The aesthetics medicine industry is at a crossroads.
Zebra Consumer Chen Biting
After decades of industrial exploration, China's medical aesthetics industry has experienced a series of technological explosions and industrial leaps, finally moving beyond its initial phase. However, the burgeoning medical aesthetics market has also reached a crossroads.
Behind the difficult choices lies the uneven distribution caused by industrial structure. Upstream pharmaceutical and medical device companies have become the core driving force of the industry, while traffic portals determine the customer base for medical aesthetics. Caught in the middle, medical aesthetics brands are squeezed, making it hard to turn a profit.
Amid the challenges, at least three directions are being explored: Langzi Holding (002612.SZ) is leveraging capital to initiate large-scale industry consolidation, hoping to improve profitability after achieving scale accumulation; Raily Aesthetic (02135.HK), despite its smaller size, has adopted a full-industry-chain approach by expanding into upstream medical devices, promoting the transition to non-surgical aesthetics, and establishing aesthetic training programs; Beauty Farm, which specializes in "dual beauty" (aesthetic and medical aesthetics) operations, is reinforcing its core strength in aesthetic services and advancing medical aesthetics through "dual beauty + dual wellness."
Each player is showcasing its unique strengths. Fortunately, the medical aesthetics industry shares a common direction: avoid internal competition and expand outward.
Deepening
Raily Aesthetic can be considered the true "first stock" in China's medical aesthetics industry. Founded in 2008 and listed in late 2020, the company established itself through several medical aesthetic centers.
Initially, its business model revolved around surgical aesthetics, with performance growth entirely dependent on expanding locations.
In recent years, post-2020, industry headwinds and intensified competition have constrained the expansion of medical aesthetic centers, increasing growth and performance pressure on Raily Aesthetic (02135.HK).
From 2021 to 2023, the company's revenues were RMB 188 million, RMB 165 million, and RMB 189 million, respectively, with net losses of RMB -18.266 million, RMB -20.247 million, and RMB -37.779 million. In the first half of this year, revenues and net losses were RMB 117 million and RMB -2.997 million, respectively.
In just a few years, its stock price plummeted from nearly HKD 4 per share to HKD 0.14, with a market cap now below HKD 100 million.
To break free from the squeeze by medical device manufacturers and traffic sources, Raily Aesthetic has devised a business model centered on medical aesthetics, spanning the entire industry chain. Its core medical aesthetics business is shifting toward non-surgical procedures to enhance clinic efficiency.
Why do many medical aesthetic institutions prioritize non-surgical procedures despite their lower prices and smaller profit margins? On one hand, non-surgical procedures have broader demand, expanding the potential user base and driving repeat purchases, thereby attracting customers to higher-margin surgical procedures.
Meanwhile, Raily Aesthetic is actively expanding into medical devices to gain upstream influence and profits.
In 2021, Raily Aesthetic acquired Shenzhen Jiumei Xinhe, whose e-PTFE facial implants belong to the surgical implant category. This new business has already begun generating revenue with promising growth.
Raily Aesthetic's subsidiary, Suzhou Yonglan, has completed a factory dedicated to producing skin injection products, covering approximately 4,660 square meters. Prior to this, Suzhou Yonglan collaborated with a university research team to develop skin injection drugs, now in trial production and applying for Class III medical device registration.
Additionally, Raily Aesthetic established a medical aesthetics training center in Boao, Hainan, transitioning from a direct participant to a "shovel seller" in the industry.
Transformation
Compared to Raily Aesthetic's full-industry-chain approach, Beauty Farm's strategy is more relaxed.
Beauty Farm's core business has always been aesthetic services, not medical aesthetics. Its recent medical aesthetics ventures are merely extensions of its traditional aesthetic services.
Currently, medical aesthetics accounts for less than 40% of its total revenue across aesthetic, medical aesthetics, and sub-health management services. The primary revenue and profit drivers remain its extensive franchise-based aesthetic business.
In the industry, Beauty Farm has long championed "dual beauty" operations (aesthetic and medical aesthetics), leveraging synergies between the two to drive medical aesthetics growth. Before the rise of online medical aesthetics platforms, beauty salons were the main referral source for medical aesthetics institutions.
In March 2024, Beauty Farm spent RMB 350 million to acquire a 70% stake in Guangzhou Nareal's core assets. By September, it incorporated Nareal's remaining outlets through franchising, completing the integration of all 150 Nareal stores—a merger of the top two players in the aesthetic market.
In the lower-barrier, higher-potential aesthetic market, expanding its aesthetic services holds significant value. Thus, Beauty Farm upgraded its strategy from "dual beauty" to "dual beauty + dual wellness."
Given the short-term pressures of capital-intensive medical aesthetics, focusing on asset-light, franchise-based aesthetic services while keeping medical aesthetics as a future growth avenue is a pragmatic compromise.
Mergers & Acquisitions
Unlike Raily Aesthetic's full-chain model or Beauty Farm's focus on aesthetics, Langzi Holding (002612.SZ) aims to dominate the medical aesthetics industry through capital-driven consolidation.
The company has a strong track record in M&A. Initially focused on apparel, it acquired South Korea's children's wear giant Agabang and Japan's mid-to-high-end women's brand m.tsubomi.
After entering medical aesthetics, Langzi accelerated acquisitions. In 2016, it invested in South Korea's Dream Medical Group and Dream Plastic Surgery while securing China's premium medical aesthetics brand "Milanoo" and non-surgical chain "Jingfu Aesthetic."
From 2018 to 2019, it expanded in Xi'an by acquiring "Gaoyisheng" and Xi'an Meilifang Aesthetic Hospital (later renamed "Xi'an Milanoo Aesthetic Hospital").
From 2022 to 2024, M&A pace quickened with purchases of Kunming Hanchen, Wuhan Wuzhou, Wuhan Hanchen, and Zhengzhou Jimei, achieving nationwide coverage.
As of June 2024, Langzi operates 38 medical aesthetics institutions—9 hospitals and 29 clinics—becoming a leading domestic medical aesthetics brand with H1 revenue of RMB 1.194 billion.
As an A-listed company, Langzi boasts ample capital reserves and financing channels, enabling further M&A through industry funds.
Recently, Langzi established seven medical aesthetics M&A funds totaling RMB 2.837 billion.
If Langzi succeeds in consolidating the industry via an Aier Eye Hospital-style incubation model, how can smaller players compete?
The question remains: Can scale truly translate to profitability?
Scale advantages enable operational optimization, stronger upstream/downstream negotiation, and higher success rates in expansion—benefits Langzi is already experiencing.
China's medical aesthetics industry remains nascent with low concentration. Even as a leader, Langzi's medical aesthetics business is underdeveloped, with greater opportunities ahead.
At this crossroads, no single model is proven best for China, but signals are emerging.
Perhaps Goldlok Holdings (002762.SZ) was inspired by Langzi's grand vision to enter the race despite the burden.
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