It's early December in Shanghai, but with the winter sun still radiating warmth, there's not even a suggestion of frigidness in the air. But apart from the temperate weather induced by the El Nino meteorological phenomenon, Shanghai's successful bid to host the World Fair has further raised Shanghainese spirits and given them cause for exultation.
The 2010 World Fair in Shanghai will follow close on the heels of the 2008 Olympics in Beijing. Aside from making the locals ecstatic, the two events are also expected to be tremendous boons to foreign investors, as they will generate myriad business opportunities in the future. With their emphasis on appearances, the cosmetics and fitness industries are rife with potential.
Natural is beautiful
On Changping Street in Shanghai's Jingan District, the lofty Natural Beauty Building, built to the tune of some RMB200 million, stretches 20 floors skyward and covers an area of over 10,000 square meters. With its blend of Eastern and Western traits, the building appears day and night as splendid and magnificent as a castle, and has become a new local landmark.
However, the recently completed and operational Natural Beauty Company Headquarters in Beijing's Fengtai District is even more grandiose, reaching a height of 25 stories and total area of over 20,000 square meters. Early in 2002, the company officially began retailing in Hong Kong. In the same year, Asia Weekly ranked Natural Beauty as number 314 on their list of the top 500 Asian companies. On top of that, two years ago company founder Tsai Yen-ping was selected as one of the top 100 Chinese entrepreneurs.
At present, Natural Beauty has over 30 business offices and subsidiaries sprinkled throughout the various mainland provinces, 30-some-odd spas, some 120 salons, more than 800 makeover centers, over 1300 department store booths, and 1000-plus franchises. Major metropolises such as Shanghai, Beijing, Hangzhou, and Kunming notwithstanding, even the likes of Urumqi in Xinjiang and Lhasa in Tibet boast franchise outlets.
According to statistics, Natural Beauty's mainland revenues would suffice to cover the living expenses of two million people.
One step at a time
"For an enterprise to succeed isn't a mere matter of chance or timing," declares Tsai Yen-ping, whose hallmark catchphrase "Natural is beautiful" is familiar to everyone. Things happen for a reason; Natural Beauty didn't just materialize overnight, but rather developed one step at a time through hard work and determination.
However, the company's present situation in the mainland is not something that Tsai had anticipated from the onset.
Back in 1992, at the urging of a bosom buddy, Chen Hsiang-mei, Tsai installed a cosmetics factory in Shanghai's Chongming County.
"At the time, mainland officials told me that Chongming's infrastructure was underdeveloped and its unemployment rate high. They hoped that by installing a factory there I could help create employment opportunities for the locals," recalls Tsai. Eager to succor her fellow Chinese, she channeled money she had earned in real estate investments in Australia into establishing a factory on the mainland. She also relocated her OEM operations to the mainland. In this way she was thus able both to provide employment for locals and survey mainland market conditions.
Much of why the Natural Beauty "empire" of today comprises an impressive 1000-plus retailers stems from Tsai's readiness keep the public informed, regardless of cost.
Prior to taking the plunge into the mainland market, Tsai had had a three-year stint as a featured speaker on a beauty program produced by Hong Kong's Phoenix TV. Afterwards, she successively made health-and-beauty TV specials for China Central Television and a host of other stations, which made Tsai a familiar quantity, thereby bolstering her image as a professional.
When the mainland authorities were promoting the xiagang policy in 1997, Natural Beauty, who at the time had already been active in the mainland scene for five years, every year was able to provide training gratis for thousands of laid-off xiagang workers interested in skin maintenance, as well as capitalizing on the opportunity to attract highly-trained personnel, especially medical specialists and teachers.
Tsai Yen-ping brought to the mainland the same spirit that she had displayed in assisting women to start their businesses in Taiwan, once again helping others realize their dreams. After receiving training, staff members aspiring to run a business were then granted the opportunity to manage their own store. Unlike Taiwan, in the mainland, an investor must first pay a ballpark figure of RMB300,000 to 500,000 that covers rent and decorating fees prior to opening a store. Tsai notes that this disparity reflects the different approaches of the two places; whereas business in Taiwan lays heavy emphasis on interpersonal relations, in mainland society, where doing business is still a novelty and therefore filled with uncertainties, would-be entrepreneurs are required to pay first to demonstrate their earnestness.
And just like that Natural Beauty branches multiplied, and the company grew and grew.
Xintiandi or bust!
With ten years of experience, Natural Beauty already has gained a firm footing on the mainland market and has become a well-known quantity; Alexander Fitness, on the other hand, relying on its solid experience in Taiwan along with fervent ambition, made its move on Shanghai just a year ago.
With all its various manifestations over the years-Arts Aerobic World, Arts Fitness & Spa, Alexander Health Club, Alexander Spa, and Aegius Club-Alexander Fitness has been in the business for 21 years. Alexander Fitness Group now comprises more than 20 branches and lays claim to 200,000 members, making it the largest health-club chain in Southeast Asia and the standout within the industry.
Tsai Yen-ping, chairwoman of Natural Beauty International Group observes: "In the mainland, everything related to beauty must make its name first in Shanghai before branching out to other regions." Alexander likewise chose Shanghai as its point of departure.
"Everyone trying to make it in the mainland must go to Shanghai, since it symbolizes progress; similarly, everyone going to Shanghai must strike out for the Xintiandi district, because it embodies Shanghai's own progress. How could Alexander miss out on such a scene?" says Tang Ya-chun, Alexander's founder. On December 21, Alexander Health and Leisure Club formally opened its doors in Shanghai's Xintiandi district.
As a result of Hong Kong's return to the PRC, Shanghai is no longer a stranger to the notion of health and fitness. To top that off, China's recent successful bid to host the Olympic games has generated an upsurge in sports enthusiasm. And in Shanghai, one of the pacesetters of the times, a lifestyle integrating fashion trends, health, and recreation is regarded as being emblematic of status.
Alexander began selling advance memberships in July of 2002. Over the course of a mere half-year, it has attracted nearly 1000 members, illustrating the market's tremendous promise.
Urban paradise
Alexander Fitness pulled out all the stops when making its mainland debut, putting down RMB40 million in one fell swoop in order to set up shop in the sky-high rent district of Xintiandi. The company managed to secure a 10,000-square-meter space with which to initiate the reign of "Alexander the Great" in the mainland.
In order to cater to the needs of Xintiandi residents, Tang Ya-chun combined Alexander Health Club exercise facilities with the Aegius Club's spa and restaurant to create Alexander Health and Leisure Club, a diversified urban health club and fitness center.
The Health and Leisure Club in Shanghai is a study in comprehensiveness. It offers the latest exercise equipment and hires professional trainers; there is a leisure area that includes a relaxation area, an herbal-tea area, a Kurhaus water treatment area, saunas, and Jacuzzis. Apart from that, there's also a lighted, heated indoor swimming pool and a health spa. A unique feature of the Health and Leisure Club is that it doubles as a gathering space suitable for all sorts of social functions. The A-Thai Restaurant serves up authentic Thai cuisine, and the coffee shop boasts an extensive selection of beverages; add to that the multifunctional banquet hall and VIP lounge, and there's something to satisfy every customer.
The head manager of the Health and Leisure Club in Shanghai, Liao Yen-lin, remarks that, at Alexander Health Club in Taiwan, one pays the equivalent of economy fare in exchange for business-class service. At the Aegius Club, business-class fare brings first-class service. However, at the Health and Leisure Club in Shanghai one only need pay economy to enjoy first-rate service.
Making dreams come true
Though the orientation of their companies is dissimilar, the business philosophies of Tsai Yen-ping and Tang Ya-chun share much common ground, amongst which the notion of daring to pursue one's dreams is foremost.
As a tenderfoot entrepreneur, Tsai Yen-ping borrowed NT$3000 from friends and relatives to set up her first tiny salon, which could only accommodate one customer at a time. On several occasions she incurred debt by overextending herself through investments, but was always able to pick herself up and keep going. In her many years in the business, she has never faltered or lost heart-even the success that Natural Beauty has achieved has not kept her from weaving new dreams and then attaining them.
Running a beauty school is a dream that Tsai has yet to accomplish in this lifetime. In the past, she has twice begun active planning, but each time was plagued by real estate problems. She says that she'll postpone the project until after her daughter has earned her PhD, at which time they'll strive together to achieve this goal.
Tang Ya-chun is also an individual who dreams prodigiously and dares to achieve. Her parents' friends sold a house to provide her with the capital to launch Arts Aerobic World, and Alexander Health Club, Aegius Club, et al are her dreams made incarnate.
"I discovered that a lot of business folk were really quite stressed out by all the meetings and hobnobbing," Tang says. "They often needed a hot sauna or good massage to help relax and to recharge their batteries. But back in those days there weren't any intimate, professional health clubs or spas, so that's what gave rise to my dream." Making things convenient for the inconvenienced contains great potential, and so she put her ideas into action, opening in Taipei's Hsinyi district her Aegius Club. Tailored specifically for upper-level business people, the club functions in such disparate roles as athletic facility, spa, business and social center, and health club.
Firmly planted in Shanghai, Tang Ya-chun now has her sights fixed on the rest of the mainland market and the path to internationalization.
Blazing new trails
The belief in independence and the unwillingness to follow in the footsteps of others are common to both Tsai Yen-ping and Tang Ya-chun.
When Tsai opened her factory in the mainland ten years ago, she noticed that skin-care services could only be found at beauty treatment centers and hospitals-there was no established skin-care industry, and most people's understanding of skin care was misconceived. The following year, Natural Beauty began operating kiosks in department stores that provided customers with a free skin analysis using a machine of Tsai's own devising. It was an instant success that attracted people in droves, the offshoot of which was Natural Beauty topping the sales charts in large department scores.
Now ten years on, Alexander has entered the fray. How is it to carve out a space for itself in Shanghai, where fitness centers are now a dime a dozen? "I've never been one to go toe to toe with others, nor am I willing to fight for a piece of the same pie-I'd just as soon make my own," Tang declares.
Building a superlative fitness club smack in the middle of Shanghai's plushest area was a declaration of Tang's originality. Compared to the RMB3000 one-year membership fee at Hong Kong's Megafit Fitness Center, an organization with a three-year history in the mainland, Alexander charges twice that amount, RMB18,000 for a three-year membership, which approaches the cost of membership in Taiwan. This manifests Tang's ambition to lure customers on the upper end.
"Every time I go back to the mainland, I can feel how the place has changed-there are always signs of burgeoning new industry," Tang comments. "If I were to advance too cautiously, I would only be scouting out the scene for others, who would then seize the opportunity to follow suit and then take things one step further. So, I'm not holding anything back. I want to pick the best location and do everything on a scale so grand that it will take the competition three to four years just to catch up. Not only do you want to avoid the obstacles directly in front of you, you also have to worry about potential future competitors."
Besides doing things big, using a blitzkrieg-like assault on the market is another one of Alexander's strategies. Head manager Liao Yen-lin announced that within the next two years, Alexander will have expanded into four locations in the Shanghai area: Gubei, Xujiahui, and Pudong, in addition to the present branch in Xintiandi. Moreover, an even classier Alexander Health and Leisure Club is scheduled to open up in Beijing at the close of 2003.
Chinese name brands
These two trailblazers of the beauty and fitness industries both strengthened the presence of ethnic Chinese-run enterprises in the mainland.
A 1995 survey aimed at Shanghai shopping centers with a business volume of RMB100 million or more showed that Natural Beauty was the top seller out of 107 skin care brands from around the world, accounting for 11.5% of the market.
In 2001, Natural Beauty commissioned a communications company to conduct a survey in which they discovered that 87% of those polled in Shanghai reported having heard of Natural Beauty. An additional 81% identified Natural Beauty as a Chinese brand of cosmetics, and 92% agreed that Natural Beauty products suited Asian women.
Clearly, Natural Beauty has resonated as deeply with Shanghai women as it has with the women of Taiwan. Likewise, "Natural is beautiful" has become a familiar slogan for mainlanders.
Tsai Yen-ping indicates that early on Natural Beauty spent close to RMB100 million in advertising so as to present a company image. "Mainlanders are extremely ethnically conscious as well as being patriots in the first degree. Natural Beauty products are the only products created by Chinese people available in the mainland; accordingly, consumers have been very supportive," says Tsai.
Noting the mounting global enthusiasm for all things Eastern, Tang Ya-chun made certain to suffuse her Xintiandi Health and Leisure Club with a pronounced Oriental sensibility, incorporating Chinese calligraphy, lanterns, wooden sculptures, and colored glaze into the interior decoration, as well as throwing in Balinese stone carvings and Buddhist sculptures for additional richness of atmosphere.
Apart from the Eastern flavor, the club's character further highlights its distinction from Western-styled recreational facilities by stressing the fact that with its Taiwanese origins, it caters primarily to Eastern tastes. For instance, Alexander's patented "30 fragrance" spa utilizes herbal essential oils as prescribed by the Chinese classic Compendium of Materia Medica in conjunction with traditional tuina massage and acupuncture to transport the customer's body and soul to a restive state.
Mindful of their roots
Tsai Yen-ping's response to stinging comments like "Natural Beauty went over to the mainland because it wasn't selling so well in Taiwan" is that, despite entering the mainland market, Natural Beauty's foundation is nevertheless in Taiwan. Even with an ailing economy and a market that has little room for further growth, Taiwan is home, and the obligation owed towards one's home and society is not something to be spurned. "By closing factories in Taiwan, Natural Beauty could save tens of millions in overhead, but I've never decided to do so. I've never even fired anyone before," professes Tsai. Importing her own products from the mainland would be cheaper than producing in Taiwan, thus it follows that Tsai's decision not to pack up, lock, stock, and barrel, and head west derives from her senses of loyalty and obligation.
Besides, adequately serving customers in all the various regions of the mainland necessitates constant revamping of sales tactics. Tsai notes that if the necessary research and development could be conducted in Taiwan, then the development of her enterprise in Taiwan would stand to benefit from Natural Beauty's participation in the mainland market.
In a similar vein, Alexander's deployment of a "one card equals global access" strategy ingeniously links the Taiwanese and mainland markets.
Alexander has been raking in profits domestically, and even the recent incursions into Shanghai haven't interfered with plans for development within Taiwan. In the next year, Alexander intends to gradually upgrade existing smaller branches as well as open clubs in Taoyuan, Hsinchu, Miaoli, and Tainan.
Sharing experience
Although she has endured cheap shots and backstabbing while competing in the mainland market, Tsai Yen-ping is always eager to share her successful experiences with others. Seeking to encourage up-and-comers in business, in 2001 she published My Experience in Shanghai, which provides insight for Taiwan business people who have their sights set on the mainland.
Incidentally, prior to unveiling her Alexander Health and Leisure Club in Xintiandi, Tang Ya-chun similarly published a memoir entitled The Road to Xintiandi, in which she retraces the stages of her journey as an entrepreneur. Advertiser Fan Ke-chin bestowed the following laudation: Tang has struck a balance between commercialism and creativity.
Creativity is imperative for growth and transition in an enterprise-but exactly how does one establish a working, cooperative relationship in a cross-strait business framework? Besides creativity, what else is required? The business modus operandi of Natural Beauty and Alexander Fitness provide us with new possibilities to explore.
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The towering Natural Beauty building has become a new landmark in Shanghai's Jingan district
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Natural Beauty International Group chairwoman Tsai Yen-ping (top) and Alexander Fitness Group general manager Tang Ya-chun (bottom) are the two women most skilled at selling health and beauty. They are well known on both sides of the Taiwan Strait.
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A 2001 survey revealed that 80% of Shanghai women felt that Natural Beauty was ideally suited for Asian women. Here we have a look at one of the Natural Beauty centers in Shanghai.
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Distinct from its Western counterparts, the Alexander Health and Leisure Club in Shanghai's Xintiandi district deliberately conveys an Oriental flavor.
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Health and leisure are the latest expressions of Shanghai life and are emblematic of status.
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All women yearn to be beautiful. In the mainland Natural Beauty has created a space for those yearnings.
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