By Mark Godfrey
Several years after its publication, the Wellness
Revolution remains a cult best-selling book. It's writer,
businessman and motivational speaker Paul Zane Pilzer advised
investors and amateur stock market players that "wellness" would be
the next trillion dollar industry. There's a lot of money to be
made out of people's desire to feel good and look good, wrote
Pilzer, telling investors to sink their money into companies
dealing in health food, beauty products and fitness centers.
Pilzer's advice appears to have been studied in China, where
multinational and local gyms vie with each other to sign up
well-to-do locals. In March Clark Hatch, one of the first fitness
center companies to come to China, announced a flurry of new
openings in the country. New gyms at the Hua Ting Hotel in Shanghai
and the Landmark Hotel in Beijing have taken the company's total
number of China-based clubs to eleven, with more growth expected in
the near future according to a company press spokesperson.
Meanwhile Evolution Fitness, a joint venture of Australian, Chinese
and New Zealand companies, recently announced the opening of its
second Beijing club at the Castle International Apartments.
Clark Hatch and Evolution are just two of several foreign
fitness firms expanding in China. A joint-venture between America's
Powerhouse Gym and China's Cy Sports Corp will open a chain of
clubs across China over the next few years, Powerhouse announced in
May. "Our expansion plan is clear, well defined and based on
realistic, calculated goals. Moreover, Cy Sports Corp has a
thorough understanding of the fitness industry in China," said
company chief executive William Dabish.
Keen to distinguish the company as one of top-drawer client
service, Dabish and his Chinese partners have hired national and
international fitness professionals and emphasized its personal
trainer services to customers. Cy Sports Powerhouse Gym facilities
will be ambitious in size, with floor space ranging from 25,000
square feet to 50,000 square feet. The jewel in the crown will be a
100,000 sq foot fitness facility on the 2008 Olympics site in
Tianjin, a port city two hours from Beijing.
Market potential is huge and obvious but profits are slow at
some clubs. The Four Seasons health club in Beijing's Tuanjiehu
neighborhood has been attempting to drum up membership by cutting
its fees. The 3,000-sq-m Japanese invested operation offers special
classes in spinning, aqua aerobics and other trendy activities.
Other hotel-based clubs such as the Jingguang Center in Beijing's
central business district have slashed prices for multiple-member
sign-ups. Four new members can join the well-equipped fitness
center attached to a four star hotel for 2,500 yuan a year. A
year's membership at internationally owned clubs in the city cost
up to four times that figure.
In May this year Chicago-based Bally celebrated its second
anniversary of operations in China. Bally, the world's biggest
operator in fitness clubs, is partnered with China Sports Industry,
or CSI, a state-owned firm, and in just one year, CSI-Bally has
established five chain clubs nation-wide, a growth rate that
compares well with figures for its US operations. It was an offer
from CSI and some subsequent market research that brought Bally
into China, says Howard. T. Quach, sales director at CSI-Bally.
According to company research locals are likely to spend one to two
months' salary per year on fitness. Chinese middle-income earners,
marketing researchers found, are also increasingly
health-conscious, but don't patronize sophisticated or up-scale
fitness clubs.
"There is obviously large consumer demand for exercise fitness,"
says Tomer, S. Rothschild, chief representative of CSI-Bally. "And
a very small number of accredited, professional fitness sector
operators. We see that as low competition." CSI-Bally has opened
five clubs in three provinces in China. More than 6,000 members
work out in Bally gyms across the country, served by 200
employees.
Most fitness clubs competing in China are going for the same
demographic grouping: young professionals, particularly women. "We
regard those with a good education as our main customers," says
Kang Tiancheng of the Chain of International Shaping Association
Clubs, a fitness chain that runs shaping classes but also offers
body evaluation, nutrition consultation, beauty salon, and image
building. "They are aware of the importance of health and fitness,
and also earn good salaries. A large portion of our customers are
white collar workers." Kang Tiancheng has opened 150 shaping salons
in China since entering the market here in 1994.
CSI-Bally has calculated that Beijingers on average spend more
than US$100 a year on fitness. If 10 million capital residents were
to spend that figure the annual revenue of Beijing's fitness market
would exceed US$10 billion. The company concedes, however, that
reality is probably slightly different. "There are Chinese people
who really want to get fit, because they have more consumer
spending power, more time, more leisure. Fitness is becoming more
important to Chinese people. At the same time we have the big 2008
Olympic wave. For all those reasons, China is really a market for
Bally," says Bally's Tomer S Rothschild.
One of the most successful Chinese fitness operations, Nirvana
has recruited 8,000 members in the space of less than two years in
Beijing alone. Borrowing heavily from Western club concepts and
management systems, on its company website Nirvana argues it has
the edge because of its understanding of local cultural norms. Yet
Nirvana also emphasizes that Western management know-how is its way
forward. In addition to gym machines and a special program for
women members, Nirvana also sells a range of "sports foods" and
fitness products. An hour with one of its personal trainers costs
200 yuan.
Nirvana's competitor, Singaporean group New Life Resources,
targets Chinese customers in the 25-40 year age bracket. According
to CEO Loni Wang ideal customers are white-collar workers in
foreign companies living in the richer cities such as Shenzhen,
Shanghai, Beijing or Guangzhou. "There is an overall trend towards
what you would call a healthy lifestyle," says a company spokesman.
"China hungers for international sporting success and the celebrity
status that goes with it." New Life plans to operate 100 health and
fitness centers nationwide by 2006. The company predicts the annual
value of China's health and fitness industry could by that time top
US$1 billion. It's banking on the spending power of modern Chinese
women. Women make up almost 60 percent of New Life Resources'
customers, says CEO Loni Wang.
Not all are so optimistic about China's fitness fanaticism. Pure
Tsai, president of Taiwan's Youth Camp Health Group, urges caution.
"I don't think the Chinese market is ready for the fitness
industry. China is a developing country so people here are
concentrating more on making money. They generally put finance
ahead of health fitness issues," says Tsai, whose chain, founded in
1977, was the first of its kind in Taiwan. "I figured out that
although there are a large number of people joining fitness clubs,
they only use their memberships to show off... I think it will take
a lot longer for China to turn into a mature consumer market."
Certainly most mainland Chinese have never been to a health
club. Bally was excited about the immense potential of China but
their profits have had to be earned. Training employees has been a
major expense, so too recruiting and training club members in a
nation new to fitness clubs. "We need to educate a lot of people,"
says Shan Jin, general manager of CSI-Bally. "That includes our
staff, in terms of recruiting, and our members in terms of
membership sales - we want people to know that fitness is a
lifelong habit." Still, the company's first two clubs have so far
turned a profit. CSI-Bally wants to open over a hundred clubs
around the country in five years.
Evolution Fitness is optimistic about China, but is
concentrating on building a quality brand before opening more gyms,
says the firm's general manager in Beijing, Matt Lewis. "While
other companies are expanding at a very fast pace we are making
sure each step is secure for the company, the team, the investors,
our members and the partners we work with. We are not focused on
opening more clubs than anyone else, but on the most high quality
world-class fitness centers. We intend to keep opening new centers,
providing in each the world-class services and facilities at
reasonable prices that Evolution Fitness has become famous
for."
(China
Today June 22, 2004)