China insights: E-commerce, sports nutrition and omega-3 developments among hot topics at Shanghai summit
According to HPA executive director Jeff Crowther, the event — which will take place in Shanghai next month — will provide international companies with everything they need to know in order to enter the market, or continue navigating China's fast-paced supplement industry.
Regulations, consumer trends, packaging, and cross border e-commerce (CBEC) were all evolving at a quick pace, so the summit would play a vital role in keeping industry leaders up to date, he added.
With probiotics and omega-3 set to figure prominently on the agenda, Crowther said both sectors were offering considerable scope for growth.
While probiotics are already big business in China, he pointed out that most of the action is confined to diary industry.
“New strains, dosage forms and continued development of the industry is causing much interest in bringing probiotics into the greater food, beverage and supplement segments,” he said.
“Also specialised strains for immune system, women’s health and temperature stable offerings are giving China’s manufacturers greater flexibility in designing new products outside the traditional diary industry.”
Filing and recording
With regard to omega-3, Crowther said that some ports were now allowing bulk fish oil softgels into the country and government regulators were contemplating adding fish oil to the approved list of products that can go through the new product filing or recording system.
“This will make it much easier for companies to enter the market compared to using the standard registration process, which can take up 3 years and over US$100,000 to complete. In contrast, the filing system is an investment of about 8 months and US$18,000 give or take,” he said.
Crowther also belives that sports nutrition is continuing to grow in China and is finding its footings.
“This segment is getting more competitive. We’ll most likely see international brands getting more involved in their China business rather than 100% relying on in country distributors. In fact some international brands are working on opening their own offices here. This would be a good move as the marketing / sales tactics shift quickly, which makes it difficult to manage from an office thousands of miles away.”
From FDA to SAMR
Regulatory matters will also take centre stage at the summit, in the wake of some major changes over the past 12 months.
The China FDA has new directives as is primarily focused on pharma and medical devices.
Food, supplements and a variety of other industries now fall under the recently formed State Administration for Market Regulation (SAMR).
“SAMR has been busy and recently released a number of regulatory drafts for the supplement industry such as Adjusting Health Food Functions, Health Food Labels, Rules on Declaration and Evaluation of Probiotics Health Foods and Management of Health Food Tele-Marketing,” noted Crowther.
He added that the sector should see see the streamlining for product approvals including ongoing work to add more ingredients that can go through the filing or recording system for finished supplements.
Currently this is is only open to basic vitamins and minerals.
“This will help get more brands on the shelfs more quickly. However, even with additions of some ingredients, it will still keep the brick and mortars at a disadvantage when it comes to multi-ingredient or cutting edge formulas. These will have to remain in the cross border e-commerce channel for the foreseeable future.”
Indeed, with regard to e-commerce, Crowther expects the thriving sector to continue to boom.
“For companies that are new to potential China business and don’t want to jump in the deep end, Alibaba’s Tmall Global has launched a new programme called ‘TOF’ or ‘Tmall Overseas Fulfilment’.
“This programme can assist companies to experiment with doing business through a consignment deal with Tmall. Products are held in country of origin warehouses and shipped out as products are sold directly to consumers. As the investment and risk is greatly reduced, this can be a great benefit for new to China players.”