Made FOR China: Probiotic firm takes up UK export challenge
The UK government has outlined plans to boost exports to China over the next decade – a mantle Cultech has already taken up.
Cultech – the company behind ProVen Probiotics, probiotic research consortium Lab4 and supplement brand Vega – has made the Chinese market key in its plans to increase revenues by £20m (€25.48m) over the next five years.
Last month the company launched its immune and digestive health ProVen Probiotics in China through the Shanghai Free-Trade Zone (SFTZ), an initiative launched by the country's government to boost trade back in 2013.
The zone allows internet sales to individuals to bypass national regulation.
CEO Nigel Plummer said the SFTZ enabled the company to “dip its toe” into the Chinese market without making significant investments in mass market routes– while this remained the long-term goal.
“This is going to be a significant portal for goods going into China, particularly for small businesses,” he told us.
In the past he said access to the Chinese market had proved challenging. Previously the company had applied for market access for an omega-3 product using European-conducted clinical trials, only to find at the end of the process that national regulation had changed to disallow non-Chinese studies as evidence.
"This stalled us," he said.
The company, with its £25m (€31.82m) turnover, currently exports around 75% of its products to countries including Norway, Israel, Canada and the US.
It hopes after five years of these sales to individuals China will account for 20-33% of its exports.
2nd largest EU exporter to world’s 2nd largest economy
UK exports of all goods to China have more than doubled since 2010 and increased by over 37% in the last two years, according to UK government statistics.
They were worth £12.4 billion (€15.79bn) in 2013, up by 18% from 2012.
Success in international markets like China – the world’s second largest economy after the US – has been described as a “cornerstone” of the UK’s long-term economic plans
“If the last decade was all about ‘Made in China’, the next decade will be all about ‘Made for China’,” the UK government said in statement last year.
Plummer said the company's plans sat within this context. “Certainly the dominant view is largely us buying from them. And this is redressing the balance. China is becoming a part of the global economy in a more balanced way.”
UK exports to China are growing three times faster than UK imports from China, according China’s Ministry of Commerce (MOFCOM), making the UK the second biggest European exporter to China.
Pitching to China
Plummer said this was in part because of perceptions of the quality of western goods – seen in particular with products like infant formula following contamination scandals concerning Chinese products.
Social media campaigns to build brand awareness would be a key factor in Cultech's growth plans.
"The internet is a big place so you still need to make that pitch to the consumer."
He added it was important to consider the unique selling point of a product when pitching for a place on Chinese shelves.
“It would be much more difficult to sell a standard multivitamin product because they can make their own.”
Indeed 90% of the world’s vitamin C supply is now made in China.
The global market for probiotic supplements, yoghurts and juice is worth €32bn, according to Euromonitor International.
This was set to grow to €43.5bn by 2020, with China accounting for a significant chunk of this growth.