China Consumer Health, a Promising Market Rapidly Emerging After COVID-19

[Asia Economy Reporter Hwang Yoon-joo] The consumer health market in China is rapidly growing due to the novel coronavirus infection (COVID-19), prompting calls to strengthen the entry of Korean companies into this market.

According to the "Trends in China's Consumer Health Market and Entry Strategies for Korean Companies" report released on the 2nd by the Korea International Trade Association's International Trade and Commerce Research Institute, the size of China's consumer health market, including vitamins, over-the-counter drugs, and sports nutrition products, reached $41 billion in 2019, ranking second in the world after the United States ($77.6 billion), and is expected to grow at an annual rate of 3.8% over the next five years.

Chinese consumers' interest in consumer health has surged due to COVID-19. In February alone, searches related to over-the-counter drugs increased more than 20 times, and searches for health food information rose more than five times.

The report identified "expansion of e-commerce distribution" and "increase in premium demand" as characteristics of the Chinese consumer health market. Last year, sales of consumer health products through e-commerce accounted for 25.5% of all distribution channels, with sports nutrition products exceeding 80% in e-commerce share. Additionally, as awareness grows that self-prevention is more important than treatment after illness for children's health, and as parents' self-care habits expand, demand for premium products such as imported and high-end brands is increasing.

The report further stated, "Last year, retail pharmaceuticals imported by China from Korea accounted for only 0.57% of China's total global imports, and health functional foods accounted for 1.8%, which is a very insignificant level," advising that "to expand Korean companies' entry into China's consumer health market, strategies such as utilizing e-commerce platforms, mergers and acquisitions (M&A) of local companies, emphasizing self-prevention over treatment, and building brand images tailored to target groups are necessary."

Park So-young, senior researcher at the Korea International Trade Association's International Trade and Commerce Research Institute, said, "Recent trends in China's consumer health market highlight e-commerce and premiumization as key factors," adding, "For Korean companies, operating online flagship stores, expanding distribution channels through collaboration with local platforms, and customized marketing are important."