Massage firm tackles steamy problems

Chinese massage service provider Dongjiao Daojia is said to be looking at an initial public offering in Hong Kong amid concerns that some of the masseuses on its platform are offering illegal sexual services.

The company's valuation is at around 3.5 billion yuan (HK$3.78 billion), according to financial media reports.

Founder Tang Fan recently said that Dongjiao Daojia had completed some IPO planning and compliance preparation, and had engaged a top-tier team of intermediaries, laying a solid foundation for the listing.

Dongjiao Daojia broke even in just one year and seven months and its revenue is projected to reach 3.8 billion yuan in 2024 and rise to 6.5 billion yuan in 2025, according to the reports.

China's first door-to-door massage services platform, Dongjiao Daojia has over 10 million users and more than registered 30,000 masseuses and therapists.

Founded in 2018, the platform started operations in Chongqing and has since expanded its services to 57 cities in the mainland, three-quarters of which are located in the southern region.

Customers can schedule appointments via Dongjiao Daojia's app and choose masseuses attired in black based on their appearance, distance and customer ratings.

The services are available round-the-clock.

Treatments include not only traditional Chinese massages and spinal decompression but also ear care and foot therapy, and prices range from 200 to 500 yuan for sessions lasting around 60 to 80 minutes.

However, Dongjiao Daojia's listing attempt could run into compliance issues.

If a company is found to have significant issues or ethical risks, Hong Kong Exchanges and Clearing can deem it unsuitable for listing.

In an article published on World Consumer Rights Day, Fujian Media highlighted a complaint from a customer who claimed after they ordered a massage, the therapist proposed a special prostate massage service "for an extra 498 yuan" which they could "try if you're interested."

The Shandong Business Daily also published a report which quoted Dongjiao Daojia staff saying that the platform only hires women therapists.

Meanwhile, short videos on the company's social media accounts do not focus much on massage techniques but instead feature conversations between masseuses and male clients, on the lines of "You look very beautiful" and "Do you have a boyfriend?"

Dongjiao Daojia has said it does not condone illegal activities such as sexual services and has pledged to crack down on therapists found indulging in such behavior.

However, the reports over illegal sexual services could dent its IPO prospects, as capital markets and regulatory authorities typically adopt a cautious stance towards companies facing such allegations, says Bo Wenxi, vice chairman of the China Enterprise Capital Union.

Fan, meanwhile, said that Dongjiao Daojia has established a risk management system and drafted a code of conduct for therapists and masseurs on its platform. It has also developed a big data warning system driven by artificial intelligence, which has led to a 400 percent increase in accurate alerts over masseuses that violate its code of conduct.

But despite these measures, Bo said it remains to be seen whether the massage services provider can resolve the problem of illegal sex services and regain the public's trust.