Many companies want to do business in China—whether it's sourcing ingredients and materials or exporting goods—but there is a great deal of confusion surrounding Chinese regulations and what the market really looks like. On Thursday, March 10, at Natural Products Expo West 2011, Nutrition Business Journal’s own director of market research, Carla Ooyen, will host a discussion on doing business in China with expert panelists Jeff Crowther and Alex Lee.
Jeff Crowther is executive director of the U.S.-China Health Products Association, and Alex Lee is founder and CEO of Core Sports, a distributor of sports nutrition products in China. Our panelists are traveling to Expo West from Beijing to uncover the regulatory aspects, as well as share their experiences and the lessons they've learned. The session will be beneficial for gaining a deeper understanding of the law, the reality of the market, navigating sales channels, working with distributors, and how to identify good partners in the market. The session will be held in Room 207A from 1:15PM to 2:45PM, Thursday, March 10, at Expo West.
Alex Lee recently spoke to NBJ from his office in Beijing, delving into the landscape of the Chinese sports market, the characteristics of consumers in Asia, regulatory boundaries, as well the general opportunities and challenges for U.S. companies looking to enter the Chinese market. The Q&A is featured in our February 2011 Sports Nutrition & Weight Loss issue. For excerpts from the interview, read on.
NBJ: What are the most popular sports in China? What products are Chinese sports enthusiasts most interested in?
Alex Lee: Right now, the two most popular sports in China are basketball and soccer. These are the ones on TV, especially with broadcasting of NBA and China Basketball Association games. The World Cup is huge. The Olympics are gaining notice among the general population. Beyond that, the sports that China has traditionally excelled in include tennis, ping-pong and volleyball. Swimming is becoming more popular at the recreational level. Also there’s a steadily growing interest in recreational and outdoor sports. As consumers’ spending power increases, they’re going out and buying road bikes or mountain bikes, or heading out to the mountains for trekking or hiking.
In terms of products that fit these sports, it tends to be the most basic at this point. What you’re starting to see now is advertisement for protein, not necessarily geared toward sports, but definitely in terms of nutrition. Electrolyte drinks like Gatorade are becoming more popular, in terms of the general population. With regard to the professional athlete space, beyond your basic creatine, protein powder, recovery, electrolyte and energy products, they’re also looking for that extra edge. So not necessarily pharma-grade, but things we might not buy off the shelves so readily. For example, things that increase hemoglobin or testosterone levels, I’m always getting requests for things like that.
NBJ: Is there a viable consumer market for sports nutrition products in China?
AL: One thing to note, for anyone looking to do business in China, is that you really have to compare apples to oranges. There’s that 1.2 billion people, what-a-huge-market thought process, but that’s not even close to the reality of the market. If you’re talking about, say, chewing gum, you probably have a better chance of reaching the 300 to 400 million city-dwellers. But if you’re talking about something as novel as sports nutrition, you’re really whittling it down to a much smaller demographic.
And it’s an issue of buying power. One of the reasons that Competitor has done so well is that their sourcing and manufacturing is all domestic, so they can create a price that no import can touch. So a protein powder sold at retail in the U.S. could go for about $100 for a five- or ten-pound product. That’s expensive by U.S. standards. And think of your U.S. consumer, say a 20-25 year old guy, college grad, has a decent job and makes about $3,000 per month. He’ll go to the gym, use his creatine and protein, and end up spending maybe $100 a month. That’s not a big deal. With the barriers to entry and import costs, the price for the same products in China is almost double that. And the average salary for a white collar job in China, in the city, is closer to $400 to $600 per month. Are they going to spend a third to a half of their income on sports nutrition? Probably not.
If you’re working with government-sponsored teams, price is not so much of a concern. They’re concerned about safety and results. A U.S. product may cost twice as much, but it might get you two more gold medals. As a team purchaser, a government official, that can go on your record. It then becomes a matter of provincial or national pride.
NBJ: What are the fitness and physique priorities for Chinese athletes and consumers?
AL: If you’re talking about athletes, it’s performance. They don’t care what they look like necessarily. So the six-pack and the bulk come from training, but it’s not an end result. With regards to the general population that can buy sports products, it’s absolutely a physique thing. Typically speaking, since the 90s, when milk became more of dietary staple, people are looking to put on some muscle mass and increase lean muscle. Pre-workouts are popular for this too.
NBJ: Are there opportunities for sports nutrition in other East Asian countries?
AL: In more developed countries with higher income, like Hong Kong, there’s a bit of demand. Sports in Japan are pretty huge. South Korea and Taiwan, not so much. Singapore, yes. From a sociological and political standpoint, the Asian countries where sports nutrition is growing—like Hong Kong and Singapore—tend to be have been protectorates or have remnants of British colonial expansion. Sports nutrition comes a little more naturally to them. In South Korea and Taiwan, the ideal body image for guys is not so much buff with a six-pack. It’s more of a svelte, pop-star look.