Pic: Getty Images
China’s Silk Road for health and wellness is now even more of a two-way street with Australia
Health & Biotech
share
- A growing middle class and younger generation concerned about their health and wellness driving sector in China
- EZZ Life Science says Australian health and wellness products are highly regarded by Chinese consumers for their rigorous standards
- Lodge Partners says “cosmeceutical companies” benefiting from direct to consumer distribution channels in China
China has a deep-rooted history in traditional wellness practices and products. And the West has adopted a significant portion of its wellness culture from the East and particularly China, from its unique medicines to tai chi.
However, China is now also adopting many health and wellness products from the West, with a particular love affair for Australian products.
A growing middle class and younger generation concerned about their health and wellness is driving the sector in China. The Global Wellness Institute says the health and wellness sector in China is the second largest in the world, behind the US, and is worth US$683 billion.
EZZ Life Science (ASX:EZZ) chairman Glenn Cross told Stockhead following the Covid-19 pandemic, the company has seen consumers across China take a much greater interest in their and their families’ health and wellbeing.
Cross says this has driven strong demand for high-quality health products with top-tier provenance.
“Australian health and wellness products are, in general, highly regarded by Chinese consumers,” he says.
“This is primarily attributed to Australia’s pristine natural environments and its rigorous quality standards, overseen by the esteemed Therapeutic Goods Administration (TGA).”
“Chinese consumers value the transparency and reliability of Australian brands.”
Lodge Partners equity adviser Richard Lodge says he has seen “cosmeceutical companies” like EZZ and Anagenics (ASX:AN1) benefit from employing direct to consumer distribution channels and marketing in China.
“Noticably e-commerce and social media platform Douyin (Tiktok in China) have been crucial in growing and maintaining sales in China,” Lodge says.
“Anecdotally it also appears that despite geopolitical tensions, the Chinese consumer still sees Australian products as quality and the combination of the correct product and channel has resulted in resilient if not strong sales growth.”
Here are some of the ASX health and wellness companies we’ve noticed with growing markets in China.
EZZ Life Science
EZZ’s core focus has been on genomic health and developing a product pipeline of healthcare solutions based on genomics research and has firmly established a substantial presence in the Chinese market.
Cross says China is a country where innovation and consumer-centric solutions are key to success. He says while Aussie products are highly regarded, simply being ‘Australian’ is insufficient in this complex market.
“EZZ invests substantial time and resources in crafting high-quality, effective products and educating consumers, primarily through our presence on e-commerce platforms in China.”
He says Chinese consumers are savvy and spend large amounts of time researching products, particularly through short-video and live-streamed media.
He says EZZ recognises the immense potential in addressing the health and wellness needs of consumers in both China and beyond with a strategic focus on maximising this opportunity.
“First and foremost, we are committed to research and development, continually innovating our product lines to align with the unique preferences of the Chinese market.
“Secondly, we are forging strong partnerships with various online and offline distribution channels across China to ensure easy accessibility to our products.
“Thirdly, we are dedicated to education, ensuring Chinese consumers have access to reliable information about our products.”
He says in the ever-evolving Chinese market, adaptability is also pivotal to being able to leverage emerging trends and evolve preferences effectively.
Anagenics (ASX:AN1)
Managing director and CEO Scott Greasley told Stockhead AN1 is an Australian provider of premium beauty, health and wellness brands, developing and distributing clinically-validated cosmetic and wellness products.
AN1’s proprietary brand, évolis, supports hair regrowth, with China a particularly important market.
“China’s haircare market is the second largest in the world at US$9 billion in annual sales, growing at roughly 5% per year,” Greasley says.
He says more than 250 million Chinese suffer from hair loss with an Alibaba report finding that 36% of those people were born 1990 or later.
He says in terms of distribution, digital channels account for over 60% of haircare sales in China, demonstrating the importance of brands catering to a growing digitally savvy health and wellness-focused consumers.
“Young consumers are driving the wellness trend and prefer to spend online on personal care products, including hair care,” he says.
Greasley says Chinese consumers are fast following the trends in Europe and Australia of prioritising health and wellness.
“The market is vast and will continue to develop as the consumer wealth curve increases,” he says.
“We’ve established a beachhead in the market with our évolis brand and will look to expand in the years ahead with our broadened portfolio of health and wellness brands.”
RooLife Group (ASX:RLG)
RLG identifies trends in Chinese consumer demand, secures distribution rights for international products that fit consumers’ needs and provides the technology and sales infrastructure necessary for brands to sell at scale in China.
CEO Bryan Carr told Stockhead the company is servicing strong demand for international products in China and in particular for Australian health and wellness products
“Following the reopening of China and the removal of Covid-19 restrictions in the second half of FY2023, we are seeing an enhanced awareness and demand for health and wellness products,” he says.
“In response RLG has increased focus on the provision of health and wellness and healthy food and beverage products into the China market to service this identified consumer demand for healthy, high-quality international products from China’s large, emerging and increasingly health-aware middle class.”
RLG now exclusively distributes Remedy Drinks, New Zealand Honey Co, Fiji Kava, Hydralyte and RLG’s own VORA protein range in the China market.
The Calmer Co International (ASX:CCO) in partnership with RLG this week announced it had launched its flagship store for Chinese consumers on Alibaba’s Tmall global platform to sell Fiji Kava products.
Carr says Australia has been historically and continues to be held in high-regard with Chinese consumers.
“Australia and Australian products are seen as high-quality, safe, reliable and as some of the best in the world across multiple categories,” he says.
“Endorsement and recognition of premium Australian brands by Chinese tourists and students studying in Australia over the years has built on and enhanced that reputation and we continue to benefit from that legacy.
“This is backed up by the official numbers that show that China is Australia’s number one export market and our biggest export market for agricultural and food products.”
RLG subsidiary RLG Marketplace recently inked a deal to source and supply a range of goods including food, health and wellness, nutritional and beauty care products to be sold in China online and in the physical store network of Shanghai No.1 Pharmaceuticals.
“This is a perfect channel to promote and market Australian health and wellness products and has already delivered almost $3 million in product orders within the first month of the partnership,” Carr says.
“We are experiencing a real surge in enquiries and interest from Australian companies seeking to access the Chinese market and sell their products there.”
An important event coming up is the China International Import Expo in early November where RLG will be representing its portfolio of products.
The expo will be attended by Australian Prime Minister Anthony Albanese and China’s President Xi Jinping.
“This will provide great exposure and profile for the Australian health and wellness products we sell in China,” Carr says.
Vita Life Sciences (ASX:VLS)
VLS primarily focuses on developing and distributing a range of over-the-counter (OTC) medications, complementary and alternative medicines, dietary supplements, and health foods across Australia, South East Asia, and China, offering them under various brand names.
Some of the prominent brands under VLS include Herbs of Gold, VitaHealth, and VitaScience. VLS has a rich history, with VitaHealth being established as a retail pharmacy in Singapore back in 1947 and the introduction of their first supplement line in 1973.
At present, VLS boasts an extensive portfolio of more than 400 registered products.
In their recent financial report for the H1 FY23, the company revealed direct export sales into China increased by 36%, including strong representation across all major e-commerce channels in China.
The company says export sales to China are forecast to continue leading into major e-commerce events in H2.
The EZZ, AN1, RLG & VLS share price today:
At Stockhead, we tell it like it is. While EZZ Life Science and Roolife Group are Stockhead advertisers, they did not sponsor this article.
