• The fitness market club in the top 10 Chinese cities has grown rapidly in the past five years, with a CAGR over 33 per cent, reaching an estimated size of US$3.9bn in 2017, driven by rising fitness culture and increases in purchasing power. Penetration has reached 2.98 per cent and is expected to increase.
• The market in China is still in the early stages of development and is highly fragmented. However, within the chain branded sector, the top five players are taking up 45 per cent of the market in terms of the number of clubs. Consolidation is expected, with regional players expanding nationally.
• Most mid-market clubs face intense competition due to the homogeneity of product offerings, and industry experts believe that only 20 per cent of the health clubs are able to generate profits.
• In response to the rising operation costs and consumer demand for more flexible hours, asset-light businesses focused on Online-to-Offline fitness platforms – mostly start-ups with private equity funding – have appeared in the marketplace since 2014 and are aggressively expanding via franchises.
• Mobile tech penetration is high in China; as a result, mobile apps such as “Keep” and “Feel” have attracted a large number of users, as they provide professional guidance for consumers who cannot afford memberships and PTs.
• Increasing awareness of commercial health club offerings will be critical to increasing member penetration rates in China. The population is used to activities such as group exercise in public parks for the elderly, as well as using public school facilities for sports such as badminton and table tennis.
• China’s central government has clearly stated its plans to promote and support the popularisation of fitness awareness in China and encourage the sustainable development of fitness clubs.