20 June 2016
China’s Spectacles Market
I. Market overview
China is not just the world's leading manufacturer of spectacles but is also the largest potential consumer of such products. Children and elderly people alike are consumers. Euromonitor International estimated that China's spectacles market grossed nearly Rmb67.9 billion with around 10% growth in 2015. Its market for contact lenses also grew over 10% to Rmb4.2 billion.
According to a joint 2014 survey by the Ministry of Health and the Ministry of Education, China has a myopia occurrence rate of 33% and more than 400 million of its people are myopic, 1.5 times the world average of 22%. The rate of myopia occurrence in primary schools, junior high schools and senior high schools is 25%, 70% and 85% respectively. As the myopic population in China is expected to increase by 8% on average annually, the potential of its spectacles market is huge.
As living standards improve, consumers are attaching greater importance to the health and protection of their eyes when choosing spectacles, and more and more people are buying glasses of higher quality. In addition to practical functions, greater attention is also paid to ornamental qualities. The trend to buy individualised and branded spectacles is increasingly evident. Market projection has it that, as more consumers come to know mid-range spectacle brands, the sales of these brands may surpass those of upmarket ones.
The pursuit of greater comfort and individuality by consumers and the on-going specialisation of China’s eyewear industry have led to the rise of the custom-made market. This is seen as the direction for industrial upgrading and brand development. Custom-made spectacles are individually designed to meet the different needs of customers. They are, for example, made in different shapes to showcase personal style or designed to fit the facial contour of the wearer.
Contact lenses: According to Euromonitor data, during 2010-2015 consumer spending on contact lenses in China increased at an average annual 9.5%, far higher than the world average of 2.5%. The figure is expected to stay at the 6% level over the next few years, underscoring the potential for further growth in the market. Furthermore, as an increasing number of contact lens consumers want convenience and hygiene, it is expected that sales of disposable one-day contact lenses will have a higher rate of growth than those of traditional ones.
Presbyopic glasses: According to statistical yearbooks, China is faced with the challenge of an aging population. During the 10 years from 2005 to 2014, the percentage of people aged 45 and above rose from 32% to 37% and the growth is expected to continue. Based on the experience that most middle-aged people begin to wear presbyopic glasses at the age of 42, the market potential is not to be underestimated. As multifocal presbyopic glasses are introduced into the mainland market, one set of such glasses would be sufficient to deal with the problems of hyperopia, myopia, presbyopia and astigmatism, saving elderly persons the trouble of carrying different types of glasses. According to reports, multifocal presbyopic glasses are far more widely used in America and Europe than in China. With rising standards of living, more and more Chinese consumers are expected to wear multifocal presbyopic glasses in future.
Sunglasses: Sunglasses have protective functions as the name suggests, and they can effectively prevent ultraviolet rays from harming the eyes. People use them for outdoor sports and when they go on vacation. Today more and more people are buying sunglasses as fashion accessories to project their personal image. As sunglasses become a fashion-cum-status symbol, high-end custom-made sunglasses are in demand. There is also considerable demand for children's sunglasses and myopic sunglasses.
Children's spectacles: As more young children become myopic and as parents are more ready to dig deeper into their pockets to get a good pair of glasses for their little ones, children become the targets wooed by the market. Besides, as technology becomes increasingly widespread, it has been found that in China, almost 67% of the children in the 0-6 age group start coming into contact with electronic products at the age of 4. So children nowadays are often exposed to the blue light emitted from hand-held devices. Since their eyes are not yet fully developed, spectacles with blue light-blocking capabilities have attracted many parents who want better protection for their children’s eyes.
Titanium spectacle frames which are lightweight, corrosion-resistant, hypoallergenic and strong are increasingly favoured by consumers. Various titanium-based frames such as those made of pure titanium, b-titanium and memory titanium can now be found in the market.
II. Market competition
Spectacles manufacturers in China are relatively concentrated in geographical distribution and are mainly found in Dongguan and Shenzhen of Guangdong, Xiamen of Fujian, Wenzhou of Zhejiang and Danyang of Jiangsu. These four clusters all have fairly complete industry chains and have developed the industry into a considerable scale.
Danyang in Jiangsu, reputed as the production base of spectacles in China, has become a major eyewear production centre on the mainland. The 600 or so spectacles manufacturing enterprises there have a combined workforce of some 60,000 people. The industry grossed about Rmb13 billion in sales in 2014. With a floor area of 110,000 square metres, the China (Danyang) International Glasses City is an experience-oriented tourism services commercial complex that offers leisure, entertainment, offices as well as film and TV performances under one roof. As such, it is the largest spectacles trading market in China.
Mayu Town in Ruian, Wenzhou City, Zhejiang, known as the town of glasses in China, is a major eyewear production base in Wenzhou and home to nearly 160 spectacles producers. Reportedly, Mayu Town is establishing an innovation and service platform for the optical industry in addition to a start-up park for small and micro-sized optical businesses. With a gross area of around 210 mu (140,000 square metres), the park will provide production sites and services like brand planning, warehousing and logistics, product promotion and e-commerce. Phase one development of the facility is now under way.
Shenzhen's Henggang owes its development to the relocation of Hong Kong's spectacles industry. After more than 30 years, the city is now one of China’s major spectacles production bases with a worldwide reputation for its production of mid- to upmarket branded spectacles. As of 2016, Henggang has over 400 enterprises engaged in the production and marketing of spectacles and produces over 125 million pairs of glasses a year, accounting for some 20% of China’s total production. It is said to be producing about 70% of the world’s high-end spectacle frames, such plastic, gold-plated or titanium, 95% of which are for export. This makes it an important spectacles export base in China. Optical enterprises in Henggang have been adjusting their business models and concepts in recent years to achieve industrial transformation and upgrading. They are no longer confined to OEM production for international luxury optical brands but go further to establish their own brands. Successful examples include Huaqiang (華強眼鏡)’s private label “P+US” (派士) and Kadin Optical (鎧迪眼鏡)’s Faka Wood (珐卡木).
Market share is quite scattered for optical brands in China. According to Euromonitor estimates, the top 10 brands only have a combined market share of 26% in 2014. However, this is not the case with contact lenses, with the six leading brands controlling 88% of the market in 2014. Major contact lens manufacturers like Acuvue, Ciba Vision and Bausch+Lomb have all entered the China market in full gear. An industry source noted that good quality, high technology content and complete production line are the major advantages of imported brands.
Domestic spectacles manufacturers are becoming more aware of the importance of brand building and technology elements in their products and have started embarking on research and development of core technologies and brand building. As a result, Wanxin (萬新), Porpoise (海豚), Wuliangcai (吳良材), Mingyue (明月), GBV (大光明) and BEST (寶視達) have successively been granted the title of "Famous Trademark of China" by the Trademarks Bureau of the State Administration for Industry and Commerce.
III. Sales channels
Wholesale markets are traditional channels for the marketing of optical products in China and there are such markets in every big city. Some of these specialised markets are mainly for domestic sales (such as the Danyang Glasses City in Jiangsu) and some are for export (such as the Guangzhou Glasses City). There are also markets that cater to both.
Four major retailing modes have gained wide recognition in China. They are branded chains, professional ophthalmic medical care institutions, bargain supermarkets for fashionable eyewear, and traditional optical shops.
Optical shops with an optometrist on site first appeared in China in the early 1990s. Customers can get prescription glasses after an optometry test at these shops, thus saving much of their time. These shops are basically developing in the direction of chain operation. Daguangming (大光明), Oriental Vision (東方), Xueliang Glasses (雪亮), Red Star Optical (紅星), Mao Chang Glasses (茂昌), Baodao Optical (寶島), Ming Long Optical (明廊) and LensCrafters (亮視點) are some of the more successful chains. Among these, Xueliang, Ming Long and LensCrafters all belong to the Italian eyewear group Luxottica. Baodao, which is doing quite well in sales, has over 1,000 outlets.
The rapid rise of the post-80s and post-90s consumer market has made the development of online business a priority for many companies. E-tailers of eyewear like Sigo (視客), Yichao (億超) and Kede (可得) have therefore emerged in recent years. It is predicted that online sales of optical products, especially contact lenses and sunglasses, will become increasingly popular.
The O2O (online-to-offline) e-commerce model which combines “offline experience” and “online trading” is gaining attention in China’s spectacles market. However, the way the model is used varies from company to company. A typical O2O model in the spectacles market is to allow consumers purchase spectacle frames online at discounted prices and have their optometry tests and prescription glasses in a physical store. The website Myall Eye Wear (麥歐網) run by network technology company Maiou (麥歐網絡科技有限公司) is an example of this. Another O2O model is the collaboration of network giants and traditional retailers, such as the partnership agreement between Dianping.com and Baodao Optical.
IV. Import and trade regulations
Foreign companies considering venturing into China's spectacles market should pay attention to the relevant mainland standards. An example of these standards is Spectacle Frames - General Requirements and Test Methods (GB/T 14214-2003). For details of the standards, reference can be made to www.standardcn.com and the website of the Standardisation Administration of China (SAC).
The General Administration of Quality Supervision, Inspection and Quarantine announced the Administrative Measures on Metrological Supervision of Spectacles on 15 October 2003, detailing the regulations that dispensing opticians must comply with as well as the relevant penalties.
The SAC promulgated the national standard Ophthalmic Optics and Instruments - Optical Devices for Enhancing Low Vision (GB 23719-2009) on 6 May 2009. This set of standards lays down the optical and mechanical requirements for optical devices for enhancing low vision as well as the test methods.
According to the newly amended Regulations on the Supervision and Management of Medical Devices implemented on 1 June 2014, contact lenses are classified as Category III medical devices which must pass safety and effectiveness assessments and be issued a medical device registration certificate prior to their production, distribution and consumption by end-users. Producers of such devices must obtain a medical device production enterprise licence while dealers should have a medical device dealer licence.
 Website on standardisation: www.standardcn.com (hosted by China Productivity Center for Machinery, China Academy of Machinery Science & Technology); Standardisation Administration of the People’s Republic of China: www.sac.gov.cn