2019-2020 China Health and Fitness Market White Paper Public version Technology, Media & Telecommunications Industry Foreword From Deloitte Partner 5 Foreword From Founder of CHINAFIT 9 Overview of the report 11 Methodology and implications of this report 12 Disclaimer 12 Chapter 1: Overview of China Health and Fitness Industry 13 Chapter 2: Trend of China Health and Fitness Industry 17 Chapter 3: The Impact of COVID-19 Pandemic 28 Chapter 4: Overview of Health and Fitness Market in Cities 41 Chapter 5: Operation of Leading Gyms 43 LeFit 45 LuckyBird 48 Will's 51 简介 Tera Wellness 54 Kuaikuai 57 Physical 59 Sinofit 61 Ingym 63 Good Feeling 65 Liking Fit 68 Mirako Fitness 70 SunPig 72 Powerhouse 74 The One Fitness 76 Super Monkey 78 Golden Times Fitness 81 Total Fitness 83 Pure 85 Renma Fitness 88 WHYTEWOOLF 90 Oxygym 92 SpaceCycle 94 Zhongtian Fitness 97 Chapter 6: Interview with Leading Industry Experts 99 (No Particular Order) Mr. Han Ke (MFT) 100 Mr. Xu Chaoqin (MATRIX) 102 Mr. Yao Ning (3HFIT) 103 Mr. Wu Chenghan, Ms. Sun Tongtong (GYMLUXE) 105 Mr. Jin Yuqing (Tera Wellness) 109 Mr. Li Liang (Oxygym) 111 Mr. Huo Ming (Good Feeling) 113 Mr. Zhou Rong (LuckyBird) 118 Ms. Cao Yan (Powerhouse) 120 Mr. Han Wei, Mr. Xia Dong (LeFit) 122 Foreword From Deloitte Partner 2019-2020 China Health and Fitness Market White Paper Foreword From Deloitte Partner As China's economy and disposable penetration rates of 10- 20% in income continues to grow, its Europe and North America. people are increasingly interested – The industry is transitioning in improving their quality of life, to customer-centric service. personal health, physique and Previous business models balance. Over the past 20 years, emphasized customer acquisition Deloitte China has continually rather than customer retention. focused on – and served – a variety of Refining sustainable and customer- clients in the fitness industry. In our centric operations is now becoming view, the health and fitness market in the key to success via rich content, China has gone through three stages attentive service and diversified of development. revenue streams. • The fitness industry in China entered – The fitness industry is exploring its infancy around 2000, with the a diversified range of business Alan MacCharles industry undergoing explosive models. In addition to traditional Deloitte China, Commercial growth especially after 2004. With gyms, other models such as Strategy and Research, the arrival of the global financial boutique studios, 24-hour gyms, Partner crisis in 2008, the growth rate of the and personal training studios Email: amaccharlesdeloitte. industry began to slow down. have also grown rapidly to cater to com.cn different types of consumers. • After 2010, the industry entered – Unique to China's hyper- a period of consolidation. connected economy, internet- Unprofitable gyms began to exit driven offerings are being rapidly the market. The industry began to developed. Benefiting from the explore more sustainable business enormous number of internet models. users in China, as well as the • After 2015, with the recovery of popularity and maturity of online the market economy and the payment and self-media platforms, dramatic increase in national the concept of "Internet+" is widely health awareness, the fitness accepted in the industry. Online industry picked up again, and the fitness and live fitness concepts entire market started to diversify. have been rapidly developed and According to Deloitte research, the implemented, with the market market size of China's top 18 cities focusing now on commercialization reached nearly RMB 34 billion in models. Adrian Xu 2019. The 2020 COVID-19 outbreak has Deloitte China, Commercial – The penetration rate of gym had a huge impact on the gym Strategy and Research, memberships continues to industry. With increased pressure Director increase. The penetration rate on cash flow, many gyms are facing Email: adxudeloitte.com.cn of gym memberships in 18 cities severe difficulties. At the same time, reached between 3-6% in 2019. The many proactive and innovative gap with developed Asian markets gyms are exploring online training (~10% penetration rate in Japan classes and live broadcasting to and Korea) is gradually narrowing, activate and retain customers amid and there is still considerable room the pandemic. In the long run, we for improvement compared with have full confidence in the fitness 6 2019-2020 China Health and Fitness Market White Paper Foreword From Deloitte Partner industry, as well as the Greater Center to develop a market landscape Zhengzhou and Kunming, covering Health industry. On the one hand, for China top cities. We believe this each city's overview, overall fitness public health awareness continues report is unique and innovative, and penetration, personal training to increasing significantly, creating we hope to share our thoughts with penetration, competitive landscape, large demand for fitness service. In both local and international industry fees and membership distribution, addition, surviving gym operators insiders and investors. etc.; have become more resilient, and • Local industry insights from have accelerated transitions to more It is important to note that data customers, personal trainers, sales robust and sustainable business presented in this report is for the and management; models. The pandemic has also full year of 2019 (i.e. a full year of accelerated the transformation data not affected by the COVID-19 • An introduction of leading brands from offline-only to online-offline outbreak), which we hope will better in different market segments, integration in leading operators. reflect the normal development including brand history, store status of China's fitness market. We network, business model and future Although China's fitness market is will continue to publish industry development strategies; becoming more and more attractive annual reports post the COVID-19 to investors both home and abroad, pandemic. We believe the 2019 • Interviews with management or it remains shrouded in a layer of data can therefore be used as a founders of leading fitness brands, mysteriousness. Few professional benchmark for future comparisons. covering brand positioning and market research organizations have In the meantime, we have also development, insights on the conducted meticulous research and dedicated a section in this paper to industry as a whole and every analysis of China's fitness industry discuss the impacts of COVID-19 on segment market. through a wide range of data China's fitness market in 2020. Presently, the four segments are collection and site visits. In order to developing in parallel, with the deep dive into the Chinese fitness To help readers better understand market continuing to innovatively industry and understand the market the market, we have divided the develop new fitness brands and dynamics and future trends, we industry into four segments (six sub- concepts. In addition, due to the size are honored to be commissioned segments): traditional gyms (divided and diversity of different cities in by CHINAFIT and the International into national chains, regional chains, China, there are both commonalities Health, Racquet and Sports Club and individual stores), represented by and differences between different Association (IHRSA) to conduct brands such as Will's, Tera Wellness, cities and brands. research and analysis on the Chinese etc.; personal training studios, • At present, China's overall fitness fitness industry and to author the represented by brands such as penetration rate is less than "2019-2020 China Health and Fitness Zhongtian Fitness; new-model gyms, 5%. Benchmarked against the Market White Paper". In this report, represented by Super Monkey, LeFit, international market, this provides our team conducted site visits and SunPig, etc., and boutique studios more than enough room for research in 18 cities across China, that specialize in certain type of offline stores to expand. Driven by interviewing sales staff, personal fitness training, represented by Pure "Internet+", as well as fitness-related trainers and management teams Yoga and SpaceCycle. This report policies, in the future the industry working in the industry to better includes: will continue to undertake out understand the development trends • Local fitness market studies for 18 internal transformations, further and characteristics of the local fitness cities, including Shanghai, Beijing, stimulating growth. industry. We then combined this Shenzhen, Guangzhou, Shenyang, insight with consumer data captured Tianjin, Jinan, Qingdao, Hangzhou, • In the current market, due to and analyzed by the Deloitte Suzhou, Nanjing, Chongqing, the large number of gyms, many Innovation & Digital Development Chengdu, Wuhan, Changsha, Xi'an, individual stores may struggle due 7 2019-2020 China Health and Fitness Market White Paper Foreword From Deloitte Partner to fierce local competition and cash • Currently, most fitness brands in Without the support from interviews flow issues. However, most of the the market are positioned towards and the analysis conducted with national or regional chains benefit the mid-to-low end of the market, senior industry experts, we not have from economies of scale and capital- targeting the mass public. With the been able to successfully complete prowess. Having survived several expansion of the fitness population this report. We would like to express round of industry reshuffling, these base and increasing consumer