Director of China Chamber of Commerce of Medicines and Health Products Importers and Exporters (CCCMHPIE) elaborated on the emerging market opportunities when speaking at the Nutrition and Health China Industry Summit held in Shanghai recently.
He said the the generation Z consumers – those who are in their early 20 – are big spenders on health and beauty products, and hence, a group to watch out for, according to Zhang.
“I recently got into contact with a guy from iQiyi (online video sharing platform). He was born in 1996 but he goes for botox injection and consumes a lot of health products.
“Online influencers are also into this, and therefore, we need to pay attention to them as they are big spenders,” Zhang said.
Specifically, he pointed out that to this group of consumers, products with special features, such as personalised packaging and customised R&D formulations, were the key selling points.
On the other hand, with an average of 15 million of newborns each year, Zhang highlighted that infant nutrition was another massive market to look out for.
“This is a huge market. Young parents are only concerned with the product brand and quality, they are not price-sensitive and their consumption level is extremely big,” he said.
A cross-border import consumption insights report by Tmall Global and CBN Data has shown that Chinese parents are adding more types of nutrients into their babies’ diet.
The most popular supplements are calcium, iron, zinc trace elements, followed by vitamins and DHA.
The third point that Zhang had pointed out, was the integration of online and offline sales channels.
He said that there might be an emergence of new retail models, especially those that integrates both offline and online channels.
“This is because China has nearly 480,000 pharmacies and over 1m convenience and mum-and-pop stores. If we were to integrate them and infuse the concept of healthy living and health products into their system, I believe there will be a very huge development in the future.”
As of last year, the online retail size in China has reached RMB$9tr (US$1.3tr), with an annual growth rate “slightly muted” at 23.9%, Zhang said. Previously in 2017, the yoy growth rate was 32.2%.
He also opined that the scale of cross-border e-commerce in China might not be “as huge as we have thought”, according to research that his team has done.
He therefore cautioned that the market competition and price reduction tactics between these retailers might intensify.
While the Chinese authorities have heavily promoted the nation’s Healthy China 2030 initiative, Zhang said there was still work to be done to align health food regulations and national health goals.
As for the authorities recent 100-day operation to clean up the health food market, he said that despite bringing “great pains” to the industry, especially towards the direct sales firms, which made up the bulk of China’s health food retail channels, it was nonetheless, a good move for future development.