by Mitchell Clute
When the Natural Products Association first began contemplating a staffed office in China back in 2001, today’s quality-control scares with Chinese-made products and ingredients weren’t yet on the radar, but it was clear that China’s importance in the supplements market would continue to grow.
Now, two years after NPA’s China office opened, manufacturers are beginning to see the results of the organization’s efforts. And those results cut both ways—not only addressing supply-chain issues for Chinese raw materials, but also opening a growing Chinese market to American products. In 2006, China’s supplements market was $6.66 billion—or 10 percent of the global supplements market, according to Nutrition Business Journal, published by NFM’s parent company, New Hope Natural Media.
“As the industry grows, the supply chain has to grow,” says Daniel Fabricant, vice president of scientific and regulatory affairs with the Natural Products Association. “China is really the global leader for vitamins, minerals and some botanicals as well. In fact, there are certain ingredients you can’t buy anywhere but China; 80 percent of the world supply of vitamin C comes from China, for example.”
Chinese facilities are capable of making high-quality ingredients but lack some of the quality-control expertise gained throughout many years by Western manufacturers. One of the NPA’s China initiatives, developed in conjunction with U.S. Pharmacopoeia scientists in Shanghai, involves comprehensive testing of ingredients before they leave China, with test results provided to the supplier and entered into the NPA database, available to all members.
“It may be luck, but in the dietary-supplements industry, we haven’t had an incident like the melamine in pet food,” Fabricant says. “We’re working to ensure the strength of the supply chain and have better guarantees on the quality of raw ingredients. Especially for ingredients originating in China, we need more transparency, with third-party efforts that let consumers know the right thing is being done.”
NPA’s China strategy has generally met with support across the industry, though few expect that these initiatives alone can address all the issues on the supply side. “It’s a good thing, of course, but it’s one step in a thousand-mile journey,” says Loren Israelsen of the industry consulting firm LDI Group Inc., based in Salt Lake City.
In the current economic climate, Israelsen says, the biggest problem is pressure to buy at the lowest price. “U.S. buyers will be telling Chinese suppliers, we want the best quality but you have to shave a buck off the price,” Israelsen says.Though some observers, such as Israelsen, believe that major results will require a variety of initiatives, NPA feels strongly that—for now at least—it’s best for the U.S. supplements industry to speak with a single voice in China.
“It’s good to have one voice and one clear direction,” Fabricant says. “It makes negotiating [with the Chinese government] at this stage much easier. It took considerable effort to set up initiatives like the USP testing, and now that we have federal GMPs for supplements, the responsibility falls to industry to give consumers confidence.”
The other side of NPA’s mission in China is to open Chinese markets to U.S. products, a process made more difficult by the nature of the Chinese regulatory system. “The regulatory system is a registration system that is somewhat redundant,” Fabricant says. “And there are issues within the regulatory scheme that invite conflicts, and areas where the process isn’t clear.” For example, Fabricant says that products are approved on a product-by-product basis, so that even if there are already a dozen 300 mg calcium products on the market, the 13th one has to go through the same process as the first one. One of NPA’s interests is to help the Chinese adopt an ingredient-by-ingredient approach to cut the amount of paperwork for new products coming from the United States.
Still, the NPA believes that the market for American-made products will continue to grow in China as more people have more disposable income—and more information about health. “There is a lot of material disseminated about health in this market, and the Chinese are very interested in those benefits,” Fabricant says. With any luck—and a lot of hard work—consumers in the United States will begin to see Chinese products with certified raw materials, while Chinese consumers will be able to find U.S. products that were never available before.
Mitchell Clute is a Fort Collins, Colo.-based freelance writer.
Natural Foods Merchandiser volume XXVIII/number 7/p.14,16