Supplement firms seeking success in China: ‘Think big, trademark brands and don’t be too trusting’

By Gary Scattergood

- Last updated on GMT

'Prepare before you reach Shanghai Pudong airport', said trade expert Mike Arand.
'Prepare before you reach Shanghai Pudong airport', said trade expert Mike Arand.

Related tags New zealand China

Companies seeking to launch products in China have been told they have to be in it for long haul and make extensive preparations, ‘instead of turning up at Shanghai airport and asking trade officials for a list of distributors’.

NZ Trade and Enterprise’s China business advisor Mike Arand said there been cases of companies dispatching an employee to Shanghai and telling them “to fix China”.

“But it doesn’t work like that,” ​he told the Natural Products New Zealand Summit.

“We are now seeing people hire more China talent, which doesn’t always work, but there are cases where it clearly does.

“Collaboration is a big factor too, but you need to find the right person. If you want to find a Chinese person who is well spoken, has stacks of money and has great connections, that’s pretty easy to find. But finding someone who is genuinely good for your business, that’s a lot harder.”

He suggested that New Zealand firms could, at times, be too trusting of offers made from potential Chinese investors, while placing too much responsibility in the hands of local distributors.

“We have cases where people jump at opportunities and have high trust. They believe they are the only company that these people are interested in so have to move quickly, but quite often they are speaking with others too.”

He also called into question the scale of ambition of some New Zealand companies.

“The longer term view is really critical for our companies and our aspirations have to match the size of the growth in China,”​ he added, stressing the importance of a clearly defined strategy to meet agreed objectives.

Arand said despite a lot of reports highlighting a slowdown of economic growth in China, it had to be put in context.

“There will be another 200m in the middle classes by 2025, making a total of 330m.”

“And they all want better health and better food and beverage, which all plays to New Zealand’s strengths,”​ he added.

Trademark brands

He also warned that protecting IP was crucial under China’s ‘first to file’ rule.

“We still get New Zealand companies saying ‘we’ve been ripped off; someone has got our trademark’. Well it’s their trademark now.

“I would advise everyone to register a trademark in China even before you go and take a look around.”

Furthermore, it isn't always possible to launch the same product in China that had sold well elsewhere, due to different consumer tastes, and Arand encouraged brands to identify a very targetted demographic ahead of its first venture in the country.

“A lot of people say they are targeting women aged 25-35, but that’s not a detailed enough segment,” ​he added.

He concluded by acknowledging there was no “silver bullet for success”, ​but added trade officials could help firms visualise where they wanted to be and help them look at how they could turn it into reality. 

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