Intl nutritional products, a healthy choices

He adds that generally, Watsons appeals more to women because there are a lot of health and beauty products. Women are also main target customers for Blackmores. In the 1990s, Blackmores started working with Watsons to sell its nutrition products in Hong Kong.

"We've been in Hong Kong for more than 20 years, and it was also the door for us to enter the mainland. We have spent a lot of time surveying the Chinese people," he says, adding that Watsons has more than 1,000 stores in the mainland and plans to scale it up to 3,000 in the next two years.

"Our products will reach out to more consumers with Watsons' expansion," he says.

Dale Preston, managing director of Nielsen's Greater China Retail Measurement, says that Western food brands can automatically charge a premium in China, as they are well-known for their quality and safety. "Chinese consumers are fully prepared to pay more for foreign food brands," he says.

Holgate admits that scandals from local food brands in the past few years have dented consumer confidence, but stresses that Blackmores is positioned for consumers who value good quality, but not necessarily as a premium brand.

"I think many Asian markets are like Thailand. It is a market with some wealthy people and many not so wealthy people," she says. "We are certainly not the cheapest, but what people do get is a quality product with a significant amount of background research."

That positioning is also reflected in the product price tag. A 400 capsule of "fish oil 1000" is sold at 299 yuan in the Tmall online flagship store, while the price for the same product in Australia is about A$38.95 (about 260 yuan).

According to Holgate, the prices of Blackmores products all over the world are normally within a 10 percent margin variation.

"We will not price our products high, just because we are in China. The information between borders is getting increasingly transparent. People might be one week shopping in Australia and then in Singapore. Shoppers are becoming more aware of the price disparity by going online."

As a health food company with footprints in Australia, Thailand, South Korea and six other countries, Blackmores realized that it has to adapt to every market due to different regulatory requirements and customer preferences.

"For instance, in Malaysia, manufacturers are not allowed to put a vitamin and a mineral together due to regulatory reasons," she says.

The company has specifically formulated products such as eye health, calcium and cholesterol for the Chinese market.

"Heart problems are a major cause of death in China, so fish oil, which protects brain and heart health, will be the first products that are sold in China," she says.

Customer preference also varies from place to place. In Thailand Blackmores sells more products with vitamin C, which improves the immune system. "It is very popular due to frequent weather anomalies in the country like the floods," she says.

Though China is a country that admires natural foods yet without many modern nutrition products, Holgate says the potential is immense.

"It (the market potential) is so huge that we need to be sure that we can deliver to our customers by having sufficient stocks."

Holgate is so ambitious about the market prospects that she says her concern is that "we might be too successful too soon and cannot satisfy the demand".

In Thailand during a recent epidemic outbreak, the company's vitamin C products were sold out overnight, she says.

To deal with such potential challenges, Holgate says the company is running its own warehouses in China, while expanding ties with other Chinese partners. This year, the company plans to hire 200 product advisors to work in the stores giving advice.

"Five years from now, China could be as big as the Australian market," she says.

wangchao@chinadaily.com.cn