Core Insights - The hair health service industry in China is experiencing rapid growth, yet the leading company, Yonghe Medical, is facing a decline in performance, highlighting a stark contrast to the booming market potential [1][4]. Industry Overview - The Chinese hair health market has expanded from 58.29 billion RMB in 2020 to 79.55 billion RMB in 2023, with projections to reach 116.54 billion RMB by 2028 [2]. - The hair transplant market is expected to grow at an annual rate of nearly 30%, with a forecasted market size of over 30.4 billion RMB by 2028 [2]. Market Demand - A significant driver of market growth is the large population suffering from hair loss, which reached 250 million in 2020, with a market penetration rate of only 0.21% for hair transplant surgeries [3]. - The number of hair loss patients is projected to exceed 343 million by 2026, indicating a substantial supply-demand gap [3]. Company Performance Challenges - Yonghe Medical's revenue has declined by 4.22% year-on-year, with a drop in average spending per customer from 22,987 RMB to 19,761 RMB for hair transplant services [5]. - The company has experienced a significant loss of talent, with the number of doctors decreasing from 350 to 242, a drop of over 30% [6]. Marketing and Operational Efficiency - Yonghe Medical has struggled with high marketing costs, spending 3.81 billion RMB in the first half of 2025, which has not translated into effective customer acquisition [9]. - The company has seen stagnation in store expansion, with only a slight increase in the number of medical institutions from 54 to 63 since its IPO [10]. Strategic Directions - The company aims to tap into the low-ticket hair care service market to create a high-frequency consumption model, potentially increasing the revenue share of medical-grade hair care services to over 50% in the next three years [12]. - There is a focus on the female market, with strategies to cater to aesthetic needs and enhance service quality to attract more female customers [14]. - Yonghe Medical plans to address the younger demographic by offering early intervention products for initial hair loss, which could help build long-term customer relationships [15]. - The company is considering price adjustments and subsidies to lower consumer barriers and enhance market penetration [16]. - Optimizing store layouts and marketing strategies is essential to improve operational efficiency and reduce reliance on high-cost traditional marketing [17][18].