A Conversation with Zhang Yu: After Scouting the Global Market, I’m Ready to Export the "China Standard"

Interview with 100 Founders: China's Next Wave—How the pioneer of China’s hair transplant industry is leveraging 20 years of clinical expertise to challenge global hubs like Turkey and South Korea.

When Zhang Yu started Yonghe Medical twenty years ago, hair transplantation in China was a niche backwater. Two decades later, Zhang leads a publicly listed company that performed 71,380 hair transplant procedures in 2025, operates 63 clinics across 61 Chinese cities, and just turned its first annual profit after a post-IPO strategic reset. Now, he is eyeing something more ambitious: turning Yonghe into the first Chinese medical services company to build a genuinely global hair health platform.

This profile draws on an exclusive interview conducted at Yonghe’s Beijing headquarters in March 2025, alongside the company’s newly released FY2025 annual results.

The Founder: Twenty Years, One Industry

Zhang Yu is an unusual figure in China’s consumer healthcare sector. Most founders of his generation built their companies by riding a single market wave — and cashed out when the wave crested. Zhang has stayed, and more importantly, he has kept changing.

“Yonghe has survived twenty years by constantly reforming itself,” he told Pandaily. “Any business model is a product of its era. The real challenge isn’t building a successful company. It’s staying successful as the market evolves.”

He traces the company’s early survival to a bet he made against the industry’s prevailing logic. Where competitors poured money into marketing and packaged proprietary surgical “technologies” — a practice he bluntly calls 包装化 (bāozhuāng huà, or excessive packaging) — Zhang pushed Yonghe toward clinical standardization. “Medical packaging creates a house of cards,” he said. “You claim generation one, then you have to claim generation two, then generation eight, and eventually you have nothing left to claim.”

That instinct sharpened into a formal strategy in 2022, when Zhang initiated what he describes as the company’s deepest self-reinvention: stripping out sales-led culture, de-emphasizing surgical technology marketing, and rebuilding around a tiered physician system — where doctors are ranked by experience and clinical record, and patients choose and pay accordingly, much like choosing between a resident and a senior specialist at a public hospital.

“When we started physician tiering, it was painful,” he admitted. One clinic that previously ran on a single do-everything doctor now needs two or three, each at different price points. Short-term cost pressure was significant. But the system, now maturing, is becoming Yonghe’s structural moat: experienced doctors are tied to the platform because the tiering system rewards their accumulated clinical data. Young surgeons choose Yonghe because the platform offers a career path that independent clinics cannot.

The Financials: A Turnaround Validated

For investors, the FY2025 annual results released on March 31, 2026 tell a clean turnaround story.

Revenue was essentially flat year-on-year at RMB 1.808 billion (+0.2%), but the composition shifted meaningfully. Hair transplant volumes grew 19.7% to 71,380 procedures, while average revenue per procedure declined from RMB 22,306 to RMB 19,265 — reflecting a deliberate price-band widening strategy Zhang describes as necessary to capture a broader patient base without sacrificing premium positioning at the top end.

The more striking numbers are on the cost and margin side. Gross profit grew 10.1% to RMB 1.194 billion, and the gross margin expanded from 60.1% to 66.0% — a nearly six-percentage-point improvement driven by clinic footprint optimization, digital and intelligent upgrades, management model restructuring, and marketing efficiency improvements. Sales and marketing expenditure fell to RMB 806 million from RMB 902 million, as the company’s shift away from paid acquisition toward content marketing and retention began to flow through.

The net result: a swing from a RMB 226.6 million net loss in FY2024 to a RMB 73.6 million net profit in FY2025. EBITDA rose 158% to RMB 363.7 million. The company ended the year with RMB 749 million in cash and zero bank debt, and has proposed a maiden dividend of RMB 0.076 per share.

“A lot of people looked at our 2024 results and saw a company cutting costs to survive,” Zhang said. “What they missed was the structural improvement underneath — the margin expansion, the conversion rate improvement, the cash generation. The surface numbers looked bad. The architecture was getting better.”

The Global Observation: A Founder Who Did His Homework

The most revealing part of our conversation was Zhang’s account of his international research over the past eighteen months. He has visited Turkey, South Korea, Japan, Thailand, and the United States — not on industry junkets, but as a deliberate competitive intelligence exercise, in some cases posing as patients to observe clinic operations firsthand.

His observations are sharp and, for a Western investor trying to understand the global hair restoration market, worth dwelling on.

Turkey surprised him. Istanbul’s hair transplant cluster — he says the city has 600–700 clinics — is a genuine global hub, drawing patients from the US, UK, France, and across Europe. The economics are built on three pillars: government support for medical tourism, Istanbul’s geographic position as an 8-hour flight from most of the world, and labor costs that keep a full hair transplant procedure priced around USD 3,000 — comparable to China and a fraction of US pricing.

But the Turkish model has a structural ceiling. Zhang commissioned a detailed legal and market study from a Big Four firm after his visit. The report confirmed something he had suspected: roughly 50% of Istanbul’s hair clinics operate without proper medical licenses, and the majority are single-location owner-operated shops with no scalability. “Turkey built the world’s biggest hair transplant destination, but almost nobody there has built a chain,” he said. “That’s actually an opportunity.”

South Korea impressed him with its depth of specialization. He visited clinics that refused to serve male patients entirely, focusing only on female hairline aesthetics. Others had narrowed their entire practice to eyebrow transplants. “Korea is intensely competitive, so practitioners have been forced to specialize in ways China hasn’t yet reached,” Zhang observed. He sees this as a preview of where Yonghe’s own clinical segmentation strategy is heading — Yonghe has already begun building a dedicated female aesthetics division, with 30 cities now hosting women-only consultation zones.

Japan is essentially a non-market for surgical hair transplants: cultural preference for wigs, particularly among men, and a high-quality domestic wig industry (he cited Aderans as a dominant player) means demand for surgical intervention is minimal.

The United States has the opposite problem: premium pricing. An average US hair transplant costs USD 10,000–20,000, driven by labor costs that make the surgical economics almost unworkable at scale. “In the US, hair transplantation is still a luxury,” Zhang said. “In China it’s becoming a mainstream elective procedure.”

His summary: “If you’re measuring by total procedure volume, China leads the world. If you’re measuring by international patient draw, Turkey leads. If you’re measuring by clinical refinement, Korea leads. Nobody has put all three together.”

The International Strategy: Two Steps, Timed Differently

Zhang’s global ambitions are real but strategically sequenced. He is explicit about this: Yonghe is currently in Step One, and Step Two involves a different capital model and timeline.

Step One: Draw international patients into China. This is already underway. Yonghe currently derives approximately 3–4% of revenue from patients from outside the Chinese mainland (including Hong Kong, Taiwan, and Macau) and international markets like Singapore. Zhang expects this to exceed 5–6% in 2026. The company is advertising on YouTube, Google, and Facebook, targeting overseas Chinese communities as the primary near-term segment — people who travel back to China regularly and can combine a procedure with a family visit. He is also evaluating Hainan’s Boao special zone, where post-free-trade-zone opening, over 80 countries now have visa-free access, as a potential hub for international medical tourism.