On the regulatory front, China’s market for health food products (dietary supplements) hasn’t changed much from
2016. Although the Food Safety Law was put into effect on Oct. 1, 2015, many of the implementation regulations for
health food were not released until 2016. In fact, the industry is still waiting for a few documents to be released by
Cross border E-commerce has been growing exponentially since 2014. Many foreign brands have entered the market through this
“direct-to-consumer” approach that allows foreign brands to side-step China FDA registration procedures because these are consid-ered“personal shipments” that originated outside of China. It’s similar to a consumer going abroad and purchasing products, then
bringing them back to their home country.
April 2016 saw the government crack down on health products that were using the cross border channel and shipping to consumers
from any of China’s Free Trade Zones. The government move excluded health products from a list of approved products that can use
the cross border channel via Free Trade Zone. This was later retracted by the government, which then gave the industry a one-year
grace period until May 2017 to find alternative market strategies.
Also new to the cross border model is a new tax system and cap on sales. The new tax system taxes all incoming direct-to-consumer
shipments at 15% if being shipped from overseas. If shipped from one of China’s Free Trade Zones, the tax rate is 11.9%.
The cap on sales is CNY 2,000 per order and CNY 20,000 per year for each person. This of course is going to cause issues with some
people who are ordering from overseas and then reselling in China.
To sum up the current and near future of China’s health product industry, I would say that cross-border is going to continue to enjoy
popularity among consumers looking for international supplement brands. Once the health product registration and recording system
is finalized, it will begin to gain momentum after the process becomes clearer to both domestic and international players.
—Jeff Crowther, Executive Director, U.S.-China Health Products Association (USCHPA)