The largest raw material supplier to the dietary supplement industry, China is also the biggest export market for U.S. brands, creating a unique, perhaps inextricable commercial bond between the world’s two largest economies.

COVID-19 exposed America’s dependency on China for commodity goods, and the fragility of supply chains, as the pandemic sank global commerce in the spring of 2020.

However, now that China’s President Xi Jinping, who secured a historic third term in March, has abandoned the “Zero COVID” policy, the mechanics of returning to business are in motion.

A Refresh for Business Relations

Despite the geopolitical backdrop, the reopening of China, a nation of 1.4 billion people, spells opportunity for U.S. brands to meet high demand for quality health products.

“Our industry is really a highlight for U.S.-China cooperation,” said Daniel Mabey, president of the Asia Region for the United Natural Products Alliance (UNPA), who expressed “some hope” that the natural products industry is helping to improve trade relations with China.

UNPA has spent years building relationships in China, visiting factories and free trade zones in multiple provinces, and meeting with officials from various levels of government. Many of these relationships continue to bear fruit.

Additionally, UNPA applied for and received a Market Development Cooperation Program (MDCP) grant, managed by the U.S. Department of Commerce’s International Trade Administration. The grant has helped UNPA, its members, and partners to increase exports of U.S. natural products to China by leveraging cross-border free trade zones.

“The green shoots are returning,” said UNPA President Loren Israelsen. “I’m optimistic that the bridges we’ve built are still there,” following the shutdown. “Daniel has had good conversations in recent months from a lot of the contacts that we’ve been working with, so that’s really encouraging—that the investments we made earlier remain active.”

Israelsen said he suspects there may be some differences in terms of engagement and caution at higher levels of government, “but I think at the everyday-business-level it will be as fast as people can go, wherever they can do business. It’s no different in China than it is anywhere else in that, if we can do business and make money, let’s go.”

The (Virtual) Road into China

UNPA has partnered with WPIC Marketing + Technologies (WPIC), a top e-commerce accelerator in Asia, to navigate the complex, dynamic, and unique sales opportunity in China.

According to WPIC Chief Revenue Officer Peter McMath, China is experiencing double-digit growth across the health and wellness sector. “Having been operating in China for the last 18 years, we’ve seen the waves of the geopolitical hurdles and challenges,” he said, but companies have continued “to transact in that market effectively.”

“There’s a huge, unmatched opportunity for companies as they look to continue to grow their business,” he added. “If China is not on a CEO’s top three priorities, it probably should be.”

How can companies capitalize on this opportunity? Cross-border e-commerce serves as the conduit for international brands, as China’s “Blue Hat” registration system for health foods and nutritional supplements is essentially reserved for Chinese companies.

In many ways, the natural products industry is “built for e-commerce,” said McMath. “Other verticals have challenges in e-commerce based on average price points, average order values, the size of products, efficient shipping, etc.”

Only about 16-17% of transactions in the West occur online, McMath noted. “In China, that number pre-COVID was 51% in consumer-product verticals.” For the dietary supplement industry, like many others, the figure today may be north of 80%.

Within China’s e-commerce world, “virtually all of the major platforms (Alibaba, Tencent, ByteDance) offer cross-border fulfillment options, which allows brands fast, easy access with U.S. products—with U.S. labeling, in English—to be sold and imported by a Chinese individual.”

Social commerce in general has been the biggest trend within the last couple of years, “really eating into the market share of more traditional marketplaces,” said McMath. “What that’s an indicator of is more consumer attention on content and storytelling and relationships, versus an algorithm. There’s definitely been a lot of excitement and a lot of energy in the market, so that’s been a super-positive indicator.”

Perhaps above all, quality is a best-seller no matter the geographical region, according to McMath. “When a mother’s looking to buy infant formula for her baby, she wants the best in the world, and the same is true in this industry within supplements and broader health and wellness categories.”

Mabey agreed, noting  “the quality story” appeals to consumers all over the globe.

Navigating with Analytics

What should companies expect, and avoid, as they attempt to navigate the landscape in China?

“The biggest thing is companies need to go in with their eyes wide open,” said McMath. “They need to understand the landscape, understand the competitive set, have a clear path to how they’re going to position and compete within that environment, and so they need to be engaged.”

China is not a market where brands can be “asleep at the wheel,” he added. “Sure, they can go find a distributor and say  ‘you take care of it.’ But no distributor is going to care as much about the brand as the brand themselves.”

Other common mistakes that brands make include “foundational strategic decisions,”  “tactical channel positioning,” misaligned product assortment, and incorrect pricing, said McMath. “These are mistakes that a company can make that are going to have detrimental effects in the long term.”

Mabey said WPIC is just the partner UNPA needed. “They have the skillset and the data. They can read consumer trends and help companies navigate the China market. A lot of brands went over to China, found a local distributor, signed up, and it really went nowhere. There was no market match. WPIC really is an excellent group with a set of distinct technologies.”

According to McMath, “the story for us is really unlocking and bridging the gap between the massive consumer demand that exists in the world’s second largest economy with some of the best and brightest and innovative companies here in America.”

WPIC engages actively with its partners to get decision makers in the West to the “front of the line,” McMath added.

Given today’s fast-paced, globally-connected environment, with products predominantly sold online, companies need actionable data and insights to succeed in a market the size and scale of China.

“Our investments in data capabilities and analytics tools are critical to give companies access to information so they can make the best decisions,” said McMath.

WPIC strives to be “the trusted boots on the ground,” able “to feed the truth of the market” to decision makers. 

Looking at analytics and today’s market conditions, McMath said: “It’s fast right now. It’s fast, it’s smooth, there aren’t a lot of issues. So we’re very encouraged by that.”

UNPA’s grant program through the U.S. Commerce Department runs through September 2025. At that point UNPA can seek to renew and expand its application to other countries.

“Today our focus is 100% on China,” said Israelsen. “We spent a lot of time trying to get to where we are now, and we feel that we finally have the mix that we need to provide a level of service both on logistics as well as the intelligence, the e-commerce management. That’s a very specific skill set. There’s only a few that can do it, and WPIC is ideally suited for our needs.

“We’d like as many companies as are interested to take a look at our program,” he added. “If they want to build on what they’ve got, great ... We’d like to work with them and see if we can help them take the next big step up.”