Health supplement market in China

Podcast transcript #70: How health supplement market in China has changed over 20 years

Find here the China Paradigm 70  where we, Daxue Consulting interview season entrepreneurs in China. Read this transcript and build an understanding of the health supplement market in China, learn the changing history of import services for China’s health care industry, and understand the difference among various channels to practice cross border e-commerce in China.

Full transcript below:

MATTHIEU DAVID: Hello everyone. I’m Matthieu David, the founder of Daxue Consulting, a China market research company based in Beijing, Shanghai and Hong Kong and its podcast, China Paradigm and today I am with Laurent Cibot. I know you for, I think, two or three years now. We have been working for similar clients and you have been in China for fifteen years now. I have not seen many people who have been here for so long.

You are now managing your own company and as the owner of this company and CEO of this company you are working for different companies in the health supplement market in China, and you have grabbed many opportunities. So, one being initially sourcing products from China to the west and now, you are importing products and helping companies to actually enter the Chinese market, especially in the health supplement market in China. So, I believe your story is a bit of a story of how China lived; like exporting and now more importing because the market is very dynamic. Thanks very much for being with us. Could you tell us more about your current activity and your two different jobs, basically because one is for the west and one is actually sending to Chinese?

LAURENT CIBOT: Well, yes, thank you very much first for your invitation. It is very nice to have a talk today with you. So, you see we are at home because maybe people don’t know we are in… it is Sunday today so I prefer to stay at home and I don’t go to the office. As you can see you are in my living room now. So yes, actually you are totally right on this point. Actually, it’s true because you know 15/20 years ago people; most of the foreigners in China actually are doing export service for China’s healthcare industry. So, I kind of follow the trend because 15/20 years ago China was not the market that it is today. So, I did sourcing in healthcare for many, many years and actually yes, a few years ago I began to do health supplement consulting in the Chinese market and a few years ago; I would say it is almost a decade ago, but I began to do some health supplement consulting in the Chinese market for companies in health care which I would like to help find some distributors in China in the supplement industry.

MATTHIEU DAVID: I saw looking at your CV or resume and basically what you did in the past that one of the key milestones was what you did for Labarato Cooper where I believe you began to discover health care in China if I understand well.

LAURENT CIBOT: Yes and no actually because before I worked for Cooper; and it was my first experience in health care. I had my own company. It was my first company I set up when I was around 24 and I set up a company to help French companies to better understand China. It was a service company and at that time we were working with different industries and I had this first experience during this time with a very famous, interesting brand. It used to be a very strong brand in France and in Europe called Oenobiol that you might know because it used to be the brand; like the beauty supplement French brand, value, brand identity and that’s how I came into the health supplement market in China. Then actually yes, I set up as you said and at that time actually; just to finish with the Oenobiol and actually yeah, they became part of a very big group; a very big company and I met the general manager at that time, as you said so I set up an office in China and that is how I continued in this industry that I found very interesting because it is very competitive in China and I would say now that Chinese people; they are much more interested and they are very conscious about their health. They really want to improve their health and to live longer, especially live well; live well and live longer in a good condition and in good health. So, it’s a fast-growing health supplement market in China and it is a very interesting industry to be in now in China. It is.

MATTHIEU DAVID: What do you for Liberata Cooper and what do you do in health care, generally speaking, because I feel health care is a very big topic so as you just mentioned, you talk more about the health supplement consulting in the Chinese market. So what you are sourcing from China are health supplements? Are they more devices and products? So could you tell us more about what you do on both sides and what you are talking about exactly because that is impacting a lot about regulations and about what certification you need to import. I believe if you want to import a product from a big pharmaceutical like Sanofi or one of those very large companies you need much more certifications than a health supplement, but I will let you explain to us.

LAURENT CIBOT: Well, actually the sourcing part; it is more about medical devices and mostly electronic medical devices that you can find in your pharmacy in France or in Europe. Actually on the other side; so this is more for sourcing and on the other side it’s really; I am focusing on supplements and so health supplements, food supplements, and products and brands are mostly French, but not only. So actually we could talk about Arcfama which is the number one in France for natural health supplements or natural health supplement markets, but also a Canadian company. I just finished consulting for a company called Larmo and Larmo Health Solutions; LHS which is a company manufacturing… so it is in B2B manufacturing probiotics and working with supplement brands to actually supply probiotics worldwide. So, it is actually different and I mean I would say it’s about wellness and health care and as you said already it is really… I cannot follow the trend of China and what has happened in China in the past I would say the last two decades from sourcing to the market and I would say it was actually what I did during my study at the business school. So, it is kind of because I studied marketing so it’s kind of something I always liked and when you are an entrepreneur in China you will find more interest in this big health supplement market in China of more than one billion people; maybe more at a certain point; more than doing purchasing or sourcing.

MATTHIEU DAVID: So let’s talk first; if you have time we can talk about the sourcing which is basically more industry of the past now for China or the promising part of china. It is more I believe the important part which is the growing part and import services for China’s healthcare industry in that part. So let’s talk about the health supplement market in China. You have worked for, as you mentioned, Aqua Farmer and you have recently worked for Larmo. The third thing when we think about health care and when we think about health supplements when we think about what we are eating and in the Chinese market, we think about certification, regulation, and we think about risk. How do you manage that because the food business can be extremely risky in China if you are not compliant? It can be criminal. So, you can go to jail and it can be a high-risk business. What is your experience in this industry regarding regulation specifications?

LAURENT CIBOT: Well, it used to be… so first I would say this health supplement market in China really has changed a lot from like 10/15 years ago until now and I mean how it changed is mostly because of e-commerce and especially cross border e-commerce in China. I remember we talked about Oenobiol. I worked for like ten years ago, and at that time we only spoke about offline. We never really spoke about an online business which is…

MATTHIEU DAVID: Which is like 2006 or 2008, right?

LAURENT CIBOT: Yeah. So, which actually would be very; I mean today it will not be possible. I mean today everybody speaks about the online and cross border. The thing is that the cross border e-commerce in China is a great opportunity for the brands in France or from other countries because it gives you the opportunity to sell your products in China without registering the product in Beijing in the; I would say the China FDA. 

MATTHIEU DAVID: So, I think it is hard for people listening to us and for people living abroad to understand. It means that you know food products; even products you are going to put into your own system or your body basically the borders are going to say, “If it’s authorized overseas then we authorize it, basically; if it is coming from overseas. “ Have you known any bad experiences regarding global e-commerce in the food industry or the beverage industry? I feel it’s topical; it is a dream; like you don’t need any certification.

LAURENT CIBOT: Personally, no, I didn’t, but I would say that this supplement or from the supplement brands of these companies in health care… well, for this brand, actually the very current question I have; the very I would say the question that comes very often is about you know; how it works because in health care especially this laboratory in Europe; they are very careful about the product that they are launching and putting on the market so they are working very closely with the regulators in their countries and so, you tell them, “You don’t need to register products. You can sell it.” So, they don’t really… for them, it is very hard to understand and to consider.   

So, very often they will say, “Yes, but what about after-sales? What about all this…?” There are sales and things around which are very important of course, so they will ask many questions and for them, it is very hard to conceive. So, part of my health supplement consulting in the Chinese market is to explain to them how it works; the cross border e-commerce in China is a great opportunity for them because to register a health supplement in China today will be a wait of at least 2-3 years for one product; one reference and it will be around 100-150 thousand Euro.

MATTHIEU DAVID: 150 thousand Euro, okay.

LAURENT CIBOT: Yes, only for one reference. If you can avoid spending this money to register a product and to spend all this time to even actually not to be sure, but to register your product it is time and it is money and its money, again. Do you know what I mean? It is a lot of money you know; if you can adjust you can directly go on cross border e-commerce in China. It’s a very good strategy today and it is a very good thing today for the brands abroad.

MATTHIEU DAVID: What are the limitations of cross border e-commerce in China? Are you limited to the supply of the packages? Are you limited on the weight, in terms of the value of the goods inside or you have no limitation?

LAURENT CIBOT: Well, you have a limitation about… actually, you have limitation because and most of the… you have a certain amount you have to pay tax. So, at a point people will try; the consumer or user would buy the product and they will themselves; they will try to make their calculation.  

MATTHIEU DAVID: What is the amount? Do you have an idea of the amount, roughly? I know it is changing very frequently, but roughly?

LAURENT CIBOT: It is changing very frequently… like it was 2000 RMB.

MATTHIEU DAVID: $300 and you don’t need to pay taxes if it is under 2000 RMB at least last year or two years ago. Now, it may have changed because it is often changing. It is already a sizeable amount of money. I mean you could even buy and resell at this level.

LAURENT CIBOT: Yes, of course, buy and resell and it’s… I would say the cross border e-commerce in China for the supplement industry really re-shaped the supplement; the health supplement market in China and actually I even know the biggest companies. Last month I met with the general manager of a big food health supplement company like the American run. It’s a major player on the market and we had this meeting because they are thinking to put some probiotics in their products and actually this guy told me that they don’t… Blue Hats is the certification you get when you register at the health supplement market in China.

MATTHIEU DAVID: How do you spell it?

LAURENT CIBOT: Blue hats because…


LAURENT CIBOT: Yes, H-A-T because it looks like a hat. 


LAURENT CIBOT: So it’s on a blue-collar and he told me, “Yes, all this money we are getting in China; we only do cross border e-commerce in China.”

MATTHIEU DAVID: How much money are we talking about for a big player with cross border e-commerce in China? So far, what I have seen in a lot of fashion brands, luxury brands when we look at the Digo; the Digo on top and we are trying to attract the ones coming basically from individuals and so on. We are talking about a sizeable amount of money. We are talking basically and roughly the size of a goods store, but not much more. So, that is the fashion industry. That is maybe a bit different. What about the health supplement market in China? Are we talking about $1 000 000, hundreds of thousands of dollars; what are we talking about?

LAURENT CIBOT: Yeah, no actually it’s more thousands of millions of dollars for…

MATTHIEU DAVID: For one year?

LAURENT CIBOT: Yes, for the; I would say the big players, but you have… I saw some small and not very big brands arrive at the China market and very quickly within a year did maybe $1 000 000 US dollars over cross border e-commerce in China which is very good because at a point I would say this money; when you do this money, first of all, we can talk maybe about it later, but it needs investment, of course. The cross border e-commerce in China needs investment with a platform especially if it’s a big platform, but the thing is that you can make enough money then to invest the money into maybe your star products, to maybe register it on the China FDA to go on the seventh step and you know; the physical and do offline and then go from online to offline and both and actually it is something what I would say is a long-term strategy. If you want to plan to stay long in China first begin with cross border e-commerce in China and then launch or register your star product or two or three products in order to do also offline and find a good partner offline. Yeah.

MATTHIEU DAVID: So in the sense of the cross border e-commerce in China, you told me that it is a very expensive certification to get because as you said; 150 000 USD and actually when it is less than 2000 RMB you don’t have to pay the taxes when importing. What about communicating and marketing on it and which platform to choose? We know that Tmall has a Tmall global and we know has done such things similarly, but then and that is actually something you were beginning to talk about; you need to advertise the product and create traffic and search convention and you may need people to actually talk on the chat because it is compulsory when you have a Tmall shop, for instance. Can you tell us more about how those health supplements selling online through cross border e-commerce in China are able to sell on which platform and how to direct traffic?

LAURENT CIBOT: Well, what is coming first would be the content because you have… 


LAURENT CIBOT: WeChat or like whatever channel because actually the content sometimes some brands and especially in health care and in health supplement market in China or maybe when you go on Twitter more OTC medicine. They don’t really have; like more OTC; like over the counter because medicine is something different, but OTC. Sometimes they don’t have a lot of materials so they need to do their materials.  

MATTHIEU DAVID: Sorry to cut you off, but what you mean is that if you are selling offline through… it is offline or online you are talking about?

LAURENT CIBOT: I am talking about online.

MATTHIEU DAVID: Online okay; so if you are selling online you have your shop and you need content because people would want to know more and very often there is not enough, especially if you go to an agent or a distributor you may not be able to talk a lot about your brand or your product so you need to create for yourself your brand content. Is it a good understanding of what you are saying?

LAURENT CIBOT: Yes, so you need to feed you… if you have a partner you need to provide this content or you need to feed your customers; your end-users with content. So, for some of the companies in the health supplement market in China; some laboratories, especially French laboratories, sometimes they don’t have that much material so we need to make it or if they have the material or they have the content we need to adapt the content to the health supplement market in China. So, this is maybe the first step and then, of course, as you said you need to choose the right channel and of course, we talk about cross border e-commerce in China. You will have to spread this content to the right, maybe, social and, of course, social media is very important. It is something that comes first because social media is the future of cross border e-commerce in China. It is the present already, but it is also the future. So, it depends on the brand. It depends on the brand. It is a little bit similar to social media in Europe or in the US. It is like you are in a different room. If you are on LinkedIn or if you are on Facebook or Instagram, it is very different and it will depend also on the product. So, actually for me, of course, WeChat is something that is everything.

MATTHIEU DAVID: Can you use WeChat for cross border e-commerce in China; I mean is it adapted for cross border?

LAURENT CIBOT: Actually I am talking about spreading your content.

MATTHIEU DAVID: Only the content.

LAURENT CIBOT: Yeah when you did your content you have all your content and I think you need to spread it in a lot of different channels. So, I think this is I would say something you should do before you begin to sell your product or to talk about your brand. So, it will be of course to do maybe an account on WeChat and to give some context to the potential group or a few groups on WeChat, but also which is very important for me is Baidu; to do some SEO because it is solid to speak about your brand. For instance, we talk about probiotics; maybe it will not be true for other products or other industries, but for probiotics; Chinese people have health issues. They don’t feel well with their belly, they have like… 

MATTHIEU DAVID: What your mind defining probiotic? I am not sure if everyone knows what a probiotic is. Could you define that?

LAURENT CIBOT: Of course. It’s good bacteria.  Actually, there are lots of bacteria; good and bad, alright? So, eating probiotics will help you to fight against or to be healthy or to intercept so it is good bacteria that helps you. It means prolife, actually and it helps you to be more healthy. So your mouth is full of bacteria also; good and bad and that is why now you can find probiotics in toothpaste. You can find probiotics now in cosmetics because you have a lot of bacteria also in your skin. So, it’s now the probiotics are everywhere in the food, in the supplements; health supplements, but also in daily care products and also like daily care products. Yes.

MATTHIEU DAVID: So, you mentioned Baidu and SEO as a key digital asset to create. On which platform should it be created; with your own websites like in Europe where you build your own website and you try to rank your website or would you actually have another strategy to go on Baidu and other websites like Sina, Mini Blog, etc. to build your presence online? What would be the strategy for you?

LAURENT CIBOT: Once again it depends, but yeah SEO, Baidu and if you can do also SEO with the platform when you put it because at a certain point as you said you need to sell your product or put your product on the health supplement market in China and to put them on a platform. So, if you are the manufacturer and it is a strong brand already in France I reckon to go on Tmall of course; Tmall or on JD and you can do also SEO on Tmall and JD, you know, but also I mean you know; it’s all on the system and for instance, you can link it also because it’s the same group as you know; Tmall, Youku for the video because it really needs… We talk about the health care and health supplement market in China so we need to explain to the people what it could bring for them; that it can make them feel healthier and more comfortable; like they feel better in their lives. Actually, you just asked me what it was; the probiotics. I mean most of the people don’t really know what is it exactly that they heard about it, but in China people will; maybe they heard about it and they know it is something for you know; when I don’t feel well or I have diarrhea or something and I take probiotics, but it is something you know; still not very well-known so we need to educate that this is very important to have these different channels to send the content to. I would say like a video, on this kind of video website or cross border e-commerce in China or even work with KOL. It’s very important because it could bring you also, especially for the one-shot operation it could bring something to your strategy that you know it is like kind of one-shot for me, I think the KOL is like, “Okay I want to set up an operation about – I don’t know – the double 11.” So I would find a KOL to push my sales on my Tmall shop.” It could be interesting, but actually so because I was talking about offline. You need to think about your offline because this is very important to the Chinese. They still like to have this interaction towards this experience. Maybe they will go during the weekend with their family to the mall and then they could be interested to go to buy some supplements and actually the health supplements market in China; it is really about a gift. It’s quite similar in cosmetics, but actually, the supplement is something you buy very often from your parents or for your kids, for yourself also, but that’s what is very different from the cosmetics so actually, the offline will be very interesting and it is something also you can’t neglect. You have to think about it because like, yes, at a point people will be… your customers will be happy to find our products; the products they are buying, the brand they are buying in offline and I would say to find a good partner in offline is very important at a point when your brand is already a little bit famous on the cross border e-commerce in China. It is very important to find a good… this is the next step. Find a good partner offline to push your brand; online to offline.       

MATTHIEU DAVID: What brands for you are the most successful health supplement brands in China; the ones that you would take as an example of what to do? Would you name a few of them?

LAURENT CIBOT: Of course I would say Australian brands.

MATTHIEU DAVID: More specifically; do you have some names in mind?

LAURENT CIBOT: Yes of course so I am thinking about Black Mall for instance or Swiss actually which is not really Australian anymore because they have been bought by a Chinese group called H&H, but yes, this is a very good example of brands which are very successful in China and unfortunately French brands are not so successful which is a pity because we have a lot of great companies and a lot of great products and brands in France for health supplements, but you know most of the time when you ask Chinese about French products in wellbeing and healthcare they will think about cosmetics. They will; not think about supplements which are a pity because we have more than 400 companies in this industry. So, we have a very good incredible know-how about health supplements and we have great brands that we export in many countries. In China, the problem is that Australian and yes, and companies so mostly Australian brands from New Zealand, also; they are very successful.  

MATTHIEU DAVID: How do you analyze why they are successful? Could you give some direction as to why they have been successful?  How do they communicate on health supplements? What are their marketing and sales channels? What is an identity? What do you think is the right identity of a health supplement…? Is it exercising to shape your body or is it a link to actually maintain good health? What are the key identities they use?

LAURENT CIBOT: They mostly just I mean just to finish because I was answering your previous question and for me, it is a pity because you can find a lot of very good French companies in supplements and I think that the reason is that in these past years, actually the Australian brands and the brands from New Zealand invest massively in marketing because the markets are the potential and they invest massively on these brands onto the health supplement market in China. Actually what they are focusing on or communicating on actually is mostly about natural supplements hat the ingredient they are using is very like unprocessed I would say, It is very natural and is very good quality because Australia and New Zealand is a big part of the world. You don’t have that much pollution. It is well preserved and everything and so what they are trying to do is about nature, you know. They market their products unprocessed.  

MATTHIEU DAVID: What do you think Chinese are looking for in those products? Are they looking for performance or are they looking to compensate for something that is going bad or are they looking to really solve a health issue? What are the main reasons why they would buy OTC health supplements?

LAURENT CIBOT: It depends on the segment. If you see they will try to find performance if you talk about sport nutrition which is a very strong segment now; a very fast-growing segment in China since the Olympics; since after the Olympics so for the past ten years it has been growing very strongly, but yes, actually what they are looking mostly for supplements; general supplements; like supplements with no chemicals. Maybe something that could help them to get some nutrition they don’t really get in their daily food, but with not too many chemicals.

MATTHIEU DAVID: Is it in a coalition with Chinese medicine or do you feel actually it is complimenting Chinese medicine? Chinese medicine is about this balance between cold and hot and all this kind of thinking and knowledge about it; how are the supplements marketed towards Chinese medicine? Is it seen as actually a good mix? Is it seen as western medicine? How is it seen?

LAURENT CIBOT: I would say that it’s complimentary. I think it is something coming with and what is very interesting is that you can see now that some foreign brands or even local brands now; they are mixing some like traditional medicine supplements so TCM supplements with for instance probiotics. So, it is actually yes, it is actually something very interesting because you mix the Chinese medicine and the probiotics and very often the probiotics are important. So, yes it’s something actually; together I think it is good because in the end, the people will be healthier. So, either Chinese medicine or point medicine and if you can mix them without any chemicals.  If you can take a good benefit from it, it is perfect.

MATTHIEU DAVID: A few words before we stop because it seems to be almost one hour already. One of the clients you have worked a lot with and you are still working with a lot is OMEY as far as I understood; O-M-E-Y and you are distributing with OMEY brands like Nistula, SVR, Doctor Pierre Rico; I am reading the PPT. It is a lot of brands distributing in China. OMEY is coming from France. Could you tell us more about the story of OMEY between France and China and what are Chinese clients looking for when they go to an OMEY store or the OMEY clinic?

LAURENT CIBOT: OMEY is a company that is already almost 20 years old. The founder and CEO are; I mean I would say it is a great business called Jordan Jia and he is someone with a great vision. So it is very interesting to work with him and his team and actually, Jordan has set up an office in France after distributing all these brands in China for these past 20 years. He set up an office in France around ten years ago and he really likes France and the French products and actually, he went; one day he went to find me. He contacted me and he saw what I was doing and we had this very interesting conversation. He said after doing cosmetics for all these years he was very interested in the French nutrition concept because as I was saying before, French cosmetics are very famous in China, but unfortunately, the French supplement products are not really famous in China. It’s a pity because we have really great brands and that’s what he wanted to do. Actually, it was great because I have been frustrated for many years because you know most of the French brands in supplements; you can’t really find any of them in the health supplement market in China. So, the idea to launch this concept of French nutrition, French supplement was something really exciting. So, we began to work on this project. So it is very interesting. This year the number one; the leader in France in supplements called Pileje and this is a very great brand.

MATTHIEU DAVID: Can you spell it?

LAURENT CIBOT: P-I-L-E-J-E and this brand are about micro-nutrition and about probiotics also. That is why I was even more interested in doing something with OMEY because yes, the supplements based on probiotics are something that I really believe. I really believe in this, especially in the health supplement market in China. It is a very strong trend in China. I said that the e-commerce cross border re-shaped the supplement industry in China, but actually the probiotics I would say would become number two. The cross border e-commerce in China and the probiotics were actually the two main biggest trends in China; re-shaped totally the health supplement market in China.

So, today we are on the market; it actually the second market probably very soon. It will become the first market in the world for supplements in China. So it is already a major market, we could say, but yes and no. Actually there are a lot of opportunities because when you see the goals of the supplement marketing, especially some segments about probiotics or the sport nutrition; there are still many, many things to do and we are like of course, we would like to find – I am talking now with major players in France – in supplements and OTC industries and I mean yes, this is something that we would like to do, which is to have a very large range of products and brands for OMEY to really launch something very ambitious for French nutrition in China.

MATTHIEU DAVID: Thank you very much for your time and thank you for everything you did to be able to catch all those opportunities and especially to be in the segment of health supplements market in China; I think what is very impressive is that you found this niche early enough to be able to see the growth and sustain it from the beginning and we see those brands now everywhere in China. Thanks again. I hope you enjoyed it and I hope everyone liked also the topic.

LAURENT CIBOT: Alright, thank you very much, Matthieu and have a great Sunday.

MATTHIEU DAVID: Thanks. Bye-bye, everyone.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at to get all answers to your questions