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Foot massaging company heads to the stock market

By Yu Tianyu (China Daily)
Updated: 2009-09-11 08:10

Jiafu Fuqiao has 500 outlets in the country and three massage training schools. [China Daily]

With traditional Chinese music playing in the background, dragons delicately painted on the walls and neatly positioned rosewood furniture, Jiafu Fuqiao foot massage parlors are reminiscent of the rooms in Beijing's magnificent Forbidden City.

The company was established by Guo Jiafu in 2004 as Chongqing Andrew Health Industry Co Ltd, but is better known as Jiafu Fuqiao. It is now a leading brand in China's massage and health care industry.

Guo, from Chongqing, is keen to get his company listed on the Growth Enterprise Board (GEB), the Chinese version of the NASDAQ. If he succeeds it would be the first time that a massage company is listing its shares in China.

Jiafu Fuqiao's growth has been phenomenal. By the end of 2006, it had more than 280 parlors with 21,000 employees. Currently, it has about 500 outlets nationwide and three massage training schools. The company's sales were in excess of 1 billion yuan last year.

Liu Hongbin, a 43-year-old businessman who owns a small advertisement company in Beijing, is a regular customer of Jiafu Fuqiao's outlet at Shijijiayuan, a high-end residential complex in Beijing's Chaoyang district.

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"Initially, I didn't like it because foot massage really hurts, but it's a traditional way for businessmen to meet while conducting business so I persevered," said Liu.

"As time went by, foot massage became a hobby of mine. I indulge myself nearly every day, even in my spare time. I'm topping up my membership card with 10,000 yuan. I'm now a platinum member."

The Shijijiayuan outlet has more than 20 two-bed foot massage rooms with televisions and also several Thai massage rooms. The cheapest service is the 70-minute foot massage costing 88 yuan while the most popular is the 298-yuan set menu which includes foot massage, Thai massage, shower, pedicure and other treatments.

Chen Chang, a 19-year-old foot masseur born in a rural area of Henan province, paid 500 yuan for a one-month training course at a Jiafu Fuqiao training school in Tianjin and started working at its Shijijiayuan outlet six months ago after passing an examination conducted by the company.

"For businessmen, our parlor is just like another office for them. We create a relaxed, safe and private atmosphere."

Chen said some clients had a foot massage for health reasons because traditional Chinese medicine is employed in the procedure.

Guo, the president of Jiafu Fuqiao, started his business with a four-bed foot massage parlor and a 40,000 yuan investment contributed by him and his three brothers in Chongqing.

Now, investors need to pay about 800,000 yuan for a franchise granted by the company if they want to open a foot massage store in Beijing. The fees vary between locations and in other cities.

The company provides investors with suggestions for locations, decor and personnel training and also shares management experiences with them.

Franchise holders pay 3 to 6 percent of their sales to the company as a management fee. Annual net profit for a parlor is roughly 1 million yuan but the company rakes in millions in management fees.

In 2007, IDGV Partners, one of the earliest American venture capital firms to enter the Chinese market, planned to pay 30 million yuan for a 35 percent stake in the Chongqing company that would have been used to fund top-end luxury foot massage parlors but the deal never came off for undisclosed reasons.

Last month, Chongqing Three Gorges Bank signed a strategic agreement with Jiafu Fuqiao to grant the company a 30 million yuan credit facility.

Guo Jiafu was not available to comment on the planned initial public offering (IPO).

A GEB analyst said on condition of anonymity: "Jiafu Fuqiao will have enough funds for an enormous market expansion if they successfully get their IPO, but they will encounter problems if they don't quickly develop their management and design practical strategic plans nationwide because the competition in China's massage market is fierce."

The analyst added that the IPO would help standardize China's massage market, integrate resources and also improve the quality of services across the whole industry.