Health brands poised for growth in China

27 February 2014
BEIJING: Chinese consumers are more likely than others to pay a premium for healthier products, while healthcare and nutrition ranks second amongst those categories in which they plan to spend more, according to a new study.

The Boston Consulting Group's Center for Consumer and Customer Insight (CCCI) surveyed 2,600 Chinese consumers aged 18 to 65, from the middle and affluent classes, and from large, medium, and small cities across the country for its report, Capturing a Share of China's Consumer Health Market.

It found that 73% of respondents – 12 points above the global average – were prepared to trade up to products deemed healthier.

The research further revealed that health-conscious Chinese consumers were buying a wide variety of products to treat common ailments, boost their energy and strengthen their immune systems.

"Almost half of the Chinese consumers we surveyed said they feel subpar because of lifestyle factors, such as work pressures, family obligations and long work hours," explained Carol Liao, a BCG senior partner and co-author of the report.

"Common complaints were insomnia, fatigue, lack of energy, obesity, and frequent illness," she added.

The report also highlighted a divide in views towards traditional Chinese medicine (TCM) and Western over-the-counter (OTC) products.

The former was more popular with sophisticated consumers, many of whom had concerns over the side-effects of OTC products. In addition, TCM was preferred by 55% of those in large cities compared to just 35% in small ones.

Less sophisticated consumers, in contrast, were more likely to regard OTC products as both more effective and more convenient.

Overall, well-known brands were considered safer and of higher quality than lesser-known brands, and BCG noted that umbrella brands tended to confer credibility across their product portfolio.

But brand knowledge counted for nothing if the product was not available. Even though a majority of consumers went into pharmacies with brand preferences – and chains were perceived to have better quality merchandise than independents – most made their final decision in-store, so point-of-sale influence mattered said BCG.

The online channel accounted for only 2% of total health product sales since consumers distrusted the internet when buying such items. But BCG said it was growing quickly as the government imposed stricter requirements on vendors and industry players improved product quality and distribution as well as increasing consumer education.

Data sourced from BCG; additional content by Warc staff
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