The Chinese market is changing

We just returned from the Hi China tradeshow and one thing is clear, the Chinese nutrition industry seems to be making major strides forward.

In geopolitics, China is often targeted for intellectual property issues and not innovating on its own. However, that was not what I observed this time and I think the results will be exciting for the omega-3 space going forward. I talked with multiple companies that have already brought exciting innovations to market, like fish phospholipids that naturally contain 50% EPA+DHA levels and new concentration techniques that allow companies to reach 97% concentrations with very little wasted EPA and DHA. The key aspect to these innovations is that they were not developed by trying to replicate products already on the market, but instead were focused on trying to solve market challenges. I believe the Chinese omega-3 industry will quickly move forward in the innovation phase of its development. The main obstacle for these companies will be marketing and communicating these new innovations, but like all obstacles in Chinese commerce, they will be solved.

The other striking observation I had at the show was how many companies are positioning themselves to make omega-3 APIs (Active Pharmaceutical Ingredients). It seems everyone wants to move into the pharma market, but this market is not likely to develop quickly and companies should be preparing for a slow development.  There are three pharmaceuticals awaiting approval in China for hypertriglyceridemia, but there are probably a dozen companies competing to supply them. Capacity is being built up quickly to make oils with the high concentrations of the EPA and DHA required by the pharma market, which should be fine as long as companies do not forget that they have existing businesses paying the bills that need to be nurtured while the pharma business develops.

Overall it was a great tradeshow and there was a lot of interest in GOED’s work. We are certainly looking forward to returning again.