China & Healthcare

8132019 China amp Healthcare

httpslidepdfcomreaderfullchina-healthcare 13

November 2010 wwwnutraceuticalsworldcom Nutraceuticals World bull 39

The International Market

their EN Thatrsquos an awfully long time to wait

to get a product to market Furthermore if

after a product has been launched with an

EN the NHPD (upon eventual review of the

license application) concludes that the prod-uct is not backed by sufficient scientific evi-

dence to support efficacy the NHP supplier

may be forced to remove the product from

the market

In SummaryhellipThese are just some of the regulatory

changes and challenges connected to the

Canadian NHP marketmdasha complete ex-

planation of all regulatory updates is wellbeyond the scope of this article At the

same time Canada still offers a highly lu-

crative market for NHP finished product

and raw material suppliers alike and

those with innovative products that blend

quality with science are likely to enjoy

long-term success

About the author Mi chael Chernyakis managing director of Canada-based CK Nutritional Ingredients Hecan be reached at mchernyakck-

foodscom

During the 1047297rst quarter of 2010 (April-

June) Chinarsquos economy was worth $13 tril-

lion which was enough to surpass Japan as

the worldrsquos second largest economy behind

the US Although this made international

news and generated many scholarly discus-

sions on Chinarsquos position as a growing eco-

nomic powerhouse it was not a big surprise

among global economists Japan has held

this position since 1968 but with its decade-

plus stagnant economy it was only a matter

of time before China surged into second

place This news is of course promising to

dietary supplement and health product com-

panies who are interested in China as a po-

tential new market Together with economic

development Chinarsquos regulatory environ-

ment and product demand must be consid-

ered as key indicators of a truly viable market

Developing the SupplementCategory in China

With an economy of this size and lots of

momentum behind it one would expect a

well-developed dietary supplement industry

Unfortunately this is not the case Although

China has been posting record gains to its

GDP it is far behind its top-tier global col-

leagues in terms of a thriv-

ing supplement industry With

that said having an established

supplement industry is not the

measure by which countries are judged

in terms of economic prowess Nevertheless

having one does reflect an established con-

sumer base with expendable income seeking

a higher quality of life which China is in the

process of building one brick at a time

To offer a little more perspective on

Chinarsquos second place medal on the podium

of the great GDP race Chinarsquos GDP and per

capita GDP couldnrsquot be farther apart In

2009 the World Bank and International

Monetary Fund ranked Chinarsquos per capita

GDP as 92nd and 96th in the world respec-

tively averaging in at $6621 In contrast the

US is first in terms of GDP and sixth interms of per capita GDP ($46400) For the

dietary supplement industry to gain more

mass appeal and acceptance China will

need to continue closing the gap between

GDP and per capita GDP This will elevate

more of the population to middle-class or

true consumer status possessing the money

needed to spend on personal health and

well being One positive sign of consumer

growth was the recently released consumer

spending indicators for July 2010 from

Chinarsquos National Bureau of Statistics Year on

year comparison of spending on retail con-

sumer goods which includes dietary sup-

plements grew almost 18

It wasnrsquot until recently that China realized

a genuine consumer base with a level of fi-

nancial freedom to become consumers of

international brands and more importantly

for our discussion dietary supplements

Keep in mind this ldquoconsumer baserdquois not

spread evenly across China and makes up

only a small portion of the populationmdashmostly found in Chinarsquos well-to-do first-tier

cities like Shanghai Beijing Guangzhou

and Shenzhen

Although there is a need for dietary sup-

plements in the market the demand at the

moment is underdeveloped One reason is

many Chinese consumers are not used to

taking pills tablets or other dosage forms

common to dietary supplements on a daily

basis In fact these dosage forms are gener-

ChinaAn Underdeveloped

SupplementMarket = OpportunityBy Jeff CrowtherFounder

USndashChina Health Products Association

32-50IntlMarkets1110qxdNUTWORLD 2009 Feature 101810 422 PM Page 39



40 bull Nutraceuticals World wwwnutraceuticalsworldcom November 2010

ally synonymous with medicine Combine

this with one of the worldrsquos most stringent

regulatory systems and you have an indus-

try with huge potential but moving at a

snailrsquos paceIn order for consumer spending to in-

crease regulations must be adjusted to a

more reasonable level to encourage both do-

mestic and foreign investment as well as the

spread of product education If consumers

donrsquot understand the products they will not

buy them

Current regulations require large invest-

ments of both time and capital to achieve

market approval from Chinarsquos State Food

and Drug Administration (SFDA) The prod-

uct registration process takes up to two years

and costs around $50000 per individualproduct (SKU) As a result companies often

need to hire a registration consultant in

order to successfully navigate the registra-

tion process The bulk of the estimated

$50000 will actually be paid to one of these

consultants with a smaller portion going to-

ward government fees At this point con-

sultants are necessary due to the

complexities and lack of transparencies in-

volved in the registration process

The process is rigorous and requires tests

such as human and animal testing at state-

approved laboratories Because SFDArsquos cur-

rent regulations pose unreasonable financialburdens as well as expenditures of precious

time many dietary supplement companies

choose to market their products simply as

food by getting label approval and hygiene

certificates from local level Inspection and

Quarantine Bureaus Doing this is certainly

less intensive in terms of costs and time but

no product claims or advertisements are al-

lowed It seems most companies are willing

to give these up in order to make it to the

shelf in a timely less costly fashion

The Main AttractionThe dietary supplement industry or ldquothe

healthy food products industryrdquo as it is

known in China has been the center of at-

tention over the last couple of years among

industry organizations and government

Due to a variety of factors including incre-

mental consumer demand consumer safety

and protection increased foreign investment

as well as industry pressure Chinarsquos State

Council has been working on amending

current regulations in order to further de-

velop the industry However this is turning

out to be a difficult task

There are a variety of players involved insculpting the new industry legislation in-

cluding the SFDA an assortment of nutri-

tional scientists leaders from different

segments of industry such as direct sellers

(MLM) manufacturerssuppliers retailers

Traditional Chinese Medicine (TCM) com-

panies as well as industry associations Like

all other regulatory shifts in the world those

leading the charge for change are not always

on the same page

The draft implementation regulations for

dietary supplements have been under re-

view advisement and revision for more thana year It was expected that by the spring of

2010 the new regulations would have been

released However the industry is still wait-

ing for a final draft that will hopefully in-

clude some of the suggestions made such

as moving toward a more open system of

notification approving ingredients not prod-

uct formulas increasing the upper limits of

some nutrients and establishing a structure-

function claim system similar to that used in

the US which would replace SFDArsquos cur-

rent 27 approved health claims

Although there remains much to be ac-

complished with regard to regulations andconsumer education the industry is begin-

ning to show signs of progress At this point

it is obvious that the State Council SFDA and

China Health Care Association are commit-

ted to change it is just a matter of time

which in the world of regulatory advocacy

can equate to years Nevertheless industry

and consumers are not willing to wait for

legislators to finalize the forthcoming new

laws Chinarsquos dietary supplement industry is

moving forward with anticipation that new

legislation is on the way and will be moving

in a direction of openness and transparency

Retail DevelopmentsDuring the last couple of years China has

witnessed the opening and expansion of re-

tail health food stores mall and hypermarket

kiosks and websites all selling domestically

made as well as imported dietary supple-

ments sports nutrition products natural

cosmetics eco-friendly cleaners organic

foods and a variety of other health products

Many of these companies are foreign owned

or invested and in some cases bring decades

of experience in retail health food manage-

ment to the market These health productpioneers are taking advantage of being first

in the market and laying the foundation for

whatrsquos to come

Itrsquos not just retailers blazing the trail for

industry development some of the indus-

tryrsquos global heavyweights have been and

continue to invest in Chinarsquos future health

product industry For example Amway

Herbalife and Nuskin to name a few have

been operating successfully in the market

for several years and are in it for the long

haul content with growing and developing

as the market dictates And investors are certainly not standing

by waiting for regulations to change In fact

US-based USANA just sealed its entry into

China by acquiring BabyCare a direct seller

that has been operating in China for more

than a decade This move will allow USANA

to enter the market with preexisting direct

sales licenses and an established in-country

management team

On the raw material side large ingredient

companies are pushing for ingredient ap-

provals This past year has seen the approval

of fish oil conjugated linoleic acid (CLA)

DHA and plant sterols by the Ministry of Health as new resource foods

Although the regulatory system has not

made significant movement since last year it

is hoped that by the end of this year there

will be some positive developments Re-

gardless of what happens those on the

ground in China envision healthy futures

and are optimistic about Chinarsquos dietary

supplement and health product industry

About the author Jeff Crowther is a con-sultant based in Beijing who has more than

17 years of experience in the natural prod-ucts industry having worked in retail salesand management international businessdevelopment and regulatory advocacy Healso manages the USndashChina Health Prod-ucts Association In this capacity he is re-sponsible for working on industry mattersaffecting US-based companies as well asacting as a liaison for both American andChinese companies He can be reached at

jeffcrowthergmailcom





Copyright of Nutraceuticals World is the property of Rodman Publishing and its content may not be copied or

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However users may print download or email articles for individual use



40 bull Nutraceuticals World wwwnutraceuticalsworldcom November 2010

ally synonymous with medicine Combine

this with one of the worldrsquos most stringent

regulatory systems and you have an indus-

try with huge potential but moving at a

snailrsquos paceIn order for consumer spending to in-

crease regulations must be adjusted to a

more reasonable level to encourage both do-

mestic and foreign investment as well as the

spread of product education If consumers

donrsquot understand the products they will not

buy them

Current regulations require large invest-

ments of both time and capital to achieve

market approval from Chinarsquos State Food

and Drug Administration (SFDA) The prod-

uct registration process takes up to two years

and costs around $50000 per individualproduct (SKU) As a result companies often

need to hire a registration consultant in

order to successfully navigate the registra-

tion process The bulk of the estimated

$50000 will actually be paid to one of these

consultants with a smaller portion going to-

ward government fees At this point con-

sultants are necessary due to the

complexities and lack of transparencies in-

volved in the registration process

The process is rigorous and requires tests

such as human and animal testing at state-

approved laboratories Because SFDArsquos cur-

rent regulations pose unreasonable financialburdens as well as expenditures of precious

time many dietary supplement companies

choose to market their products simply as

food by getting label approval and hygiene

certificates from local level Inspection and

Quarantine Bureaus Doing this is certainly

less intensive in terms of costs and time but

no product claims or advertisements are al-

lowed It seems most companies are willing

to give these up in order to make it to the

shelf in a timely less costly fashion

The Main AttractionThe dietary supplement industry or ldquothe

healthy food products industryrdquo as it is

known in China has been the center of at-

tention over the last couple of years among

industry organizations and government

Due to a variety of factors including incre-

mental consumer demand consumer safety

and protection increased foreign investment

as well as industry pressure Chinarsquos State

Council has been working on amending

current regulations in order to further de-

velop the industry However this is turning

out to be a difficult task

There are a variety of players involved insculpting the new industry legislation in-

cluding the SFDA an assortment of nutri-

tional scientists leaders from different

segments of industry such as direct sellers

(MLM) manufacturerssuppliers retailers

Traditional Chinese Medicine (TCM) com-

panies as well as industry associations Like

all other regulatory shifts in the world those

leading the charge for change are not always

on the same page

The draft implementation regulations for

dietary supplements have been under re-

view advisement and revision for more thana year It was expected that by the spring of

2010 the new regulations would have been

released However the industry is still wait-

ing for a final draft that will hopefully in-

clude some of the suggestions made such

as moving toward a more open system of

notification approving ingredients not prod-

uct formulas increasing the upper limits of

some nutrients and establishing a structure-

function claim system similar to that used in

the US which would replace SFDArsquos cur-

rent 27 approved health claims

Although there remains much to be ac-

complished with regard to regulations andconsumer education the industry is begin-

ning to show signs of progress At this point

it is obvious that the State Council SFDA and

China Health Care Association are commit-

ted to change it is just a matter of time

which in the world of regulatory advocacy

can equate to years Nevertheless industry

and consumers are not willing to wait for

legislators to finalize the forthcoming new

laws Chinarsquos dietary supplement industry is

moving forward with anticipation that new

legislation is on the way and will be moving

in a direction of openness and transparency

Retail DevelopmentsDuring the last couple of years China has

witnessed the opening and expansion of re-

tail health food stores mall and hypermarket

kiosks and websites all selling domestically

made as well as imported dietary supple-

ments sports nutrition products natural

cosmetics eco-friendly cleaners organic

foods and a variety of other health products

Many of these companies are foreign owned

or invested and in some cases bring decades

of experience in retail health food manage-

ment to the market These health productpioneers are taking advantage of being first

in the market and laying the foundation for

whatrsquos to come

Itrsquos not just retailers blazing the trail for

industry development some of the indus-

tryrsquos global heavyweights have been and

continue to invest in Chinarsquos future health

product industry For example Amway

Herbalife and Nuskin to name a few have

been operating successfully in the market

for several years and are in it for the long

haul content with growing and developing

as the market dictates And investors are certainly not standing

by waiting for regulations to change In fact

US-based USANA just sealed its entry into

China by acquiring BabyCare a direct seller

that has been operating in China for more

than a decade This move will allow USANA

to enter the market with preexisting direct

sales licenses and an established in-country

management team

On the raw material side large ingredient

companies are pushing for ingredient ap-

provals This past year has seen the approval

of fish oil conjugated linoleic acid (CLA)

DHA and plant sterols by the Ministry of Health as new resource foods

Although the regulatory system has not

made significant movement since last year it

is hoped that by the end of this year there

will be some positive developments Re-

gardless of what happens those on the

ground in China envision healthy futures

and are optimistic about Chinarsquos dietary

supplement and health product industry

About the author Jeff Crowther is a con-sultant based in Beijing who has more than

17 years of experience in the natural prod-ucts industry having worked in retail salesand management international businessdevelopment and regulatory advocacy Healso manages the USndashChina Health Prod-ucts Association In this capacity he is re-sponsible for working on industry mattersaffecting US-based companies as well asacting as a liaison for both American andChinese companies He can be reached at

jeffcrowthergmailcom













China & Healthcare

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