Takehome:
China health food market has huge development potential but its growth is still stymied by an outdated regulatory system. The health food market in China has grown tremendously over the last several years and based on the current growth rate forecasters predict the total value of the health food industry will reach more than RMB 500 billion by 2020. However, there are still a lot of illegal activities that hinder the development of the industry.
Focusing too much on marketing strategy while ignoring technology development
Many Chinese health food companies’ growth model focuses solely on promoting their brands through innovative marketing concepts and invests huge amounts of money in advertisement rather than focusing on product quality, efficacy and technology development. This overall industry emphasis on advertisement has led to the widespread occurrence of disingenuous marketing which often rely on exaggerated product function claims and cross the blurry line walked by these borderline products from compliant functional claims to illegal medicinal claims. However, it is explicitly stipulated in the Food Safety Law that health food shall should not be labelled or marketed with claims of disease prevention or curative functions, and the functions claimed on the label or advertised shall be within the approved 27 functions.
Advertising products with disease treatment claims
The health food sale channels in China are mainly direct sale, conference market, sale by distributors/agencies, on-line sale, etc. Currently, the modes of direct sale and conference market still occupy a high percentage of Chinese health food market. There are a lot of free “health lectures” held by health food companies to disseminate misleading scientific information to support their products efficacy. The senescent population in China is deliberately targeted with exploitative marketing campaigns that focus on disease treatment or even disease curative functions.
Adding illegal components into health food products
Some pharmaceutical products are added to health foods that may do harm to human body and is common among products with weight management functions. Drugs such as sibutramine or phenolphthalein have been illegally added to health foods to increase efficacy.
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