Entering China’s Market for Foreign Health Supplements

How can foreign health supplements brands successfully enter the China market? Which channels and strategies are best suited to doing so? Looking at the challenges involved and effectiveness of several approaches, TMO has put together the following strategic roadmap for foreign health supplements brands to enter the China market. Your strategy for entering this market depends on whether you have (or intend to set up) a domestic Chinese legal entity, and on whether you wish to adopt a cross-border strategy or sell through general trade.

Strategic roadmap for China market entry by overseas health supplement brands

Cross-border eCommerce sales by overseas legal entities

Currently, the Chinese government permits the sale of health supplements across borders. Under this model, international brands can sell directly to Chinese consumers from their overseas legal entity, without needing to set up a Chinese counterpart or subsidiary.

Ordinarily, a postal tax of 13% is levied on health products sent using the direct overseas mail model, in addition to a 9.1% cross-border eCommerce tax levied on goods in this category.

Setting Up an eCommerce Platform on WeChat

WeChat now allows foreign companies with no Chinese legal entity to register public accounts and run H5 stores. However, for now, such companies are not allowed to open a WeChat Mini-Program store in the health product category.

Watsons’s non-mainland H5 store can sell to mainland customers from its non-mainland public account. However, because the server for this store is not located within mainland China, the store can load slowly for many mainland consumers.

Using an Overseas eCommerce Web-store

Overseas eCommerce web-stores are better for companies to test the Chinese market than as a valid long-term strategy. Slow loading speeds in the mainland, low SEO friendliness for mainlanders searching for it, and barriers to consumer trust due to being based overseas and enforcement of consumer rights being difficult across borders are all issues that plague such web-stores. This makes it a poor long-term solution, as consumers have so many fast, convenient, and trustworthy options at home. If this is an approach you are considering using, be sure to make your site Chinese language-friendly. Few shoppers have the patience to navigate a foreign-language site in addition to the above issues.

Joining a Cross-border eCommerce Platform

You can choose to set up a flagship store for your brand on cross-border eCommerce platforms such as Tmall Global and JD Worldwide. For those selling in the health products category, the restrictions on and conditions for eCommerce across borders are stricter. Below we take Tmall Global as an example, showing what criteria a company hoping to sell in this category must meet.

Currently, Tmall Global uses an invite-only system for the healthcare product category, which means that brands cannot apply to set up a store. Instead they must wait for an invite from the platform. The relevant criteria, fees, and requirements for setting up to sell cross-border are shown below.

Tmall Global Health Products Seller Requirements and Fees

For breakdowns of your options when selling cross-border and selling domestically when you have a Chinese legal entity, check out the full article on TMO Group’s blog.