What you need to know
Gym membership is growing rapidly in Taiwan, but still lags behind other Asian markets.
As health and fitness take on higher priorities for many in Taiwan, growing numbers of people are exercising regularly. High-end fitness centers and extreme endurance events are expanding throughout the island, and the market for expensive personal trainers is booming.
Yet two recent entrants into the fitness market in Taiwan – U.S.-based Anytime Fitness and local chain Light Fitness – are introducing strategies that target not existing fitness buffs, but the vast majority of Taiwanese that have never belonged to a gym and whose understanding of fitness is likely quite limited.
“All of the other gyms are fighting for the same slice of the market,” says Maurice Levine, the master franchiser for Anytime Fitness in Asia. “They are all going for the mountain climbers with six-pack abs. We are aiming at the other 97 percent that don’t go to the gym. It’s the crowd that wants to get healthy but doesn’t know how to go about it.”
Jason Lai, founder of Light Fitness, says that his gym chain aims to help women unfamiliar and intimidated by the fitness scene enjoy themselves and “start their fitness life” in a comfortable environment. “Some people are afraid; they don’t know how to work out or how to lose weight,” observes Lai. “If they join a big-box gym, they’ll be introduced to big machines and free weights that they aren’t comfortable with and they won’t get taught how to work out properly.”
The Sports Administration under the Ministry of Education has been working both to raise awareness of the importance of health and exercise and to provide facilities to encourage more public participation in fitness activities. This support includes expanding the number of public fitness centers, constructing bicycle paths and sports parks, and implementing school fitness programs. The impact can already be seen in surveys that show 30 percent of the population now following government recommendations of 30 minutes of brisk exercise three times per week, compared to only 18 percent a decade ago.
The development of the economy over the years has increased leisure time, while greater access to information via the Internet has raised health awareness. “With the growing middle class, not only do they have access to more money but they also have more free time and have access to more information,” observes Anytime Fitness’s director of business development in Asia, who refers to himself as Mr. DK. “They begin to realize that maybe they haven’t been living a very healthy lifestyle and need to change in order to live longer and healthier.”
Taiwan’s government has a keen interest in promoting wellness in its rapidly aging and sedentary population. Chronic illnesses that result from unhealthy lifestyles such as diabetes, heart disease, and hypertension are among the biggest consumers of the National Health Insurance (NHI) systems budget, and a more active population will potentially reduce these needs. Similarly, while exercise can’t stop the aging process, it can delay some of the ill-health associated with aging. As the elderly consume 60 percent of the NHI budget, and with the Taiwan population rapidly approaching the stage of becoming a “super-aged” society, this approach is also crucial to maintaining fiscal health.
Despite rising health consciousness, though, Taiwan’s fitness center market is still underdeveloped, with only a 2.5 percent penetration rate, compared to an average across Asia of 3.8 percent. The penetration rate in Hong Kong is 4.2 percent, South Korea 3.99 percent, and Singapore 4.09 percent, according to the International Health, Racquet & Sportsclub Association (IHRSA). International and local fitness center chains and independent gyms are all expanding to fill the gap between Taiwan’s penetration rates and regional benchmarks.
Chains such as U.S.-based World Gym and local player Fitness Factory have seen steady growth following the abrupt collapse in 2007 of the Alexander gym chain, which left pre-paid members high and dry. The government subsequently restored faith in the market by largely eliminating the pre-pay model that was blamed for the turmoil. The result has been a 26 percent increase – from 460,000 to 580,000 – in the number of gym-goers in Taiwan from 2011 to 2014, according to IRHSA. The number of fitness clubs has expanded even faster, by 41 percent during the same period, from 131 to 185.
Yet the fitness center industry has not seen a corresponding increase in income, and in the same timeframe annual revenues rose only 10 percent, from US$333 million to US$369 million. Taiwan is a “uniquely price-sensitive area,” observes Mark Homeier, chief operating officer of Anytime Fitness Taiwan. “In the region, we have some of the lowest prices here in Taiwan. In the Philippines, where people have lower incomes, they actually pay more.”
The average monthly dues for a fitness center in Taiwan are less than NT$1,200 (US$36), compared to US$76 in Singapore, US$52 in Australia and US$53 in Hong Kong, according to IRHSA. In fact, the only countries in Asia with lower average monthly rates are China, at US$34, and India at US$33, according to the association.
To take advantage of the market opportunities while mitigating pervasive price pressure, Anytime Fitness employs a strategy of locating its gyms in residential areas where rents are lower. It also provides a key to each member, allowing 24-hour access at every location in Taiwan (and the world). The smaller size of Anytime Fitness gyms, their locations outside of city centers, and their low staffing levels cut costs to a bare minimum, in stark contrast to big-box gyms with sky-high rents and large staffs.
The locations and 24-hour availability enable consumers who lack time during more conventional hours to work out at a gym near their homes, while the low-cost structure translates into cheaper monthly rates. Costs are so low and demand in more residential districts so high, in fact, that Levine says the outlets often reach the operating breakeven point in as little as a year or less.
During daytime hours, Anytime Fitness has a trainer on duty to offer personal training as well as simply providing advice and help with members’ workouts. At night, however, the outlets are not staffed, which could conceivably raise concerns about safety and security. Levine responds by saying the Anytime Fitness equipment is imported from the United States, and all of it is chosen carefully to prevent injury or accident when members are working out during unstaffed night hours. Further, members get trained on the equipment so they understand how to use it safely. Each outlet is under constant surveillance and monitoring, and Levine says the chain has never had a problem in any of its outlets in Asia.
Anytime Fitness opened its first gym in Taiwan in 2014 in Luzhou in New Taipei City, and has followed that with seven more dotting New Taipei City, Tainan, and now Kaohsiung. Its Xindian store will open in late September, and executives foresee strong growth potential.
Light Fitness, founded only two and half years ago by former World Gym trainer Jason Lai, recently opened its fourth outlet in the Taipei Living Mall. It follows a different model to success by focusing on women members and providing a novel payment plan.
As a trainer at World Gym, Lai observed that women are far more likely to spend a lot more on personal training and other health and fitness programs, but are often uncomfortable working out alongside men in big-box gyms with lots of unfamiliar equipment. This often causes women to forego the gym altogether in favor of yoga or aerobics studios.
Light Fitness, by contrast, offers classes and an environment that is more attractive to women, including yoga, TRX, aerobic classes, and lighter free weights for its generally 25-45 year-old white-collar women members. Lai also notes that all of the workers in the gym are trainers and will readily provide guidance for the members.
Instead of the monthly fee model, Light Fitness uses a points system on a card. Members buy a certain number of points, which can be used to participate in classes and get training. “You use it like an Easy Card,” explains Lai, and if the member decides not to use the points, they can be given away for someone else to use.
The monthly fee system used by most gyms can alienate those with lower exercise motivation, who often just finish out the yearly contract and then quit. Industry insiders and market researchers concur that Taiwan has relatively low retention rates for its fitness centers.
The pay-as-you-go payment system is popular with members, and Lai says he went with the points system because he knows that gym-goers resent paying monthly fees if they don’t use the gym very often. He admits that the model limits income earned from people who buy memberships and pay monthly fees but don’t use the resources, but feels that long-term prospects for member retention are higher using the low-pressure price strategy.
“We don’t push them, but we give them a good blend of low fees, lots of combination classes, and a great community,” he explains. “They feel like they are with family and friends so they think it’s fun and want to stay.” The group recently expanded by adding a CrossFit gym to its network.
(Taiwan Business TOPICS is published monthly by the American Chamber of Commerce in Taipei.)
First Editor: Edward White
Second Editor: J. Michael Cole