Caixin
Oct 27, 2021 08:15 PM
BUSINESS

Market Watchdog Reveals How and Why It Punished Bad Beauty Clinics

A worker displays new beauty treatments at the China International Beauty Expo in Guangzhou, South China’s Guangdong province, on March 10. Photo: VCG
A worker displays new beauty treatments at the China International Beauty Expo in Guangzhou, South China’s Guangdong province, on March 10. Photo: VCG

China’s market watchdog fined beauty clinics 3.55 million yuan ($556,387) for a variety of dishonest or dangerous practices in the first nine months of 2021, as the booming industry came under new regulatory pressure.

The State Administration of Market Regulation (SAMR) on Monday published a list (link in Chinese) of 10 example cases of medical cosmetology companies that it punished for making exaggerated claims about treatments, lying about their staff’s qualifications, and faking online reviews.

China is one of the world’s largest and fastest growing medical beauty markets. The country’s regulated medical beauty market was worth 152 million yuan in 2020, brokerage Citic Securities (link in Chinese) reported, while the total value of the entire market could be as high as 300 billion yuan, which means that half the market might be operating unlawfully.

In one case cited by the SAMR, a BeauCare Clinics Medical Investment Co. Ltd.-backed beauty clinic was fined 310,000 yuan in June for misleading customers when it said a spokesperson who had studied at one of China’s top hospitals was a full-time doctor there.

Another clinic in Southwest China’s Sichuan province was fined 100,000 yuan for similar reasons — two unlicensed people were advertised as being chief experts who had rich experience in South Korea and were in charge of nearly 70 branches.

Fake qualifications are common in the country’s medical beauty industry, which covers dermatology, cosmetic dentistry, some types of plastic surgery, and more.

A report from market analysis firm iResearch Consulting Group (link in Chinese) said the country only had a total of 38,343 licensed practitioners in 2019 while demand across the whole sector could be as high as 100,000. This shortfall has encouraged many operators to hire unlicensed or underqualified doctors with rudimentary training to carry out complex treatments.

Xiaoran, a Chinese web celebrity, died in July aged 33 of complications related to a liposuction procedure. The beauty clinic that performed the procedure had a “lack of professional knowledge” and “mishandled the surgery,” according to an investigation (link in Chinese) by the Hangzhou Health Commission.

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Exaggerating beauty products’ effectiveness is also a common problem, with companies regularly blurring the lines between medical advice and advertising.

Hong Kong-listed Yestar Healthcare Holdings Co. Ltd. was fined 250,000 yuan for allowing one of its clinics to falsely advertise that they had performed treatments that were actually carried out at other clinics it also operated. A Zhejiang province-based beauty clinic was also fined 200,000 yuan for making claims with no scientific basis.

The last type of violation mentioned in Monday’s notice was manipulating online rankings, often with the use of organized groups known as “click farms.” Nanjing Xihan Medical Beauty Clinic Co. Ltd. was fined 350,000 yuan for paying eight people to write 220 customer reviews on popular consumer review platform Dazhong Dianping.

Earlier this year, the National Health Commission and seven other government agencies published a plan (link in Chinese) to crack down on rule-breaking in the sector. The National Internet Finance Association issued a notice (link in Chinese) in June barring financial institutions from working with unregulated medical cosmetology organizations.

In August, the Shanghai and Shenzhen stock exchanges barred loans tied to cosmetic procedures — usually taken out by the procedures’ reciepients — from being included in asset-backed securities traded on the bourse.

Contact reporter Manyun Zou (manyunzou@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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