APAC Q2 2023 Review: China's Regulatory Shifts & South Korea's Resilience Drive Market Focus
Analysis of June's top APAC news reveals critical regulatory changes in China impacting advertising and product formulation, alongside robust South Korean nutraceutical growth despite economic headwinds. Brand owners must re-evaluate market strategies to navigate these evolving dynamics.
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Singapore, Singapore — 10 July 2023
Key developments across the Asia Pacific health and nutrition sector in June 2023 highlight significant regulatory shifts in China and sustained market resilience in South Korea. China's State Administration for Market Regulation (SAMR) has proposed new advertising rules for health foods, potentially prohibiting the use of scientific research reports and clinical evidence. This move directly impacts how brands communicate product efficacy, demanding immediate re-evaluation of marketing collateral and clinical trial strategy ahead of anticipated implementation in Q4 2023. Additionally, Chinese authorities are proposing stricter protein requirements for milk and formulated milk powder products targeting older children and adults, necessitating formula adjustments for brands like Biostime which recently secured approval for new infant formulas featuring lactopontin (LPN).
Conversely, South Korea's nutraceutical market demonstrates robust growth, defying broader economic slowdowns. Industry experts from AceBiome and Amway Korea indicate that 'evergreen' consumer demand for body fat reduction, immune support, and joint/bone health supplements continues to drive sales, offering stable investment opportunities. This trend is bolstered by the market's high acceptance of probiotics for a broader range of therapeutic purposes, as evidenced by Sanofi and AB–BIOTICS' collaboration to launch cholesterol-improving probiotics. In Malaysia, health supplement registrations are on an upward trajectory, contrasting sharply with a five-year low for natural product registrations. This indicates a consumer preference shift towards modern, scientifically-backed supplement formats over traditional herbal remedies.
Indonesia's Youvit, backed by a US$6 million Unilever-led funding round, exemplifies the push for new product formats and market expansion, successfully growing in Malaysia. Meanwhile, Danone China has capitalised on surging demand by launching an electrolyte drink, identifying it as the fastest-growing beverage category in the country. The H&H Group saw its Swisse brand achieve US$1 billion in sales, coinciding with the appointment of a new CEO, underscoring the ongoing potential for established brands with strong consumer bases and strategic leadership.
What this means for Asia Pacific
Manufacturers and brand owners in APAC must prepare for a significant overhaul of marketing compliance in China, prioritising substantiation methods that align with SAMR's proposed advertising restrictions by Q4 2023. South Korean market entry strategies should focus on 'body fat reduction' and 'immune support' claims, leveraging the market's high probiotic acceptance to differentiate products. In Malaysia, new product development should skew towards modern health supplements, moving away from traditional natural products to capture rising consumer registrations. Reformulation windows for milk powder products targeting China's adult segment will be tight, requiring prompt R&D investment to meet stricter protein standards.
The emphasis on scientific reports and clinical evidence in marketing is under regulatory scrutiny in China. This will likely cause brands to shift focus towards product innovation that speaks for itself through tangible benefits and consumer testimonials (where permitted), rather than relying heavily on detailed scientific data in public advertisements.
This trend is being actively addressed by UK manufacturing partners including Supplement Factory.