The rise of dental chains in China, and their challenges
Over the past decade, dental chains in China have grown from their first beginnings to rapid expansion. From a handful of regional brands at the start to chain networks across the country today, chains have become an important part of the industry. Behind the expansion, however, lie challenges in profitability, standardisation and talent.
1. The market at a glance
1.1 Degree of chain consolidation
- China has about 120,000 dental institutions, of which chain brands account for about 15%
- The number of chain clinics has grown from fewer than 1,000 in 2015 to about 18,000 today
- Leading chain brands have between 50 and 300 stores
- Regional chain brands have between 10 and 50 stores
1.2 Main business models
| Model | Features | Strengths | Challenges |
|---|---|---|---|
| Directly operated | Wholly owned and run by headquarters | Strict quality control, unified management | Slow expansion, high capital needs |
| Franchise | Brand-licensed operation | Fast expansion, asset-light | Hard to control quality, uneven service |
| Partnership | Key dentists hold equity | Strong incentives, high stability | Slower decision-making |
| DSO | Provides management services | Professional division of labour | Still at an early stage in China |
2. Core elements of chain expansion
2.1 Site selection
- Neighbourhood store model: near large residential communities, covering a 3-kilometre radius
- Shopping district store model: in core commercial districts, with an emphasis on brand presence
- Hospital-adjacent store model: near general hospitals, taking referral traffic
- Office building store model: aimed at white-collar workers, focusing on orthodontics and whitening
2.2 Standardisation
The core competitive strength of a chain lies in standardisation:
- Clinical standards: unified clinical pathways and operating procedures
- Service standards: standardised reception processes and service scripts
- Management standards: a unified SaaS system and management rules
- Training standards: a complete staff training system
2.3 Supply chain management
- Centralised purchasing to cut costs (consumables costs can fall by 15%–25%)
- A unified logistics and distribution system
- Systematic inventory management
- Strategic partnerships with suppliers
3. The main challenges of running a chain
3.1 Profitability
- New stores usually take 12–24 months to become profitable
- Large up-front investment (fit-out + equipment + staff + marketing)
- Acquisition costs rising year by year
- Staff costs as high as 35%–45% of revenue
3.2 Talent
- Demand for good dentists outstrips supply
- Dentists take a long time to train (3–5 years to mature)
- High dentist turnover
- Professional training systems for nurses and front-desk staff are incomplete
3.3 Quality control
- Consistent service quality across many stores is hard to guarantee
- Heavy pressure around medical safety and risk management
- Standardising the handling of patient complaints
- Managing brand reputation
4. Trends and recommendations
4.1 Future trends
- Detailed operations: a shift from expanding scale to optimising profitability per store
- Digital enablement: using technology to improve operating efficiency
- Specialisation: focusing on strengths such as implants, orthodontics and paediatric dentistry
- Ecosystem building: extending upstream and downstream along the industry chain
4.2 Advice for small and medium clinics
- Do not chase scale blindly; perfect a single store first
- Build your own core strength (technique, service, brand)
- Make good use of external operations resources to reduce the cost of trial and error
- Take digital marketing and private-channel operations seriously
Summary
The development of dental chains is a constant balancing act between scale and quality. Scale brings cost advantages and brand effects, but quality is what keeps patients. In the current market, chains need to focus more on detailed operations, digital enablement and developing talent to keep growing amid fierce competition.