1. ENTRY INTO THE CHINESE
HEALTH FOOD MARKET!
VITAFOODS ASIA, 2013!

2. 1. Chinese Health Food/Dietary Supplement Market
Overview!
2. How to Enter the Chinese Market!
3. How to Be Successful in China!
4. Why We Add Value!
5. Q&A!
Agenda!

3. Part 1"
Chinese Health Food Market Overview!

4. China as an Attractive Market!
• China forecast to achieve 7%+ GDP
growth in the next 5 years!
• Large market size: 575 million (urban) +
765 million (rural) !
• Rapid urbanization and increasing upper
middle class will support sustained
spending growth!
• Ageing population will drive continuous
growth in healthcare. 180m+ people will
be over 50 yrs old in the next 10 years!
• Chinese consumers increasingly accept
imported products and find them
affordable!
Source: China Nutritional Supplement Market Overview (David Zhang)!

5. Growing VDS & Nutritional Foods
Industries in China!
Source: China Nutritional Supplement Market Overview 2012 (David Zhang)!

6. Market Growth by Product Category!
Source: McKinsey Report on Nutritional Supplement Market, China Nutritional Supplement Market Overview 2012 (David Zhang)!
Size in USD millions

7. Consumer Preferences"
(2012 Survey)!
(%)!
Source: Annual Report On Healthcare Food Industry of China No.1, Page 194, 200!
Popular Functional Products! Purpose of purchase!
Popular imported dietary supplements include
herbal, beauty and weight control products.!

8. Retail Sales & Market Share"
(2010 Survey)!
Source: Annual Report On Healthcare Food Industry of China No.1, Page 246!
2010 total retail sales (through
shopping malls, supermarkets):
RMB64.1billion, up 14.4% from 2009!
Sales through other channels such as
pharmacies (drug stores),
conferences, Internet, direct selling,
etc. are not included. !

9. Dietary Supplement Sales Channels
(2012 Survey)!
Source: Annual Report On Healthcare Food Industry of China No.1, Page 204!
Demand is concentrated in Tier-1 and
Tier-2 cities.!
Very fragmented market with the top
10 players holding less than 25% of
the market.!

10. Chinese Consumers Perception about
Imported Dietary Supplement Products!
Source: Annual Report On Healthcare Food Industry of China No.1, Page 219!
Foreign companies can
potentially tap into 76.7% of
the market where
consumers are open to
buying imported products!!

11. Part 2"
How to Enter the Chinese Market!

12. Barriers to Entry!
High brand building and channel
operating requirements!
Foreign companies often neither
understand the Chinese culture nor
have right connections!
High human resources requirements
and difficult to find and retain talent!
Regulatory environment: highly
regulated and frequently changing!
Opportunities Are Massive, So Are
Challenges!

13. Importation!
• CIQ (China Entry-Exit Inspection
and Quarantine Bureau)
requirements!
• Selecting a right import port (over
100 ports in China) and complying
to its varying import requirements!
Must meet the regulations of these
government bodies:!
• Ministry of Health!
• SFDA (State Food & Drug
Administration)!
• AQSIQ (General Administration of
Quality Supervision, Inspection and
Quarantine)!
• SAIC (State Administration for Industry
and Commerce)!
• “Blue Hat” (quality & safety) registration!
Registration!
Regulatory Requirements for Importing
Dietary Supplements!
The regulatory processes are
time-consuming and
stressful. Most companies
use agents to handle the
processes. !

14. Successful Entry " Successful Sales !
! Product must be market-ready before distributors can accept it!
! An effective marketing and sales model in China relies on established
distribution network and wise pricing!
! Internet selling is growing but it will not work without a recognizable
brand!
! Without connections with a powerful national distributor and key
influencers in the market, companies will bear high marketing, channel
operating and HR costs with little chance for success!
! Marketing materials must be in Chinese and accessible to the
consumers !
Market Barriers!

15. How Imported Dietary Supplements
Reach Chinese Consumers!
Manages regulatory compliance including product
registration with multiple government authorities - critical to
entering the Chinese market and often time-consuming and
stressful!
Sets marketing strategies and plans including brand building,
channel strategies and pricing. Very powerful in the supply
chain. Finding a right ND determines sales success!
Implements the marketing plans set by the National
Distributor. Absorbs logistical and marketing costs !
Consumers usually accept RRP of under RMB300/product.
Foreign companies must understand how pricing works at
each level of the supply chain. !

16. Part 3"
How to Be Successful in China!

17. Consumers! Connections!Culture!
Success Factors - 3C s!
! Understand and appreciate the unique
Chinese culture for doing business!
! Have language capabilities to
communicate messages in China in a
culturally intelligent manner!
! Understand the needs and buying
behaviours of Chinese consumers!
! Segment and target the right
consumers and understand the most
effective marketing tools to reach them!
! Doing business in China is largely
about connections !
! Building trust and lasting relationships
with the right agents and distributors
who have knowledge, experience &
powerful marketing capabilities is often
critical for success!

18. Part 4"
Why We Add Value!

19. We identify
ingredients and
finished products
that have potential
in China!
3!1! 2!
Our Value Chain!
We consult with your
company and our
Chinese partners to
break down the entry
and market barriers
for you!
We ensure your
company is
equipped with
the success
factors - 3Cs!
Your
product"
Chinese
Consumers"

20. Who We Are!
• Is the largest and most influential organisation in China s healthcare
industry, consisting of nearly 1,000 companies, many of which are key
distributors and manufacturers.Through CHCA s Committee of
Health Care Consultation, we engage in market strategy consulting,
health food registration advisory services, law and policy research,
healthcare industry research, evidence-based study of health food
products, domestic and international health food industry
communications, as well as healthcare industry conferences and
exhibitions. !
• Our expert team consists of richly experienced consultants and
technical experts for food, medicine and biology. !
• We maintain a strong relationship with Chinese regulatory authorities. !
China Health Care Association (CHCA)!

21. Why You Will Work with Us!
• Proven track record in successfully bringing Western brands and
products into China!
• As the healthcare industry s opinion leader, we are able to leverage
industry resources to your benefit, assisting you in selecting the right
partners and navigating the Chinese market!
• Strong connections and partnerships with other key market players
including successful national distributors. Our partners competently
handle regulatory requirements, have proven experience in market
success, and maintain close relationships with regulatory authorities. !
• Qualified and customer-centric trilingual (English, Mandarin, Cantonese)
consultants who will build a bridge to China for you!

22. Specific Services Available to You (1)!
Our services cover almost the entire supply chain for imported products.
Working together with our Chinese partners, we are able to help your
company:!
1) Understand the Chinese healthcare and dietary supplement industries
and market and provide all kinds of market data!
2) Handle all registrations with the Chinese government for health food
(finished products or ingredients), cosmetics, medicine, medical appliances,
etc.!
3) Understand the importation options and procedures and optimize the
process for you!
4) Understand the IP situation in China and handle the IP protection and
patent registration for you!
5) Establish sales and marketing channels including traditional and online
channels and find you distributors of various sizes!

23. Specific Services Available to You (2)!
6) Find all sorts of marketing service providers in China for product
positioning, packaging, advertising, etc.!
7) Organize seminars, trade fairs, conferences, press meetings, etc. !
8) Find land and facilities if you want to open your own factory or subsidiary
in China!
9) Find ingredients for foods and functional foods!
10) Arrange financing options !
11) Manage public relations!
12) Manage other ongoing issues or crises!

24. Thank !you.!