By Siah Hwee Ang*
For the most part, the Chinese market has grown accustomed to consuming cheaper goods.
But as Chinese consumers enjoy increased spending power, they become more selective, especially when it comes to health-related products. With money, many people hope to live better and longer.
Healthy consumer products are now a priority for the affluent middle class consumers in China.
Back in 2006, healthcare and health-related products was one of the bottom three growth areas in consumer spending in China. By 2016, it had become the third highest growth area. It is expected to become the highest growth area by 2030.
People living in developed countries may take it for granted that other countries offer similar living conditions to ours.
We cannot assume that others have the same control over staying healthy that we do in New Zealand.
For example, despite shifting its industrial activities out of the main cities of Beijing and Shanghai, air pollution continues to be a major concern facing Chinese city dwellers.
During a recent trip to China, the air pollution often caught my attention.
Beijing City on a morning in March.
Shanghai city, mid-morning in March.
While Beijing and Shanghai don’t look this gloomy all the time, environmental problems are growing. “Look at the sky. There’s nothing to see!”, a cab driver told me.
I can understand why there are anxiety and concerns among residents in these cities.
Beijing and Shanghai provide the best opportunities for employment and most likely pay the best wages in the country.
But this comes at a price. Staying healthy is not a guarantee as pollution continues to loom large. There’s no doubt that China’s fast growth has had an indelible effect on its environment.
Many residents’ attention has shifted to consuming all sorts of healthy food and supplements to ensure that they stay as healthy as possible.
With increased spending power, the willingness to pay is also higher.
Herein lies a business opportunity, which is unfortunately being exploited by unscrupulous businesses: fake health-related products.
Fake health-related products are a ubiquitous feature of the Chinese market and will likely never go away. In some cases, we may even see more growth.
Nonetheless, this increase does not necessarily come at the expense of authentic products.
The desire for authentic health-related products is picking up as well. It can even be argued that this is partially helped by the ‘promotion’ of the fake ones in the market.
Various distribution companies are experiencing a flood of fake health-related products being traded on their platforms.
So much so that Chinese consumers are struggling to differentiate between what’s real and what’s not.
They are becoming increasingly concerned about the origins of their health-related consumer products.
In many cases, friends and relatives end up being the most reliable ‘suppliers’ of authentic health-related products.
“That’s the only way to ensure I get the real thing (direct from New Zealand)”, as a manager told me during my recent visit. “There’s no way to tell if the products in Chinese stores are real or not,” he added.
So, what’s wrong with this picture?
Differences between two countries can often give rise to the best international business opportunities.
The fact that a business may offer quality health-related products in China does not guarantee that its products will fly off the shelves.
Obviously, education about quality is key. Recall how New Zealand dairy prices plummeted alongside those of the rest of the world—indicating that the market did not deem New Zealand dairy to be ‘premium’.
Communication is also vital. How can consumers know that the products they see are genuine? This question sounds unimaginable, but it’s real and it doesn’t only apply to China—we can expect the same of other less developed markets.
While their high quality will ensure that most of New Zealand’s health-related products will do well in China, the increased sophistication of the market means that we cannot lose sight of the constant need for education and communication of our value propositions.
*Professor Siah Hwee Ang holds the BNZ Chair in Business in Asia at Victoria University. He writes a regular column here focused on understanding the challenges and opportunities for New Zealand in our trade with Asia. You can contact him here.