Q&A: Business leaders explore China’s booming health food industry
Late last year, the Foundation led a group of six New Zealand nutraceutical and functional food business leaders to China for a deep dive into the sector and to attend Asia’s largest nutraceutical. Over seven days, the group met with local manufacturers and retailers, gaining insights into the Chinese business environment and exploring opportunities for collaboration and attended functional food expo, Healthplex, in Shenzhen. In this Q&A, we speak with three of the delegates to get a taste of what the trip was like.
Despite a busy itinerary, the group also found time to experience some cultural highlights and scenic attractions
In this Q&A, we chat with:
Alex Devereux, chief executive and co-founder of dairy alternatives company ANDFOODS.
Hayley-Jean Rahman, brands partner at dietary supplement manufacturing company PharmaNZ.
Tristan Vine, co-founder and chief executive of natural health and company Mānuka Performance.
Why did you want to take part Nutraceutical & Functional Food delegation to China?
Alex: The feedback I have had consistently is that successful businesses operating in China spend a lot of time there and form deep partnerships as opposed to visiting once or twice a year. So, any chance to get up there is important for us, but with this trip the opportunity to have it curated by the Foundation was an opportunity not to miss because they pack into one trip what would take me three to four trips to achieve.
Hayley: To better understand the scope for New Zealand manufactured nutraceutical products into the China market and to explore opportunities for market access and partnerships.
Tristan: China is an emerging market for our company, the delegation provided specific engagements with a range of businesses and groups that are integral to us gaining deeper insights, relationships, connections, and a general understanding of doing business in China.
The group visited New Zealand and Chinese companies, attended networking functions and roundtables and connected New Zealand officials
Can you describe what it was like at the Nutraceutical & Functional Food expo in Shenzhen?
Hayley: The scale of the event was impressive, as was the breadth of goods and services exhibiting. The show was very much consumer facing, with exhibitors launching and/or selling finished products - Influencers (online promoters) dominated the halls, broadcasting live promotions and selling online and direct to public attendees. I was surprised to see how popular and prevalent the ‘Made in NZ’ branding was on booth displays at the trade show.
Tristan: The expo was highly valuable — big insights gained from all of the relevant halls (manufacturing, ingredient supply, nutraceutical brands etc). Probably the most insightful aspect, and I didn't think it would be, was the food service hall, where I saw clearly how our ingredients could be relevant in this sector.
Alex says the most valuable part of the visit was getting in front of and hearing from key industry representatives and leaders
What’s the market for nutraceutical and functional foods in China like?
Alex: For our products, we have been delighted to see baristas and chefs get their hands on the product and use it in vastly different ways to how operators would in Australia or New Zealand.
The Chinese market is so innovative, and they are always looking for the next exciting thing, but their expectations have also risen dramatically alongside their purchasing power.
They are conscious of the provenance, the ingredients being used, the health benefits alongside the all important taste and texture of the products.
Hayley: It's a mature, digitally connected dietary supplements market the same size at our entire New Zealand GDP - and growing! A market where Brand-NZ is established, recognised and respected.
Tristan: The market is simply huge. Aside from exporting consumer products and nutraceutical ingredients into China consumers and customers, there is a huge and relevant market for in-China manufacturing, R&D, clinical trials and ingredient supply opportunities. The size of the market, consumer base and access to customers cannot be compared to New Zealand: One fraction of just one city is the entire size of New Zealand's population.
How is New Zealand as a country placed to sell products health-food products to China?
Hayley: Consumers and businesses were very keen to connect with novel New Zealand products, noting the long established ‘clean green NZ’ branding that our products carry. The trip reiterated that having a local presence is paramount to success (either through a trusted agent/distributor or ‘boots on the ground’ via a local/JV entity). In-market partnerships help navigate language, customs requirements, local regulations and lower the barriers for product market access.
Tristan: The opportunity is absolutely there. Some businesses are positioned well and taking advantage of it, but there are a lot of missed opportunities as well. Our [New Zealand] products are hugely sought after, but we (in general) need to promote and leverage the access to these opportunities.
The delegation meeting with Nuspower, one of Guangzhou’s leading Nutraceutical Manufacturers
What do you see as the biggest obstacle for businesses looking to entering the Chinese market?
Alex: I think people get scared by the thought of operating in China because of perceived issues around IP, language barriers and differences in the business culture. But we have found that if you go in with an understanding of how they do business and what kind of relationship they are looking for, you can be successful. That doesn’t mean you shouldn’t be careful about IP and who you partner with, you absolutely should, but it shouldn’t put you off exploring China as place to operate.
The group touring a supplement production laboratory and testing facility
What was the most insightful or valuable thing about taking part in this visit?
Alex: It was just the face time with all the different people we met; it really exposed to me to the capability at some of the technical universities, the supply chain models in China and the speed at which people operate.
Tristan: Probably the most valuable part was gaining an understanding of specific niche opportunities to supply B2B (business to business) ingredients that - at China scale - are a highly viable business on its own.
Hayley: How receptive the market was to New Zealand products and the importance of digital/online influencers for product promotion. Gaining a better understanding the dietary supplements landscape (the product journey) from manufacturer to consumer, and the various requirements along that journey was also invaluable.
The Foundation's business programme supports New Zealand companies to better understand Asia so they can make the most of opportunities in the region. It also supports to grow the next generation of Asia-savvy business leaders.
