Her­bal­ife bullish on China mar­ket

Com­pany seek­ing M&A op­por­tu­ni­ties to ex­pand prod­uct port­fo­lio, dou­ble sales rev­enue

China Daily (Latin America Weekly) - - Business - By FAN FEIFEI fan­feifei@chi­nadaily.com.cn

Her­bal­ife Nu­tri­tion Ltd, a US-based nu­tri­tion com­pany, is bullish on the prospects of the Chi­nese mar­ket, which will be­come the its big­gest mar­ket in the next few years as con­sumers in­creas­ingly fo­cus on healthy life­styles and nu­tri­tion.

“At present, China is the most im­por­tant mar­ket for Her­bal­ife, and also the third­largest mar­ket be­hind the United States and Mex­ico,” said Zheng Qunyi, chair­man of Her­bal­ife Nu­tri­tion China.

The US firm is now seek­ing merger and ac­qui­si­tion op­por­tu­ni­ties in the coun­try and ex­pand­ing its prod­uct port­fo­lio, with an aim to dou­ble sales rev­enue in the next few years, ac­cord­ing to Zheng.

China is a grow­ing mar­ket for Her­bal­ife. Over the past five years, the com­pany has gen­er­ated rev­enue of more than $23 bil­lion world­wide and over $3.5 bil­lion from the c o u n t r y, with a com­pound an­nual growth rate of more than 17 per­cent.

The nu­tri­tion firm has been present in the coun­try since 2005, and has three plants in Nan­jing and Suzhou in Jiangsu prov­ince and Chang­sha in Hu­nan prov­ince.

The Nan­jing fa­cil­ity, which opened in 2016, con­ducts test­ing and anal­y­sis of in­gre­di­ents and prod­ucts, while the Suzhou fa­cil­ity be­gan op­er­a­tions, man­u­fac­tur­ing pow­ders and tablets for the do­mes­tic mar­ket, in 2000.

Ac­cord­ing to Ger­man con­sult­ing com­pany Roland Berger, ow­ing to con­sump­tion up­grade and ad­van­ta­geous govern­ment poli­cies, the size of the coun­try’s nu­tri­tion mar­ket is fore­cast to reach about 180 bil­lion yuan ($26.15 bil­lion) by 2020, with an av­er­age an­nual growth rate of 8 per­cent, giv­ing it the po­ten­tial to re­place the US as the largest mar­ket in the world in the fore­see­able fu­ture.

The con­sul­tancy said the rapid growth of the nu­tri­tion mar­ket is creat­ing un­prece- dented op­por­tu­ni­ties and chal­lenges for the in­dus­try and com­pa­nies need to make prepa­ra­tions in ar­eas such as prod­uct de­vel­op­ment, brand­ing, sales chan­nels and in­ter­na­tional col­lab­o­ra­tion.

Her­bal­ife has said it will in­vest 700 mil­lion yuan to ex­pand its busi­ness in the coun­try and help ad­dress pub­lic pol­icy chal­lenges such as obe­sity.

The com­pany will also seek co­op­er­a­tion with four Chi­nese uni­ver­si­ties in the fu­ture and fund re­search cov­er­ing di­rect sales, sourc­ing of raw ma­te­ri­als, pro­duc­tion qual­ity, health and grow­ing obe­sity prob­lems. Each of the uni­ver­si­ties is ex­pected to play an im­por­tant role in Her­bal­ife’s de­vel­op­ment.

In ad­di­tion to in­vest­ment, Her­bal­ife has built part­ner­ships with lead­ing busi­nesses in the na­tion. It en­tered into an agree­ment with Tasly, a Chi­nese phar­ma­ceu­ti­cal com­pany, in 2017.

The part­ners will team up to im­prove the health of peo­ple in the coun­try and around the world, co­op­er­at­ing on prod­uct de­vel­op­ment, man­u­fac­tur­ing, and in­creased ac­cess to lo­cal and global net­works and cus­tomers.

PRO­VIDED TO CHINA DAILY

Cus­tomers select Her­bal­ife nour­ish­ment prod­ucts at a health­care ex­hi­bi­tion in Nan­jing, cap­i­tal of Jiangsu prov­ince.

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