Consumers' perception of the consumption of sexual health products has changed significantly, and they are now open-minded, leading to an increasing variety of sexual health products. With the rise of e-commerce, online sales models for sexual health products have become very mature. Especially in recent years, the emergence of social and interest-based e-commerce has further driven consumption of sexual health products.
China's gender health market
The Chinese gender health industry entered a fast development phase since 2016, with the market size increasing from 39 billion yuan in 2017 to 76.63 billion yuan in 2021, a compound annual growth rate of 18.4%. At the beginning of 2020, with the outbreak of COVID-19 and the implementation of epidemic prevention policies such as home quarantine, social activities were restricted, which in turn promoted the sales growth of gender health products such as family planning supplies, leading to rapid expansion of the industry market size.
In addition, the gradually decreasing willingness to have children, the continuous improvement of gender awareness, and the transformation of more open gender culture consumption concepts have all increased consumers' willingness to consume gender health products, becoming an important reason for driving industry scale growth.
Source: Frost & Sullivan report
In the long run, although factors such as the 'COVID-19' pandemic have jointly driven rapid growth in the scale of the gender health industry,However, as the epidemic is gradually brought under control and supporting policies are implemented to boost fertility intentions, China's gender health industry will gradually resume a relatively stable growth level in the future. Consumers' demand for gender health products will be further unleashed and continue to drive the vigorous development of China's gender health market.
Gender health products include family planning items, care items, appliances, clothing, and others.
Source: Frost & Sullivan report
The gender health industry in China has experienced more than 20 years of growth.
From the early strict government regulation of the industry, where the public was 'terrified by sex'; to exploratory wild development, the state realized the necessity of sex education, industry regulation began to relax, and public awareness of sexual health awakened; to today's gradual scaling and maturity of the industry, with increased popularization of sex education, rising acceptance and demand for sex products among young consumers, improved industry production technology levels, and diversified sales channels.
Source: Frost & Sullivan report
The upstream of the gender health industry chain includes raw material suppliers and production and processing enterprises, with the production side adopting the OEM model, leading to serious product homogenization. The midstream consists of brand owners. At present, there are no large-scale enterprises with monopolistic capabilities among local brands; the market is still dominated by international brands. The downstream sales side has seen rapid development with online B2C/O2O platforms, which are widely popular among consumers.
Gender Health Industry Industrial Chain
Source: Frost & Sullivan report
Currently, local brands lack differentiation, strong independent brands are scarce, and the mid-to-high-end market remains uncharted. 'Small, scattered, and chaotic' is still the main characteristic of China's gender health industry, but more and more brand owners are beginning to focus on building brand power and influence.
The sales models in the gender health industry are mainly divided into distribution and direct sales. Distribution includes offline stores such as supermarkets, convenience stores, pharmacies, specialty stores, adult products vending machines, etc., as well as online wholesalers and retailers. The direct sales model is purely online, including B2C models represented by comprehensive e-commerce platforms like Tmall and JD.com, and O2O models represented by vertical e-commerce platforms such as Taoyou and Chunshuitang.
Online channels have gradually increased their market share due to the resolution of the pain point of 'user privacy', and the low entry threshold for merchants, accounting for most of the market. In contrast, offline channels have a relatively lower sales proportion.
Compared to the distribution model, the direct sales model can reach consumers directly, with stronger consumer willingness to communicate and lower information exchange costs. With the maturity of e-commerce development, comprehensive e-commerce has established a traffic monopoly advantage and even begun to dominate industry standards; vertical e-commerce, on the other hand, places more emphasis on experiential marketing, with platforms tending towards boutique-style and differentiated operations.
The development of the gender health industry in China is relatively late, and there are significant differences compared to the United States and Japan in terms of cultural concepts, sales channels, product catalogs, and market structure.
1) Cultural aspects,China's gender culture still tends to be implicit and conservative, with a low acceptance of gender health products. The public's awareness of gender and sexual education remains to be improved; at the same time, the fertility intention of the appropriate age group is low, and there are relatively negative views on marriage and childbearing among the young urban population. With the continuous strengthening of modern life pressures and work intensity, people's physiological needs for sexual life are suppressed.
The United States has developed an open sexual concept and gender culture driven by early sexual liberation movements and various equal rights movements, advocating for people's pursuit of physiological pleasure and sexual freedom; its sex education system is relatively complete, and people have a relatively high level of awareness about gender relations; the childbearing age has become younger.
Japan's adult industry developed earlier and more extensively, with a higher acceptance of gender health culture; gender culture is less constrained by conservative traditional culture, with more open-minded thoughts, and people place more emphasis on personal experience rather than being bound by traditional ideas.
2) In terms of sales channels,The penetration of e-commerce channels in our country is high. The rapidly developing e-commerce platforms, a relatively open e-commerce policy environment, and consumers' privacy needs have laid the foundation for the online sales of sexual health products. The instant delivery model of cooperation between offline stores and online platforms is the main mode of consumption for sexual health products in first- and second-tier cities, with e-commerce channels accounting for up to 67% of sexual product consumption.
The United States is dominated by retailers and wholesalers, mainly selling to retail stores and online stores through four major wholesalers (CEN, PIPEDREAM, DOCJOHNSON, TOPCO). Due to strict platform management restrictions, the penetration rate of e-commerce for gender health products is relatively low, with offline retail stores still being the main channel, with specialty stores and KAs accounting for 78%.
Japan's sex products are mainly distributed through specialty stores and vending machines, accounting for 32% and 39% respectively. There are numerous sex toy stores, commonly located at stations, shopping streets, etc. The convenience store industry is developed, while the penetration rate of e-commerce is relatively low.
3) In terms of products,China's main consumer group for family planning products is about 53%, accounting for a significant proportion. The continuously decreasing fertility demand has driven sales growth for family planning products. The consumption of products such as sex toys is relatively low, with about 90% of the appropriate-aged consumer population still being conservative towards sex toys, using them infrequently and purchasing a limited variety. There is still significant room for growth in this area.
In the United States, sexual products are mainly consumables, accounting for about 46%. Women's adult products account for the majority of production and sales. There are currently several large local companies in the United States with a complete range of product categories. Most products are produced abroad and sold domestically.
Japan has invested a great deal of effort in product research and development, dedicated to developing a variety of products across different categories, taking into account the needs of various niche cultures, and continuously innovating in product diversification; the packaging design and display arrangements are exquisite, emphasizing product quality.
Overall, the development of China's gender health industry started relatively late, with many emerging brands and a fragmented market; in contrast, the US gender health industry is mature and highly concentrated, with giant companies leading each sub-sector; Japan's gender health industry has a high market concentration, with companies covering a wide range of products.
Driving factors of China's gender health industry
Consumption Concept Transformation Driven by E-commerce Collaboration: The new generation of consumers with more open-mindedness and a greater focus on their own needs have become the main force in consumption. At the same time, the rapid development of e-commerce platforms has provided a good distribution channel for the sale of sexual health products, becoming a major driving force for the growth in sales of such products.
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Consumption concept factors
The new generation, which is more receptive to gender needs and pays more attention to diverse life experiences, is becoming the main consumer force. In the future, as China's population growth slows down and decreases, the number and scale of the new generation continue to grow and occupy a major position in the population structure.
In 2021, the number of new-generation consumers, who consume sexual health products frequently, reached 520 million, accounting for 37% of the total population. Approximately 15.8% and 16.7% of eligible consumers in China purchase sexual health products at least once a month or quarterly, with the frequent consumer group accounting for about 30% of the total population; first- and second-tier cities, which are more economically developed and have more advanced and open-minded residents, are the main source of consumers of sexual health products, accounting for nearly 80% in total.
Against the backdrop of income growth, consumption upgrading, and an open and free economy and culture, the new generation of consumers has the ability and inclination to spend more on gender health products and will become the main purchasing force driving the growth of the market size for the gender health industry in the future.
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E-commerce collaboration factors
The rapid development of e-commerce platforms has laid a solid foundation for the sexual health industry to expand its sales channels. Online purchasing channels such as e-commerce platforms can meet consumers' requirements for privacy, security, and convenience. Between 2017 and 2021, the total e-commerce transaction volume grew at an annual compound rate of 15.3% to reach a scale of 21.2 trillion yuan. The continuous maturation of e-commerce channels has changed the traditional offline sales model, providing a good distribution channel for the sexual health product industry and realizing empowerment of the industry.
The continuous rapid development of the gender health industry is largely due to government support policies. The gender health product industry has undergone a transformation from strict control to benign guidance and sustainable development. The promulgation of multiple policies and the implementation of industry standards have standardized aspects such as product design, production, and display, promoting the positive development of the gender health industry.
In recent years, the state has issued the 'Outline of China's Child Development (2011-2020)' proposing to 'incorporate sex and reproductive health education into the compulsory education curriculum system'; the revised 'Law of the People's Republic of China on the Protection of Minors' in 2020 first proposed that 'schools and kindergartens should carry out sex education suitable for minors of their age'; the 'Outline of China's Women's Development (2021-2030)' requires enhancing awareness of sexual morality, sexual health, and sexual safety for both men and women.
Source: Government official website, analysis by Frost & Sullivan
The state has begun to focus on the popularization of gender education, with the government and associations holding over a hundred exhibitions on gender health products each year to convey gender health concepts to the public and guide citizens to establish correct sexual attitudes.
Development Trend of China's Gender Health Industry
The market for China's gender health industry has taken initial shape, and its industrial ecosystem continues to enrich itself. Although product quality varies greatly and homogenization is a serious issue at present, the trend towards single-brand differentiation has already emerged. As the industrial ecosystem continues to enrich itself, some early market participants have also gradually launched their own brands, breaking through barriers. China's gender health industry will also develop in the direction of intensification and scale-up.
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Branded path
Strengthening product brand building can consolidate the enterprise's market position, enhance its vitality. From 'product-driven consumption' to 'brand-driven consumption' after product scale-up, this strengthens the company's moat and promotes healthy development. The new products and services derived from brand accumulation can also be quickly accepted and trusted by consumers, which is conducive to industry integration and standardization.
From a product-driven perspective, there are currently many small players in China's industry, and the business model is fragmented. Consumers are highly sensitive to product prices and care about cost-effectiveness. From a brand-driven perspective, brand management plays a crucial role in the development of a company. Building brand awareness to stabilize the target customer base and then aggressively expanding the market is essential.
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Factor analysis
(1) The dividend of policies and the progressive advancement of consumer concepts drive rapid industrial development side by side;
(2) Market participants who started with manufacturing in the early stages expanded their market by offering products with high cost performance;
(3) The strong reliance on e-commerce platforms and their inherent privacy stimulate consumer demand;
(4) The continuous enrichment of the industrial ecosystem provides better supply options, diversifying the choices available to consumer groups.
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Trend analysis
The development potential of China's gender health industry is great, with rapid scale growth attracting the favor of capital markets. Many related companies have been listed and received multiple rounds of financing, with capital helping drive the industry's rapid growth and expansion.
The capital attention to the gender health sector continues to strengthen, and market financing is in good condition. In the past decade, there have been 98 financing events in China's sector, involving 61 brands, with a disclosed total financing amount exceeding 5.34 billion yuan. Since the successful listing of 'Condom No.1' company Nos Health on the New Third Board in 2016, related enterprises mainly engaged in and family planning products such as Ailü Health, Taqu, Taohuawu, and Chunshuitang have successively listed on the New Third Board; since the outbreak of the COVID-19 pandemic in 2020, the domestic gender health industry has grown rapidly, with the number of newly registered enterprises in the industry increasing by nearly 10 times year-on-year. By the end of 2021, there were approximately 120,000 enterprises related to in China.
It can thus be seen thatThe development potential and growth opportunities of the gender health industry are continuously recognized by domestic capital markets. Multiple rounds of financing and capital support will accelerate explosive industry growth and scale expansion.
In the future, the fragmented and chaotic state of the industry will be integrated and regulated with the help of capital; leading enterprises that drive industry development will gradually become well-known and branded. As market scale expands and consumption diversifies, their focus on niche areas becomes stronger, and their customer base becomes more concentrated. taste e-commerce may become the main battlefield of the domestic ' taste economy'.
