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China's fitness industry

Market Tidbits transcript #7: How and why China’s fitness industry is transforming

Allison Malmsten: Hello and welcome to this week’s episode of Market Tidbits. This week we focus on China’s fitness industry and how it has changed over the last few years.

This week, I’m super excited to talk about the topic of China’s fitness industry. I’m joined by Steffi Noel, a project manager at daxue consulting and we are going to talk about the changes in China’s fitness industry.

In 2019 daxue consulting published an article about how Hosa Fitness closed down for good. Hosa Fitness was the first gym to suffer the changes that were happening in China’s fitness industry landscape. The change was from traditional gyms to more flexible, more digital, and more social gyms. We found that 80 – 90% of fitness clubs lasted less than 12 months. One phenomenon that would happen is that fitness clubs would collect one year’s worth or even a few years’ worths of membership fees before shutting down and leaving their clients high and dry.

Why did traditional gyms in China fail?

  1. Many of the people working in the gyms were salespeople. They were paid by commission and were therefore short-term oriented and aggressive in their sales tactics.
  2. As a result of these short-term oriented goals, investment in quality gym equipment was not made and the overall gym quality was low.
  3. Spending at these gyms was poorly managed. Their poor choice of the business model meant cash-flow dried up quickly at these pre-paid model gyms.

What are the changes in China’s fitness industry?

  1. New retail
  2. Digitalization
  3. More social work-outs

Covid-19 accelerated these trends. During the pandemic, fitness exercise videos were watched 660 million times, an increase of 200% on 2019’s views. Steffi, have you watched any fitness videos in China?

Steffi Noël: Yes, actually I have never experienced a traditional gym in China. I went straight to video platforms for fitness content or I downloaded Chinese fitness apps. In my opinion, this approach is simpler. On an app like Keep, most of the video workouts can be 20 minutes to one hour. But on bilibili, a lot of the fitness videos are much shorter, generally up 8 – 12 minutes. The idea is to push more Chinese people into working out on a daily basis. One fitness KOL that I follow is 欧阳春晓, she has about 1 million followers which is not a lot in China. I like her because she does workouts on the bed or on the couch but also, she doesn’t work out for the purpose of garnering compliments on her body. She focuses on working out to feel well, keep healthy, and feel good about one’s body. Sometimes when I look at Keep or Super Monkey, I feel it’s more about showing off your body rather than feeling healthy.

Allison Malmsten: Yes, I agree, there is a shift away from just looking good to overall feeling good. Usually, when you purchase a gym membership in China you might buy 2 years; so when I first came, I visited a lot of gyms and now I still have a lot of these salespeople in my WeChat. Some of the stuff they used to post would be considered unethical in the West, they would post copyrighted images of plus-sized women with the caption of “you don’t want to look like this”. I haven’t seen this type of marketing with any of the new players like trendy gyms, fitness apps, or fitness influencers in China.

Steffi Noël: There is this whole social aspect to apps like Keep where users share photos of their results and details workouts. I know Super Monkey is also supposed to be quite social, have you been there, Allison? Did you know?

Keep recorded a 205% increase in users between January 2019 and January 2020.

Allison Malmsten: Yes, actually I first went because a friend shared one of their workouts with me on WeChat. They have no changing rooms, just a small cubby so they save money on retail space. Also, each class is 80 – 100 rmb and there is no membership so you don’t have to commit and they wont pressure you into buying anything. One of the social aspects of Super Monkey is that after the class the teacher will take a photo of the group and share it with each of the participants who can then share it on their WeChat. Also, signing up for the class has been digitalized so you sign up through their WeChat mini-program and you use the same mini-app to sign into the class when you arrive. So, it is embracing New Retail model and also is being more Social.

Steffi Noël: Yes, I’m more familiar with Keep, but they are also embracing online, eCommerce in products that are not directly related to the workouts but are related to fitness on a holistic level, so they might sell supplements but also healthy food.

Market stats from China’s fitness industry:

  • Only 4.9% of Chinese people are members of gyms. Compared to 20% in the US
  • However, 30% of Chinese citizens are regular exercisers
  • 80% of the paid fitness users in Shanghai are not habitual engagers