The Battle for China's Billion-Dollar Aesthetic Medicine Market: From SoYoung and Gengmei to Meituan Medical Aesthetics and Alibaba Health

The summer vacation that just passed was the peak season for medical aesthetics.

During this period, it has become commonplace for advertisements to dominate screens across elevators, buildings, outdoor large-format displays, medical aesthetics clinics, and medical aesthetics apps.

In August, So-Young released the “So-Young 2019 Medical Aesthetics Industry White Paper,” revealing that the “Million Doctors” generated an average wealth of RMB 2.03 million, making medical aesthetics physicians a highly sought-after profession. At the end of August, So-Young announced its financial results for the second quarter of 2019. As of June 30, 2019, So-Young Technology achieved revenues of RMB 285 million, representing an 87.3% year-over-year increase and exceeding the high end of the Q2 revenue guidance previously issued in its Q1 earnings report.

Gengmei, another medical aesthetics platform, also unveiled its “Gengmei AI” suite of features on August 21, announcing that the medical aesthetics industry has officially transitioned from the 2.0 era of “Internet + Medical Aesthetics” into the 3.0 era, ushered in by “5G + AI.”

Just when you thought the August hype had faded, on September 3, Alibaba Health, in collaboration with numerous medical aesthetics brands, medical institutions, and service providers, officially launched the Tmall Medical Aesthetics “Renewal Plan,” designed to help brands and institutions connect with Tmall’s 300 million beauty-seeking consumers. Meanwhile, the “Peace of Mind Beauty” alliance, established by Alibaba Health and its industry partners, leverages coordination across the upstream and downstream value chain to enable consumers to enjoy more professional and transparent medical aesthetic services.

According to VCBeat (WeChat ID: vcbeat), Alibaba Health’s Tmall medical aesthetics business has experienced rapid growth for consecutive years, topping the industry growth rankings during Tmall’s “Double 11” shopping festival in 2018. During Tmall’s “618” mid-year shopping festival in 2019, the medical aesthetics segment saw a year-on-year performance increase of 572%, with a number of institutions achieving swift growth alongside the platform’s expansion.

The “Renewal Plan” announced at this press conference aims to replicate the methodologies from Tmall’s past collaborations with other industries, thereby creating more success stories for the medical aesthetics sector.

Wang Yajun, Senior Director of the Consumer Healthcare Division at Alibaba Health, stated on-site that the core of the “Renewal Initiative” is to help industry players establish their own stores on Tmall, thereby securing a dedicated platform for user operations and growing alongside the future dividends of Tmall’s medical aesthetics sector. “Moving forward, we plan to incubate 100 representative institutions on Tmall Medical Aesthetics that achieve annual revenues exceeding RMB 10 million, encouraging all compliant and professional medical institutions in the industry to set up shop on Tmall.”

Alibaba Health’s aggressive entry into the market can be described as another “wolf” arriving in the medical aesthetics sector, following Meituan’s foray into medical aesthetics.

In recent years, the fierce competition between two leading platforms, So-Young and Gengmei, first drew significant attention to medical aesthetics apps within the industry. Subsequently, giants such as Meituan Medical Aesthetics and Tmall entered the market, leveraging their massive traffic portals and adopting a “community + reviews + e-commerce” model, under which medical aesthetics often became their fastest-growing segment.

“Seize the early opportunity and don’t miss the prime window” has become a common sentiment among many medical aesthetics platforms. However, one should think big but start small. First, we need to examine the nature of medical aesthetics platforms from a macro perspective, exploring how they are formed and derive value.

According to Zhang Chuan, President of Meituan-Dianping’s In-Store Business Group, as shared with Caijing: The foundation of a platform lies in creating dynamic imbalance between its two sides. Only through such dynamic imbalance can a platform sustain its value. Dynamic imbalance refers to a market with sufficiently high activity levels, preventing the same user and service provider from repeatedly completing the same transaction over a given period.

The value of a platform lies in the extreme imbalance between the two sides of its bilateral structure; by leveraging operations and product strategies to sustain this imbalance, the platform ultimately realizes its full value.

To put it more bluntly, the ideal scenario is that both sides of the medical aesthetics market—namely, beauty seekers and doctors/clinics—must rely on medical aesthetics platforms as intermediaries to complete transactions, rather than bypassing the platforms to engage in repeated offline transactions. The platform must create an imbalance that makes both supply and demand sides dependent on it.

If a state of dynamic equilibrium is reached, the platform’s value will diminish significantly. We begin with the conclusion that the medical aesthetics industry is relatively prone to reaching such an equilibrium. This will be elaborated in detail below.

From the perspective of the capital market, two major opportunities in the medical aesthetics sector have attracted the most attention: one is branded physical chain clinics, and the other is content and transaction platforms. The latter represents a structural new opportunity under channel transformation, with players taking turns to compete around customer acquisition—from early utility pole advertisements, outdoor and traditional media, and Baidu, to current medical aesthetics apps and comprehensive giant platforms such as Ali Health, Meituan Medical Aesthetics, and JD Health. This trend reached its peak in May this year with So-Young’s IPO.

More than half of 2019 has passed. From the perspective of the capital market, apart from some physician-IP clinics and hospitals completing mergers, acquisitions, and sales due to strategic contraction, there have been few public reports of brand-name physical healthcare institutions securing financing.

It is an indisputable fact that the supply side remains in a state of high-turnover churn, with a large number of institutions entering the market, while many others incur losses, transfer ownership, or even go bankrupt.

According to the Frost & Sullivan report, the total revenue of China's medical aesthetics services market increased from RMB 86.9 billion in 2013 to RMB 192.5 billion in 2017, representing a compound annual growth rate (CAGR) of 22.0%.

Currently, there are over 12,000 medical aesthetic institutions in China’s market, with more than 3,000 new clinics opening in 2018 alone. Among them, popular cities for medical aesthetics such as Beijing, Shanghai, and Chengdu each have more than 400 institutions. However, overall, the supply of legitimate medical aesthetic institutions still falls short of demand.

Tier-1 cities are characterized by intense competition, concentrated resources, and a high degree of homogenization. Expanding into tier-2 and tier-3 cities and focusing on single-product offerings have become new strategies for some companies; however, popular procedures such as double eyelid surgery, rhinoplasty, breast augmentation, and liposuction have already become mired in price wars.

Large private hospitals are establishing group-based management and standardized operational processes. Meanwhile, lightweight medical aesthetic clinics—whose technologies are relatively easier to specialize in and standardize—are emerging, and their ultimate trajectory may gradually evolve them into a new species of private hospital. At the same time, upstream companies in the industrial chain that manufacture devices and consumables are also continuously increasing their investments in downstream physical entities.

As technology matures and demand from beauty seekers surges, the medical aesthetics industry is booming; opening offline clinics has become a lucrative “hot cake” business.

From the perspectives of replicability and entry barriers, establishing a medical aesthetics institution is not particularly difficult. However, due to the inherent nature of healthcare services, regional characteristics remain exceptionally strong. Consequently, the notion of forming a nationwide chain that achieves monopoly status is, to some extent, a false premise; this is a market characterized by a long-tail structure. Setting aside factors such as hardware costs and regulatory oversight, the primary challenges for medical aesthetics chains include a shortage of physicians, difficulties in customer acquisition, and obstacles to standardization—particularly when expanding across different regions.

In contrast, the medical aesthetics platform business boasts relatively stable cash flow and rapid growth, emerging as a niche segment worthy of sustained strategic investment. Against the backdrop of the broader upgrade in the mobile internet industry, medical aesthetics platforms are ushering in new solutions for their own evolution.

So, what are the characteristics of the supply and demand sides in the medical aesthetics sector?

First, consumption upgrades are underway: an increasing number of young people recognize the importance of physical appearance and seek aesthetic enhancements through medical aesthetic services. Meanwhile, the aging population structure is driving growth in the anti-aging sector, with more individuals seeking solutions for wrinkles and skin laxity. In addition, rising consumer disposable income has boosted purchasing power. As a result, the medical aesthetics industry will continue to maintain robust growth, both in terms of existing and new customer bases. However, compared to other high-frequency lifestyle services, medical aesthetics remains a low-frequency service.

Secondly, the decision-making process for medical aesthetics consumers is lengthy. In the consumer healthcare market, where private hospitals constitute the majority, merchants incur substantial marketing costs to acquire customers. Nevertheless, patients still operate with incomplete information and need to obtain educational content from medical aesthetics platforms to facilitate transactions and service delivery.

Ultimately, medical aesthetics remains fundamentally a medical practice, possessing inherent “medical” attributes. Its therapeutic outcomes rely on expert physicians as well as mature products and technologies. Whether in cosmetic surgery or cosmetic dermatology services, standardizing physicians’ services proves challenging. Consequently, the contradiction between eliminating information asymmetry and genuinely earning consumer trust has persisted throughout the industry’s growth. This situation will likely remain unchanged unless there is a substantial improvement in the efficiency of physician supply and technology matures to a point where standardization becomes readily achievable.

Therefore, for aesthetic seekers, medical aesthetic procedures that are relatively infrequent and difficult to standardize surgically may involve cautious decision-making and a prolonged process. However, once the transaction is completed, a trust-based and emotional connection with the physician and the institution is established throughout the journey from initial consultation to post-treatment recovery. Following a positive experience, patients often no longer need to rely on third-party platforms.

To some extent, the business model of medical aesthetics platforms leans more toward dynamic equilibrium. Whether it is medical aesthetics apps such as SoYoung, Gengmei, and Meibei, or tech platforms like Meituan Medical Aesthetics, Ali Health, and JD Health, all must operate within this overarching characteristic.

In short, the characteristics of being difficult to standardize, low-frequency, reliant on physicians’ expertise and technical skills, and constrained by an insufficient supply of doctors mean that while platforms can emerge in the medical aesthetics sector, their scale is considerably smaller than that of service platforms such as food delivery and ride-hailing, and not comparable in magnitude.

How to Break the Curse of Dynamic Equilibrium in Medical Aesthetics Platforms and Achieve Larger-Scale Growth? The Key Focus Lies in Whether the Content Information and Services (Medical Services) Provided by the Platform Are Standardized.

To expand on this, internet healthcare platforms that serve public hospitals and physicians across the broader healthcare sector must engage in long-term cultivation around both medical services and pharmaceuticals to validate their business models. However, due to the low-frequency nature and high difficulty of standardization inherent in the “medical services” segment, most platforms currently focus their strategic layout and revenue generation on “pharmaceuticals,” “distribution channels,” and other foundational industry services.

Standardization remains a persistent bottleneck for the advancement of medical aesthetics platforms.

How to Classify Medical Aesthetics Platforms in the Market?

In the past, online customer acquisition for medical aesthetic institutions primarily relied on Baidu’s pay-per-click (PPC) search rankings. However, such PPC placements delivered only one-way, purely promotional content, failing to bridge information asymmetry or genuinely earn consumer trust. This was the modus operandi of the PC era.

With the transition into the mobile internet era, various platforms for appointment registration, lightweight medical consultations, and patient acquisition have emerged. These can be broadly categorized into two types: platforms with a “content pool” and those that directly leverage a “service pool.” Of course, content and services always overlap to some extent; the difference lies in their respective emphases.

A typical example of the former is medical aesthetics apps. For instance, So-Young’s business model primarily relies on the platform’s reliable and comprehensive content along with diverse social features to help users interested in trying medical aesthetic services discover products and services, evaluate their quality, and book appointments for services of interest.

A typical example of the latter is the various online consultation, appointment scheduling, and health management platforms that emerged alongside the development of internet healthcare. Due to their strong “medical” nature, low-frequency usage, and the inability of capital to sustain prolonged cash burn, some of these platforms have pivoted, scaled back operations, or shut down entirely. The entry of platforms such as Meituan Medical Aesthetics and Ali Health has introduced new variables into this landscape.

Baidu’s “search engine” itself faces various information silos such as standalone apps, WeChat Official Accounts, Douyin, and Toutiao. Baidu is expanding its “content pool” by strengthening Baijiahao and acquiring content platforms like Zhihu and Guokr; otherwise, it may face a future with no content to search.

Baidu’s Q2 Financial Report Highlights Mobile Ecosystem. The report shows that Baidu’s mobile ecosystem has become more prosperous and robust. The monthly active users of Smart Mini Programs reached 270 million, a 49% increase within three months, continuing the strong momentum since their launch one year ago. In addition to long-tail information, Smart Mini Programs provide users with a broader range of services. The number of content creators on Baijiahao has reached 2.2 million, and the content produced by these creators can not only be distributed through information feeds and short-video applications but also be discovered via search.

“Thanks to the rapid development of businesses such as Baijiahao and smart mini-programs, Baidu’s mobile ecosystem has become more prosperous, which has not only driven strong traffic growth for us but also expanded our partner base. In June, the daily active users (DAU) of the Baidu App reached 188 million, a year-on-year increase of 27%; the monthly active users (MAU) of smart mini-programs reached 270 million, a month-on-month increase of 49%,” said Robin Li, Chairman and CEO of Baidu.

Baidu is providing distribution channels across various platforms for content and service providers, with “Mini Programs” playing a pivotal role.

In the mini-program sector, Baidu, Tencent, and Alibaba are all increasing their investments. The underlying logic is that while mini-programs appear to be about content and information on the surface, their core essence lies in services. Tech giants leverage mini-programs to connect services, extending from content to service delivery, and providing comprehensive, one-stop solutions. Although many aspects still have room for improvement, it is also possible that more technologically advanced underlying tools will emerge in the future.

This is the development logic of the mobile internet, and also the visible trend in the growth of medical aesthetics platforms: from building a “content pool” barrier to providing “service pool” capabilities.

As we previously assessed, medical aesthetics platforms address specific challenges and follow a distinct development trajectory. We believe their evolution path involves: reorganizing the supply side to enhance efficiency and reduce costs in local production or transaction matching; acquiring and retaining users through high-quality “content pools”; and maximizing monetization from the merchant side through intensive services and operations.

Regardless of whether a platform is more content- and information-driven or service-oriented, it must connect medical aesthetic institutions, physicians, and users to increase market penetration, address information asymmetry between supply and demand sides, and enhance overall operational and service capabilities.

The aforementioned discussion highlights the characteristics, types, and growth trends of medical aesthetics platforms, noting that the primary drivers behind their continued expansion are standardization and the disruption of dynamic equilibrium. So, how can medical aesthetics platforms achieve standardization?

The underlying premise is that goods and content are easily standardized, whereas lifestyle services, particularly medical services, are difficult to standardize. This lack of standardization hinders the formation of transaction platforms.

Similarly, according to Zhang Chuan, President of Meituan-Dianping’s In-Store Business Group: How should service standardization be assessed? My methodology fundamentally rests on the principle that “service experiences can be made consistent, and customer evaluations can be standardized,” rather than depending on the complexity of the service, let alone the duration or difficulty involved in delivering complex services.

Alibaba Health also aims to develop several standardized medical aesthetic products based on localized traffic, transforming the previously bewildering array of services offered by individual institutions into standardized online “off-the-shelf” products for consumers to choose from.

Medical aesthetics is currently a highly non-standardized service, characterized by a wide variety of service categories, diverse patient demands, and significant inconsistencies in perceptions of beauty and service evaluations.

Although various platforms are working to standardize service offerings into distinct SKUs, aiming to subdivide all procedures in the medical aesthetics industry and break down comprehensive solutions into standardized components—such as those focused on the eyes, nose, and facial contours—to ensure a shared understanding of specific treatments between patients and physicians. Meanwhile, they seek to commoditize physician services by modularizing doctors’ and experts’ time as much as possible, thereby achieving full digitalization.

However, after extensive exploration, it remains difficult to standardize solutions for medical service delivery. What is easier to standardize is content—specifically, the structuring and enhancement of user-generated content (UGC) reviews. This includes enriching formats such as diaries, image-text posts, and even videos in both breadth and depth, thereby shortening the decision-making time for aesthetic seekers.

What Factors Do Aesthetic Seekers Value Most in Medical Aesthetics Platforms? According to VCBeat’s surveys of clinic operators and aesthetic seekers, the most valuable information includes, in order of importance: patient reviews, educational content and institutional credentials, before-and-after comparison photos, and service pricing. The primary concerns are cost, complications, and finding suitable institutions.

In summary, standardizing the “content pool” by building a comprehensive, structured database and community review system is far more feasible and less challenging than establishing a standardized framework for the “service pool.” This explains why medical aesthetics apps like SoYoung, leveraging their extensive plastic surgery diaries and community evaluations, currently maintain a strong competitive moat compared to other platforms that primarily focus on services.

“Content” and “services” still have a long way to go to achieve seamless integration in the medical aesthetics industry. Establishing a more in-depth and comprehensive professional service mechanism will be the key focus in the next phase.

How to address this? A viable direction is to recognize that although medical aesthetics platforms target consumers (C-end), their profitability stems from business clients (B-end), and the quality of the patient experience is ultimately determined by B-end institutions. By increasing the volume, density, and efficiency of supply side offerings, enabling institutions to become more digitalized and profitable, and encouraging medium-to-large institutions to deeply engage with online platforms while extending service cycles, medical aesthetics platforms can truly deepen their involvement in medical aesthetics services and sustainably expand their scale.

Greater opportunities lie in enhancing supply-side efficiency and upgrading the industrial internet.

Grounded in the present, with an eye on the future. Finally, let us examine the current initiatives and relevant data of major platforms involved in the medical aesthetics industry, primarily medical aesthetics apps such as So-Young and Gengmei, as well as tech giants like Ali Health and Meituan Medical Aesthetics.

In August this year, So-Young unveiled its new “One Vertical, One Horizontal” strategy. The “One Vertical” refers to deepening its commitment to the medical aesthetics industry by building an industrial internet platform. It aims to empower various production factors within the industry through internet technologies, thereby enhancing overall industrial efficiency.

“The Horizontal Expansion” refers to So-Young’s initiative to broaden its portfolio of consumer healthcare categories. Notably, after six months of operations, So-Young has achieved commendable results in the dental sector. The characteristics of medical aesthetic procedures—such as high average transaction values and high decision-making thresholds—align almost perfectly with dental services like orthodontics, dental implants, and veneers. For dental institutions, these high-value services represent the most challenging business “fortresses” to conquer.

Jin Xing, Chairman and CEO of So-Young, revealed that the average transaction value per customer at So-Young Dental exceeds RMB 3,000, which is even higher than that of its medical aesthetics business. Currently, So-Young Dental has onboarded more than 1,400 professional dental institutions, attracted approximately 2,500 dentists, and accumulated nearly 100,000 verified cases of orthodontic treatment.

This August, Gengmei launched features such as AI-powered facial diagnostic analysis and AI-driven facial deformation simulation. These tools help users analyze their facial characteristics and proportions of facial features, and identify suitable cosmetic surgery templates. Combining entertainment with practicality, these features not only assist medical aesthetics users in intelligently customizing their treatment plans but also serve as a key instrument for Gengmei to attract beauty-conscious users. In the future, Gengmei will continue to develop new functionalities leveraging 5G and AI technologies, accelerating the advent of the era integrating medical aesthetics, AI, and AR.

Gengmei aims to leverage AI in conjunction with its operations and business development teams to continuously refine its strategy, evolving into a platform that provides comprehensive solutions for users rather than merely a price-comparison tool. Meanwhile, it seeks to more precisely match users with the most suitable providers. Partners will no longer need to offer a full range of categories as before; instead, Gengmei intends to implement more personalized distribution, connecting users with the most professional doctors and institutions in their specific areas of interest and for their particular procedures.

In addition to medical aesthetics apps, the entry of Meituan Medical Aesthetics and Alibaba Health has introduced more variables into the industry.

As mentioned above, on September 3, Ali Health officially launched the Tmall Medical Aesthetics “Renewal Plan,” aiming to help medical institutions better connect with consumers through digital operations.

Meituan Medical Aesthetics is a well-known medical aesthetics consumption service platform in China. It entered the medical aesthetics industry in 2017 and established its Medical Aesthetics Business Division in 2018. As of June 2019, Meituan Medical Aesthetics’ healthcare services had covered 380 core cities, with more than 8,500 partner merchants. Its offerings spanned over 390 subcategories, including skin management, anti-aging treatments, hyaluronic acid injections, health check-ups, and dental care. The platform had accumulated more than 3.5 million authentic user reviews for medical aesthetics services.

Medical aesthetics is one of the key industries within Meituan’s In-Store Comprehensive Services segment. Currently, In-Store Comprehensive Services offers consumers over 100 categories of lifestyle services, including bathing and spa, KTV, beauty services, medical aesthetics, parent-child activities, wedding services, educational training, home furnishings, and pet care. It also provides digital solutions for marketing and operations to merchants in the local comprehensive lifestyle services sector.

Meituan Medical Aesthetics is committed to providing users with authentic and safe medical aesthetic services by standardizing and ensuring the transparency of information regarding institutions, physicians, products, and services. Meanwhile, it connects upstream and downstream segments of the industry chain, integrates online and offline operations, and collaborates with industry partners to drive the transformation and upgrading of the medical aesthetics sector.

In August this year, Meituan Dianping released its Q2 financial report, mentioning the inaugural Meituan Medical Aesthetics 618 Mega Sale. Leveraging the momentum of e-commerce marketing trends, medical aesthetic transaction users contributed approximately RMB 670 million in gross merchandise value to the platform.

In terms of GMV alone, So-Young’s scale has reached the tens of billions of yuan, yet its share of the overall medical aesthetics market remains small. The total GMV of the medical aesthetics industry has exceeded RMB 200 billion, and with the entry of industry giants, market competition will undoubtedly become more intense. Regarding profitability models, most medical aesthetics platforms rely primarily on advertising and commissions.

Regarding the widely held view that Alibaba Health and Meituan Medical Aesthetics leverage “high-frequency services to disrupt low-frequency ones,” we believe that while tech giants possess substantial traffic and brand resources, medical aesthetics is inherently a low-frequency business. Moreover, treatment outcomes depend heavily on physicians’ technical expertise and craftsmanship, distinguishing it from the sale of commoditized products. In-clinic medical services are difficult to standardize, and the decision-making process is prolonged. Consequently, platforms will find it challenging to establish an absolute advantage in precision-targeted traffic within a short timeframe.

Conversely, structured databases and community reviews are more critical for patient decision-making. For low-frequency services, optimizing the user experience and advancing the standardization and digital transformation of specialized categories can extend engagement time for both providers and users, thereby more effectively converting low-frequency interactions into sustained service utilization and positive word-of-mouth.

In summary, the long road ahead involves refining patient evaluation systems, expanding and enhancing the scale and efficiency of supply-side services, and bridging the gap between medical aesthetics “content” and “service” ecosystems. This will remain a key focus for platform-level breakthroughs in the next phase.

References:

Caijing: Zhang Chuan of Meituan: After Eight Years in Platform Operations, I’ve Summarized the Five Major Hurdles for Platforms

SoYoung Just Listed in the U.S. Why Was It the First to Go Public in the Internet Medical Aesthetics Sector?