Text|Sina Finance Yuan Yiming

Number of issues: No.47

Guest: Zhang Yu, founder of Yonghe Healthcare

Baldness is no longer an exclusive topic for middle-aged people. Currently, there are 250 million people with hair loss in China, and hair loss problems are common among young people in the post-90s and post-00s. Hair transplants have become a topic of concern for more and more young people.

Recently, Sina Finance had a conversation with Zhang Yu, founder of “the first hair transplant stock” Yonghe Medical. Zhang Yu said that hair transplants are not the only solution for people with hair loss. Currently, the entire industry is moving towards the hair care industry. This is a huge market, but it will take time to mature.

Referring to the hair transplant industry itself, Zhang Yu admits that the industry's publicity chaos and fee chaos is still serious. In order to improve itself and lead the upward development of the industry, Yonghe Medical has taken the lead in implementing a “one price” hair transplant and de-marketing policy. In his opinion, it is very difficult to implement reforms, but they must be changed.

“Not fooling around, not relying on deception is the foundation we have come to where we are today.” Zhang Yu said.

Reshaping the industry: moving hair loss treatment to hair loss prevention

Nineteen years after starting the business, Zhang Yu focused Yonghe Medical's future development path on the Maofi industry. “Hair transplants are not a panacea. Currently, less than 1% of people with hair loss choose hair transplants, so not everyone is suitable for hair transplants. If we set our sights on the hair (hair care) industry, the market would be huge. This industry is definitely a good business, but it takes a process.” Zhang Yu told Sina Finance.

From a medical perspective, Zhang Yu explained that in addition to hair transplant treatment, there are also various treatments such as medication, physical lasers, injection treatment, and traditional hair care and hair fixation products.

Judging from the industrial structure, Zhang Yu wrote down his judgment on the hair industry as early as 2021. In his opinion, the game between stock and growth in the hair industry was not obvious at the time. However, in recent years, consumption of preventive treatments has continued to rise. Zhang Yu believes that shifting from treatment to prevention and from hair transplantation to hair will become a future trend.

According to research data, the number one chemical dermatology product in 2023 was a hair growth agent; the revenue of anti-hair loss care products launched by a pharmaceutical company increased by 90%, and the hair care market grew significantly. However, almost all offline hair care stores are beauty salons that sell cosmetics, shampoo, etc., but the effectiveness still requires a question mark.

In addition, consumers' demand for special hair services has increased dramatically, and at the same time, their pursuit of hair aesthetics is getting higher and higher. “Today, I think the hair care industry has reached a stage of reinventing itself. If an agency only focuses on hair transplants and doesn't consider the entire hair industry, the pressure will increase in the later stages.” Zhang Yu said.

As the first listed hair transplant company in China, Yonghe Hair Transplant has always been a pioneer. Zhang Yu said that the transformation of the hair health industry is in the early stages of development, and it is necessary for the industry chain to work together to promote industry transformation in depth.

As a result, Yonghe Medical's current tactic is to lay out the field of hair on the basis of anchoring hair transplants and invest more research energy into doctor system training. In the future, “hair transplant+medical maintenance+products” will be the three main models of Yonghe Medical.

Zhang Yu believes that in the future, the industry will evolve from a single hair transplant to a comprehensive treatment model, and the ultimate competition will involve refined operation capabilities. This means that hair care companies need to work inward, polish their internal skills, continuously improve treatment methods, continuously improve the diagnosis and treatment system, and continuously improve management standards.

“Reforms are difficult, but they must be changed”

Talking about Yonghe Medical's main business, Zhang Yu explained that there are three biggest changes in the hair transplant market in the past two years. First, people with hair loss are getting younger. As mentioned before, people probably only think of genetic hair loss, but now they are considering various aspects such as stress.

Second, treatment begins to be preempted. Previously, patients defined the extent to which they had almost no hair as “hair loss,” but today's young people are already anxious when they first lose their hair and need to be treated and prevented. This is a change in the market.

Furthermore, the core group concerned about scalp health is getting younger. 52% of post-00s are already worried about hair loss, and 49% of consumers are concerned about scalp health before age 25.

Third, the hair transplant industry previously had a certain excessive technical packaging situation. “Everyone knows that now various hair transplant techniques will be promoted on the Internet, and consumers will look at it, but in fact, our industry doesn't use chips; we rely on doctors.”

Zhang Yu said that if the doctor is proficient, the extraction angle and naturalness of planting will be better. When she first started her business, Zhang Yu discovered that the biggest problem in this industry was the problem of doctor training. At the beginning, there was no hair transplant department, so Yonghe Medical trained surgeons and dermatologists and established a doctor training system. Since its establishment 19 years ago, Yonghe has always insisted on putting doctors at the center.

Furthermore, Zhang Yu frankly mentioned the problem of high sales rates in the industry and current improvements. In his opinion, this is because the industry needs market education and market awareness when it is in its early stages.

Beginning in 2022, Yonghe began promoting de-marketing and allowing doctors to treat patients directly. This change in sales model, which has continued for more than ten years, allowed Yonghe Medical to “cut off” nearly 300 sales staff across the country within half a year. Some employees accuse him of “killing donkeys.”

At the same time, Yonghe also carried out a decapsulation reform. It no longer advertised floppy technology, only used internationally recognized FUT and FUE technology, and then graded doctors based on three, five, and ten years of employment, thus shifting the focus of publicity from technology to doctors.

More importantly, in February 2023, in order to optimize around integrity, Yonghe Medical began to fully implement the “one price” service.

Previously, there were different fees for different hair follicle units, but after the implementation of the price of one price, it was only divided into two price ranges, one price for 2,500 hair follicle units or more, and the next price. If the number of hair follicle implants is less than 1,000, then only a doctor's opening fee is required to perform the operation.

Under such circumstances, doctors will feel unfair. After all, the hair transplant industry has long been billed per unit, and the reform will directly affect doctors' income.

“There is a lot of resistance to reform, but it has to be changed. In the past, the industry's charging chaos was too serious.” Zhang Yu said.

According to reports, the conventional routine of many institutions on the market is to first advertise with the customer that the surgery results are better, so that the hair follicle unit number is higher, and then give the customer a lower discount, making the customer feel that it is a big deal, but the scalp's carrying capacity is constant. At the time of actual surgery, it is still only performed according to half the number of units.

However, the “one price” introduced by Yonghe Medical is aimed at reversing the effects and reducing the area of uncertainty.

Looking at the general direction, Zhang Yu revealed that in previous years, hair transplants were more functional. 95% of hair transplants were men, but in the past two years, hair transplants began to evolve from an aesthetic perspective. There are more and more small-area hair transplants, and there are more and more cases of women modifying hairlines, growing eyebrows, and men growing beards.

From an overall perspective, in the 19 years since the company was founded, Yonghe has insisted on two points: change and change. Change is to cater to the market through innovation. “When Yonghe was first founded, it sought professionalism. You can start a business by renting two houses, but now when everyone is starting to specialize, Yonghe is fighting for scale and service system.” Zhang Yu said.

What hasn't changed is reality. “No matter how things change, don't rely on fooling around, rely on deception. This is the foundation we have come to where we are today.” Zhang Yu told Sina Finance.