According to the published report from Roland Berger consulting, by 2020 China’s health supplement market may reach 180 billion yuan. This means that the Chinese market will probably very soon surpass the US market even though for the moment Chinese spend 28 times less on vitamins and dietary supplements compared to the American people. The population tends to have a healthier and more functional alimentation. During these last years, the Chinese expose their preference for high protein and dietary fiber food.
Description of the Market
We should, therefore, define Vitamins and dietary supplements from a western viewpoint. These products are amid food and medicine because they bring to the body nutriments contained in some ailments. They can correspond to different needs. Consequently, customers can use them to strengthen their immune system by fortifying, for example, blood regulation or to improve the quality of sleep. Actually in China functions over the immune system are the most favored by customers. There are other products that can help those who want to lose weight or brighten their skin. Health professionals can recommend some products to children in order to improve their growth and development.
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If you want to start your business in this field, this is a good period to do it because the Government is supporting this market. The idea behind this project is the wish to have a healthy population and to reduce medical expenditures. In the 5 year plan, they aim to reach 1 trillion RMB with a growth rate of 20 %. Even if the goal seems high the market shows good opportunities considering the increase of the population’s purchase power and the broader targeted consumers. We can notice the progress of 12 percent in the vitamins and dietary.
Characteristics of the demand
We have to highlight an important trend in the Chinese market. It is about the fact that the Chinese population is getting older. This phenomenon can be explained by the previous one-child policy. China as a consequence, needs to care about their health more than others. Chinese people consume Calcium and protein powder which express their wish to be taller and stronger. They are looking for a convenient product. As a matter of fact, their purchase the most pleasurable taste and forms. More traditional Chinese ingredients are getting increasingly popular too.
Skepticism toward mainland market
Because of corruption in the medical industry, all the products produced in China about food and health are facing Chinese people’s skepticism. Trust in Chinese brands is very low. Hence, foreign brands are welcomed. They are looking for trustable international quality brands which use high-end technologies. Regarding, dietary supplements, the market is relatively open because the Chinese can’t rely on professional guidance. The market is very segmented and Chinese brands are not popular.
China Digital Ecosystem
In terms of strategy, China is a very developed country. Thus, there is a set of highly developed e-commerce systems, very convenient for the marketing promotion and the distribution of the product. For most foreign products, the main sales channels in China are e-commerce platforms like Taobao, operated by the Alibaba group. One could say that e-commerce platform has had a huge impact in China and they have even almost replaced pharmacies. They represent the second-largest sales channel for health supplement products. Consumers can benefit from easy delivery. Concerning legislation, legal procedures are getting clearer to accelerate the application and approval process.
Thanks to the powerful cross-border e-commerce, international companies have been able to bypass mainland regulations on health products and avoid local taxes. As a consequence, they can be competitive in terms of price with domestic products.
Strategy to Adopt
One reliable strategy for new players is to get in the market through direct sales licensing and then leverage e-commerce sales channels for quick expansion. You should after considering traditional offline channels such as pharmacies to sell your products. Another good way consists in cooperation with local firms. By working with the Chinese firm, international companies can take benefit from the advantages of their Chinese partners in terms of policy insight and distribution channels. In this way they as a foreign brand you don’t need to apply for your own licenses.
Starting your business in the dietary complement market could be very successful considering the support of the government. As a foreign brand, you don’t have a negative image as the local ones. However, as we already mentioned earlier the regulation is very strict and sometimes it can be very difficult to get licenses. This is the reason why your project requires real analysis and strategic choices. It is important to define the segment in which you want to be specialized and to characterize your target in the order you have an accurate approach. Thanks to its significant experience GMA can provide reliable expertise and good solutions.
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