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Firm going skin deep in Chinese mainland

By Yin Ping (China Daily)
Updated: 2009-02-09 08:02

Lim Meng-teng, founder and managing director of Neo Derm Group, speaks to media at the openning ceremony of the company's first medical center in Shanghai in January. Company photo

While many overseas companies have postponed their expansion plans on the mainland due to the global financial crisis, Lim Meng-teng has persisted in his original plan to venture onto the Chinese mainland from his Hong Kong base with his cosmetic dermatology group.

Lim, founder and managing director of Neo Derm Group, one of Hong Kong's largest medical aesthetic groups, opened the company's first medical center under its skin rejuvenation brand, Reenex in Shanghai on Jan 8.

"Expanding our service to the mainland at this point of time is challenging," Lim said at the opening ceremony. "But we are optimistic about the outlook of China's medical aesthetic market."

His reasoning is that Chinese women, especially those from major cities, are increasingly well educated, have strong purchasing power and demand better beauty services.

And his Six Sigma process management has leveraged the group to double its turnover every two years in Hong Kong and rake in an impressive year-on-year 41 percent growth in revenue in 2008.

"We believe our success in Hong Kong will be replicated in Shanghai," said the Singaporean entrepreneur.

Steady growth

Until 12 years ago, Lim had been a senior executive at a global food company, responsible for marketing in Asia-Pacific region.

"That experience has made me very sensitive to customer needs," he said in an interview with China Business Weekly.

After reading media reports about the then emerging concept of medical aesthetic services and appreciating its needs in Hong Kong, Lim decided in 1997 to venture into the field.

"At the very beginning, I determined that I would build a world-class company," Lim said. "And I did it step by step."

When he started his company, Lim was the sole distributor of a few quality medical skincare products and laser equipment for physicians, dermatologists, cosmetic surgeons, clinics and hospitals. At the time he had only three employees.

Five years later, as he collected enough resources in the industry, Lim branched out to launch his own cosmetic dermatology brands in 2002, including Reenex for skin rejuvenation, Derms for laser hair removal and Elyze for body shaping.

"People started to realize that medical aesthetic service could produce a guaranteed and visible outcome compared with traditional skincare products and facial treatments," Lim said.

Neo Derm's business surged by 72 percent in 2002.

As he became more conscious about service and customer feedback, Lim began the Six Sigma process management system in 2005 and took the lead in the industry in Hong Kong.

The Six Sigma process management plan provides a defined sequence of steps to ensure error-free staff performance and consistent quality customer service. It enforces standardized processes and ensures that all the frontline staff shares the same vision.

Lim also developed a tracking system to monitor customer satisfaction on a daily basis, ensuring good service while helping to build relationships with clients.

"Within three days after a client finishes her treatment, we will call her over a telephone, asking her to rate her therapists between one and five, depending on their overall satisfaction level," Lim said.

The results appear on Neo Derm's central computer system and can be accessed by all employees. Underperforming staff are counseled on how to improve their service levels.

These management systems helped Neo Derm to score a 390 percent growth in revenue in 2005.

In 2008, the group won the Hong Kong Management Association's prestigious Gold Quality Award, the first in the industry in Hong Kong to garner the kudos.

Now Neo Derm has over 700 employees to operate 13 brands, 15 treatment centers and six retail outlets in Hong Kong.

Mainland bound

As demand for non-invasive, guaranteed, long-standing medical aesthetic treatments gained momentum, Lim began to cast his eyes on the vast mainland market.

As early as 2004, Lim set up a representative office in Shanghai, with an employee distributing international skincare products to hospitals and beauty salons. In 2005, Neo Derm expanded its presence to Beijing and started a skincare retail business in 2007.

The group has now 130 employees in Beijing and Shanghai, providing medical aesthetic equipment and skincare products to hospitals, beauty salons and consumers.

"The medical aesthetic service is rather a niche market on the mainland. We have almost no competition," Lim said.

He believes that it will not take long for mainlanders to accept his skincare concept after its popularity in Hong Kong.

"It is true that we need to educate the market in the first place, but the mainland, as always, will catch up with Hong Kong soon," said Lim..

All the dermatologists at Neo Derm are qualified to operate the medical aesthetic equipment that has been approved by Conformite Europende (CE) and US Food & Drug Administration to deliver the treatments, Lim pointed out.

And the center has acquired a license from the Shanghai Municipal Health Bureau to perform treatments using equipment such as lasers.

Covering 1,300 square meters, the Reenex medical center in Shanghai cost 20 million yuan and has 21 employees. Lim said the staff will expand to 50 by June this year.

"Launching Reenex on the mainland is only one of the first steps of Neo Derm Group's regional expansion," Lim said. As Chinese women benefit more from medical aesthetic services, Lim expects to introduce other services, such as permanent laser hair removal, to the market.

IPO plan

Lim is gearing up for an initial public offering (IPO) on the Hong Kong Stock Exchange, and if everything goes well, he expects it to be done in 2010.

"We plan to float 25 percent of our shares on the Hong Kong Stock Exchange, and the floating assets will be mainly our medical aesthetic services," Lim said.

He said the group did not have a plan to introduce a strategic investor before the IPO, as it has a good cash flow.

As for the future, Lim said he plans to add three to five cosmetic skincare centers in Hong Kong each year, with a total investment of 100 million yuan, and later branch out to Southeast Asian markets.