Fat Bucks

A group of chubby 8- to 18-year-old children trudge around a sweltering track under the watchful gaze of Frank Yu, general manager of Shanghai Dianfeng Sports Management Co., Ltd. While still a student at the Shanghai University of Sport, Yu, along with the help of two classmates, independently generated 30,000 RMB (USD $4,400) of start-up capital to establish Shanghai's first youth fat camp -- now held several times each summer. Yu is among a growing number of entrepreneurs entering the market en masse to address China's obesity epidemic -- a problem as weighty for this nation as the global financial crisis with impacts as longstanding.

As China's diet and lifestyle habits change in sync with its newly achieved wealth, more than a quarter of China's adult population has become overweight or obese. Among developing nations, China's rate of increase in overweight adults is only second to Mexico, says a report published in the July/August edition of the journal Health Affairs. Figures from the Ministry of Education reveal that among 11- to 12-year-old urban children, 8.1 percent are obese and 15 percent are overweight. Numbers of diabetes and heart disease cases have exploded among Chinese of all ages.

In October, the government responded to the growing crisis; it has required elementary through high school students to take daily jogs of 1,000 to 2,000 meters and advised members of the general public to walk at least 6,000 steps per day. There have also been increased nutritional awareness campaigns.

In its first year of operation in 2006, Yu's camp only drew a dozen students. His team persevered, keeping operational costs low with perks like discounted use of their university's facilities. The team first made profit in 2007. Average price for a three-week period of enforced exercise and individually prescribed diet is 9,000 RMB (USD $1,320) per camper -- a price equal to three times that of an average Shanghai resident's monthly salary. This year, the first summer 2008 session attracted 86 campers; Yu had to cap the second summer session at 100.

"We started sign-up for July in April, and more than 400 people inquired," says Yu.

Market demand is only set to expand. Barry Popkin, author of the Health Affairs report says eating junk food and living a sedentary lifestyle is no longer limited to the domain of the big city. "It's a national problem."

Although the market calls for preventative scribes, Chinese consumers should beware, says Cai Dong Lian, director of the nutrition department at Zhanghai Hospital.

"Some nutrition companies use big ads and make use of famous experts, but many of these experts whose images are being used don't even know what the product is or that their face is on it," says Cai.

Traditionally nutritionists have been trained by the state and set up shop in state hospitals, but, increasingly, private Chinese companies are taking up the charge. So is the American company Weight Watchers, which launched its first China branch in Shanghai in September. It banks on a "sustainable scientific approach" to tackle the Chinese market, says Matthew Mouw, CEO of Weight Watchers Danone (China) Weight Loss Consultation Co., Ltd.

Weight Watchers maintains a 51% holding in its joint venture with the French food company, Groupe Danone. The point-based diet program uses portion-size rice bowls and flat Chinese-style spoons as well as a calorie count/point system of traditional Chinese home-style meals. Localization took two years.

General Manager Beatrice Chan says, unlike in the US, the company won't enter license partnerships to create specialty foods just yet. First they'll focus on training weight loss leaders and nailing down productive group meetings, which they've reframed as "classes" so as to not intimidate Chinese who might be reluctant to "share feelings," a format hardly in line with Chinese culture.

Acupuncture, however, fits into cultural paradigms. When 32-year-old Ellen Zhang, a Shanghai-based magazine designer, discovered she could eliminate the middleman and her middle bulge by visiting her doctor's home for services, she was happy to oblige. For two months, she underwent two hours of massage and acupuncture treatment three evenings a week. She spent 2,400 RMB (USD $320) and lost 22 pounds. Three months later, however, she discovered she was pregnant and gained all the weight back and more. After her son's birth it hasn't come off.

Zhang admits she doesn't exercise because she's "too lazy," but, because of side effects, she's also unwilling to use diet drugs -- a popular method advanced by the thousands of foreign and domestic firms that have invested in herbal and synthetic diet products in China. So far, domestic companies have dominated -- in 2004, they constituted 95% of the weight loss products sold in China -- but with a market predicted by the China Institute of Health Science and Technology to reach 60 billion RMB (USD $8.8 billion) by 2010, foreign companies want in the mix.

Among current substances on the Chinese market is Ephedra, a Chinese herbal drug once embraced by Westerners seeking to shed pounds until users began experiencing serious side effects such as heart attack, stroke and even death. Ephedra was banned by the FDA in 2004.

As Yu explains it, Chinese disregard certain dangers for the same reason people the world over might: they prefer the passive approach.

Be as it may, Chinese sporting goods manufacturing companies have still earned an 8.5% increase in investment in the first seven months of this year, or 10.3 billion RMB (USD $1.5 billion); and investment in sports and entertainment industries has increased in that same time by 22.6% to 66.42 billion RMB (USD $9.7 billion), according to the National Bureau of Statistics China.

Today, China has more than 615,000 gyms, offering classes such as spinning, yoga, step, salsa and even pole dancing -- anything to entice office workers to sign up for annual memberships that generally run from 2,500 to 20,000 RMB (USD $360 to $2,930) in major cities. Gyms often market memberships by preying on young people's anxieties about finding (or keeping) a match in a competitive dating environment and frame belonging to a health club as a sign of privilege and achievement.

Shanghai's recently opened One Wellness, which bills itself as a boutique fitness club, sells "a lifestyle rather than a product," says David Barr, the club's founder and CEO, an Englishman who has lived in Shanghai for 12 years. The first carbon neutral gym in China, the club -- a refurbished 1950s-era building interjected with modern elements -- boasts state-of-the art Technogym machines and chill-out zones equipped with Wifi. On one weekend the strain of live music and smell of barbecue fill the outside terrace. Due to his club's success, Barr plans to open several more locations in 2009.

The children from Yu's fat camp have long said good-bye to summer and those torturous walks around a hot track, only to greet chillier jogs at their schools. Whether they have finally outrun obesity is something they -- and China's new weight loss capitalists -- will keenly watch.