardize to stave off quality challenges

With annual growth rates of over 15 percent and revenues in excess of 334 billion yuan (34 billion euros), the hairdressing and beauty services industry in China should have been on the fast road to success. But the hairdressing 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, Chinese citizens 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 hairdressing and beauty services industry is set to be a 500 billion yuan industry in China by 2015, says 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 says.

In spite of the unorganized structure, it still is 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.