0:55 Since 2005, how would you characterize developments in the market? 2:00 Could you elaborate perhaps on the “blue hat” in terms of registration, costs, and timeline? 3:47 Many dietary supplements and other health foods that are on the market, on the shelves, here in China but don’t have the “blue hat” registration. How is this possible? 5:27 What kind of changes can we expect will be easier or more difficult for Canadian companies to enter the market here? 9:06 Other initial steps should Canadian SMEs be taking to prepare themselves as they develop a China strategy 12:56 Is there any advantage to be had to outsource their manufacturing to a contractor here in China? 14:40 We’ve seen multinationals such as Amway be very successful in China with a direct sales strategy, is this a viable option for Canadian SMEs? 18:00 What other sales channels would really suit a medium sized Canadian company and what are your views on cross-border ecommerce in the China market? If you're a Canadian SME and have questions about doing business in China, please send us your questions by email at SMEGateway@international.gc.ca. All services of the Trade Commissioner Service are FREE of charge to qualified Canadian clients. Tony: Welcome to this latest instalment of the Canadian SME Gateway to China video series as presented by the Canadian Trade Commissioner Service. I’m Anthony Finch from the Trade Section at the Canadian Embassy in Beijing, and here today with me is Mr. Jeff Crowther, executive director of the U.S.-China Health Products Association. Jeff has been working in the natural health products industry since 1993 and has been in China here since 2005. In 2010, he found the US-CHPA, and Jeff’s work has been widely published in leading natural health product publications, such as Nutraceuticals Magazine and Nutritional Outlook. He regularly delivers educational seminars and cooperation with government and private sector partners in the U.S. and China. Welcome Jeff. Jeff: Thank you, thank you for having me. Question 1 – Tony: Now Jeff, you’ve been an insider in the Chinese nutraceuticals and health food industry since 2005, over that time how would you characterize developments in the market? Answer 1 – Jeff: Developments have been quite interesting. When I first got here the market was really kind of a wild wild west, if you will. I think you know, one of your Canadian companies Jamieson was here early on and there was quite a few other companies, but the regulations were not very set in stone. They were very opaque; non-transparent, if you will. So if you had the right relationships, you knew the right people you could get the business going in China quite easily. From that point to approaching maybe the 2010, or 4 or 5 years after that, things were getting a little more difficult and chaotic. And we’re at a place now where we have new regulations coming out and of last year it’s made business, as I think most of your viewers will know, quite almost impossible to get stuff in the market at this point. Question 2 – Tony: Now an important consideration for foreign companies looking to export into the Chinese market is the “blue hat” registration, issued by the Chinese Food and Drug Administration. Could you elaborate perhaps on the “blue hat” in terms of registration, costs, and timeline. And maybe also highlight any other matters of interest to Canadian SMEs looking to enter the market place. Answer 2 – Jeff: Well the “blue hat”, as it’s called, is a logo first off. And the reason it’s called a “blue hat” is because it looks like a little hat, a little crown, so we call it that. And in Chinese it also has the fun name of “blue hat” in Chinese, Lán màozi. And this is a very expensive and timely process, it takes generally about 2 to 3 years to achieve this. And this is working through a registration agent that you have to procure and go through that process. And worst case scenario it can cost probably about what I’ve seen about 150,000 U.S. dollars. So it’s more similar to what I think people would be accustomed too, like maybe an OTC or even a drug approval. It’s very rigorous, with toxicologies and human and animal testing, depending on what functional claim you’re going to make. But overall, it’s an investment in time and capital to get that done. And most companies have chosen not to go that path leading up to current time, because it is so expensive. And that’s just for one product, so most companies have a number of skews, you know, minimum five or six, and some companies have hundreds, so you can imagine multiplying that times $140,000 can get quite expensive. Question 3 – Tony: Those of us who monitored the Chinese industry see many dietary supplements and other health foods that are on the market, on the shelves, here in China but don’t have the “blue hat” registration. How is this possible? ...

• published: 16 Mar 2016
• views: 8919