China health supplement market: Retail or e-commerce?

The health supplement market in China has been forecasted to reach 160 billion yuan in 2018. Just second from the US market, and expected to surpass it in just a few years time. However, the highly regulated health supplement industry there is always not easy for foreign brand companies to enter the market.

A company like Blackmores and Swisse from Australia are among the brands that can be considered the most successful in China market. The demand from consumers towards these products have contributed most of the sales via E-commerce. For example, Swisse company generated 700million yuan turnover via e-commerce platforms like T-mall in the year 2015 alone.

E-commerce platforms are loopholes for consumers to purchase these supplements easily with no import duty tariff as well as not under surveillance of regulatory acts due to its complexity of trade transactions.  However, this will be changed as the Chinese government has already announced that there will be action plans to restrict e-commerce trades for health supplements in 2019.

Means, foreign brands health supplements company have to find ways before the new acts come to the scene. Many are putting resources in strengthening the retail sales channels rather than relying to much on the e-commerce sales channel, which then soon will be a change. Also various forms of collaborations of foreign companies with local players in terms of share exchange, joint-venture and merger & acquisitions in order to strengthen the foundation of these companies in China health supplement market especially in retailing sector. With their local counterparts lifting strengths, it may be easier to pass their products in terms of regulations as well.

Source: Euromonitor

Hee Siang Lu

Regional Sales Manager