Sports Nutrition in China
2018-09-13 10:58 Thursday
The sports nutrition market in China is rapidly growing. Although the US is currently the largest market for nutritional products in the world, but China may soon overtake it, thanks to rising health awareness and growing per capita income.
According to Euromonitor, the sports nutrition market in China is valued at US$206m, having experienced a CAGR of 42% for 2014-2017, and is projected to to grow at a CAGR of 25% through 2020.
As preventative healthcare and fitness trends become increasingly prominent across Chinese society, they have created abundant opportunities for international brands to operate and thrive in the sports nutrition sector. However, there are still substantial obstacles in the form of increasingly stringent regulations for health supplements and e-commerce sales.
Challenges and Opportunities
The majority of international companies utilize e-commerce to distribute their products, allowing them to bypass regulations in China that apply health products, and in the process avoid paying local taxes. This model provides overseas brands with an advantage over domestic brands, especially with regard to reaching consumers in first and second-tier cities. However, tighter regulations now require that international companies selling products in Mainland China pay import tariffs and comply with a pre-approved import list. Companies will also have to register their products with the China Food and Drug Administration, a process that requires clinical trials and a significant investment of time and money.
While the new regulations provide a challenge, overseas brands can still experience success by reconsidering their approach to the sports nutrition market in China. A potential method for entering the market in the new regulatory environment, include direct-sales licensing, followed by leveraging of e-commerce sales channels to achieve rapid expansion.
Perhaps the most effective strategy involves cooperating with local companies. This allows overseas brand to reap the benefits of developed distribution channels and regulatory compliance strategies, thereby bypassing the need to apply for licenses of their own. Chinese companies are willing, and in certain cases eager, to work with foreign companies. Overseas brands enjoy a sterling reputation among Chinese consumers, with 50% believing that their products are of higher quality, demonstrating that collaboration can be mutually beneficial.