What do almonds, vitamins and the Misfit tracker have in common?
They’ve all seen a surge in consumer sales in China. With a population that has one of the fastest rate of aging coupled with an exploding middle class, China has seen a dynamic shift in how healthcare is being prioritized and consumed. More people have a health-conscious lifestyle, boosting the healthcare industry to new heights and opportunities.
China’s healthcare sector spending was at $511 billion in 2013 and is estimated that it will balloon to $1 trillion by 2020. From consumer health to pharmaceuticals and medical devices, if you look at market growth and the speed at which it is growing, the healthcare market in China has great potential and opportunities for businesses.
“Chinese consumers are more concerned about food quality: food safety, food nutrition and food supplements,” says Andrew Pan, senior vice president and head of China Business and Strategy at East West Bank.
Health awareness continues to be a social priority as the middle class and urbanization expand. Given the country’s history of traditional Eastern medicine and lifestyle practices that involve activities such as tai chi, the importance of maintaining good health goes without saying for most Chinese citizens. The modern-day difference simply lies in the variety and heightened awareness of accessible health options and practices.
Wearable fitness tracking devices and health gadgets have saturated the international health market, with China being crowned the fastest-growing market, according to International Data Corp. Although the rate of growth may seem promising, international brands still face steep local competition when appealing to the Chinese consumer. Internationally recognizable brands like Apple Inc. and Garmin Ltd. fare relatively well; however, other brands, like Fitbit Inc., have partnered with giants like Alibaba Group Holding Ltd. and Tmall.com to compete. The average wearable fitness-tracking gadget hovers at under $200, and, according to International Data Corp.'s Worldwide Quarterly Wearable Device Tracker, total shipment of wearables in the third quarter of 2015 was 21 million units, an increase of 197.6 percent from the third quarter of 2014. Chinese vendor Xiaomi was a strong vendor in 2015 with 97 percent of their Mi Bands being purchased directly from China in the third quarter of 2015.
Among the growing interest in wearables, one international brand that has gained traction and popularity among consumers is Misfit Inc. An American consumer electronics company founded in 2011, Misfit has designed wearables with stylish fashion sense and consumer practicality in mind. Ranging from the Flash to the Shine, Misfit products look unobtrusive and blend well with any outfit.
Founder and former CEO of Misfit, Sonny Vu, told Wareable.com that many fitness trackers “look like they were designed by geeks for geeks, as opposed to for the mass market and women.” In 2014, the company received funding from giants like JD.com and Xiaomi to “amplify our presence in China and also to accelerate product development.”
As the health market continues to grow and technology advances, competition will inevitably get tougher. China’s modern consumers offer great potential through their purchasing power and market share; however, brands should be warned not to use them as a launch pad for new products.
As Chinese consumers in the middle class gain higher disposable incomes, health has increasingly become a priority in their lifestyles. While old-school remedies such as ginseng and acupuncture are still essential, the Chinese are beginning to incorporate the consumption of health supplements and vitamins into their daily lives. The Chinese vitamins and supplements market is projected to grow by 5 percent each year to reach $20 billion by 2019, and while traditional Eastern medicine still dominates China’s health industry, with the government’s pledge to support the biomedical industry, big companies like Amway and Pfizer Inc. are investing heavily in R&D and biotech hubs around the country.
Since 2006, 13 out of the 20 biggest pharmaceutical companies have built R&D centers in China and many have moved their Asia-Pacific regional headquarters to mainland China. Given the declining demands from shrinking populations in North America, Europe and Japan, nations like China are now becoming the center of focus for these vitamin, supplement and pharmaceutical producers.
What about something more organic?
Healthy foods and eating habits are beginning to gain popularity in China, as consumers are no longer shopping for the lowest price point, but caring more about the origins and quality of their food.
Typically, foreign imports cost two to three times more than domestic produce. Infamous food scandals in China, however, have caused Chinese consumers to distrust locally sourced foods and to instead purchase imported products. To give a small snapshot, the organic food market in China has tripled since 2007 with a market value of around $20 million. Because up to 40 percent of the rivers and 20 percent of the land in China is polluted, according to a national soil survey, consumers are expected to favor foreign imports and to continue to want to know the origin of their purchases.
“There is a health trend growing in China, and California‘s agriculture and food industry can benefit,” says Pan. “Dairy products, nuts, fresh produce, etc., benefit, especially with the growing demand for organic food.”
SunnyGem LLC hit the market with the right product at the right time. Despite a drop in popular demand from China, the market for California almonds alone has produced up to 30 percent returns for investors in recent years and has pushed farmers to plant more almonds. The state currently grows 80 percent of the global supply of almonds with almond trees covering almost 400,000 hectares.
With nearly 20 years of successful almond growth, SunnyGem is the company that supplies Simply Almonds. It continues to ride the wave of health-conscious Chinese consumers to cultivate more business.
China’s healthy lifestyle trend has only just begun. Consumers are venturing out to try more products, activities and services to improve their health.
Following in the footsteps of countries like the United States and Japan, where consumers actively pursue healthy lifestyles, Chinese consumers are expected to become increasingly aware of what they consume and where it originates.
“Understand what your target consumers really want and are concerned about, and address these issues in your brand – whether it’s food safety, air pollution or stress at work,” says Pan. “Chinese consumers tend to have a slower work pace, pay attention to work-life balance and spend more time with their families. Young people these days are increasingly health conscious, so taking advantage of social media is a good way of promoting brands.”
Companies diving deeper into this market should be well equipped with the best market data and strategies for communicating with and informing this audience about their unique products, benefits and services.
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