Hong Kong’s health food companies struggle with anaemic sales on the mainland because of onerous regulations and red tape, the city’s exhibitors at China’s first International Import Expo have complained.
The week-long trade fair in Shanghai that ended on Saturday drew about 2,800 companies from 130 countries and regions. More than 20 out of the 160 Hong Kong exhibitors were from the food industry, led by the Hong Kong Trade Development Council.
The Hong Kong exporters said most of the nutritional supplements and health food products, common in the city, could not be sold in shops on the mainland because of a maze of rules and regulatory hurdles. The local industry is estimated to be worth about HK$19 billion (US$2.4 billion), according to a survey in 2014.
“We are waiting for a chance. We have to pave the road first by building networks and learning more about the mainland market,” Ken Wong, director of a health food company said at the event, which was aimed at opening China’s market to global importers.
His sugar-free snack products were given the green light to enter the Chinese market, Wong said, but not two other health products for stomach and liver ailments. “A customs officer came over to the booth and reminded me these products could only be sold online,” Wong told the Post.
Set up in 2014, Wong’s company All Time Healthy manufactures its products in Canada with his own research team, and distributes to retail chains in Hong Kong. Item names include Gastro Wellness and Liver Wellness.
Wong said they could only send samples by mail to interested companies at the expo. In the end, the event was a chance to promote his brand and network rather than to cut any deals.
Exhibitors are seeking a share in the largest market of imported food products in the world. In 2017, mainland China imported food products worth US$61.7 billion (HK$483 billion), up 11.1 per cent from a year before, according to latest official figures announced at the expo.
Market watchers said demand was likely to grow with the rise in aspirations for a better quality of life.
But Wong’s company isn’t the only one struggling to make inroads. Big names like Catalo also say they have to rely mainly on online platforms for sales.
Catalo, which operates one of the largest health food retail chains in Hong Kong, has set up three stores in Shanghai, Guangzhou and Shenzhen. “The shops are mainly for product display and promotion … Staff there would guide interested customers to buy online,” the company’s project leader Dick Cheung said.
According to the company’s reports in 2016, 99.4 per cent of revenues came from Hong Kong, compared with 0.6 per cent from the mainland.
Imported health food products with specific purposes are not completely banned from physical sales in mainland China, but companies have to jump through hoops such as prolonged and costly application procedures with no guarantee of success.
Small companies such as Wong’s can barely afford the costs.
Importing natural and organic food was also not an easy task, according to Kampery group general manager Howard Wong. As a Hong Kong tea giant, Kampery supplies tea products to more than 70 per cent of Cantonese restaurants in Shanghai.
Yet, the organic food business of the group’s subsidiary Green Dot Dot faces a tougher path. “We encounter difficulties importing certain products at times when they do not fall under any categories in China,” Howard Wong said.
For example, he said, the company tried to import wild rice from Canada five to six years ago but was told the product was not classified as rice, or under any existing category. In short, it was banned.
The issue was fixed only after three years of discussions and the intervention of the Canadian government.
Food products labelled as “organic” also came with high costs, as under mainland law, each item type required its own certificate, and the accreditation process could cost about HK$10,000 and span months, Wong said.
“The country is talking about connecting to the international community. As there are so many international certification agencies, could authorities work closer with them?” he asked, hoping China’s market, in the spirit of the expo, would further open up in terms of policies.