Selling supplements, finding out about local business challenges

Author: Raymond Koot

I have always been the entrepreneurial type. Eager for opportunities, always on the lookout for interesting ventures. That is how I ended up the semiconductor business in Taipei, one of the most inviting business environments in the world. But when I stepped into the new business arena of sports supplements, I found Taiwan offers some challenges that I was not entirely aware of.

As I have never been much of an athlete or fond of going to the gym, my interest in supplements has always been low. Sure, I have tried to lose weight once and figured that I could use some help with a product that would help me burn calories faster. But it was a meeting with a South African businessman that drew my attention, got me hooked and made me enter the business of selling supplements. The strength and endurance results that rugby teams booked by using his natural supplements amazed me.

Scouting Taiwan
Before I knew it, I was busy scouting Taiwan and mainland China for opportunities to market Supplements SA products. Supplements represent a billion-dollar business worldwide, and Taiwan was not the more mature market. One US brand dominated the market, in which small local players distribute small batches that are bought in Europe or the US via e-commerce.

One eye-opener is that local authorities like the Taiwan Food and Drug Administration seem to have confusing policies for products that are allowed into the country. Even natural substances are allowed today but can be banned tomorrow. Maybe we were unlucky, maybe naïve, but one lesson is this: do your homework when you intend to import food products and supplements in Taiwan. Even when natural products are involved, bureaucracy and over-regulation may come into play, so make sure you have your product specs well-documented. In a lengthy process, we managed to get 9 out of the full range of 29 products admitted, but we are not giving up.

No problems at all
Naïve? Probably that too. There must be an explanation that our biggest competitor has had no problems at all to import its American-made and branded product. I can’t help thinking that the fact that the competitor’s team in Taipei consists of two local ladies who know their way around. They managed to team up with a local drugstore business, which opens the world of officially-stamped doctor statements that help a lot when applying for market entry approval.

By ‘knowing your way around’ I also mean ‘knowing how to pull strings’ and how, when and to whom they should offer a small red envelope. This red envelope – the infamous ‘hong bao’ – is the ‘small token of appreciation’ that is still very much relevant to anyone wishing to do business successfully in Taiwan. In my first years in Taipei, I closed a deal for semiconductors. Part of the price I paid via official channels, for the other part – the red envelope part – my business partner called to read his Macau bank account number.

 

Not a sore loser
I don’t want to come across as a sore loser. Dealing with the authorities to get the other 20 products approved is just a matter of time. Meanwhile, we have had some issues that can be connected to another local business custom, even among businesses: to blow the whistle on your competitor. The authorities approached is that we had to make changes to the special SupplementsSA water jugs that we had sourced from a factory in Shenzhen. We were obliged to add a notice inside the bottle about the fluid temperatures for which the bottle was safe to use. A similar thing happened with the supplements bars we are selling in 28 gyms all over Taiwan. First, we received a notification that the best-before date should be printed on each box, later the regulation was tightened further: we now have to print this date on each bar. Obviously, we are complying with the new rules, but we have clear indications that the authorities have been tipped off by some competitor. It is part of the local business culture: if you get a chance of nailing your competitor, don’t miss it.

Positive aspect
We are proud to say that we have established our product and brand name in the local market – ‘just as good or better as the competitive product, for 30 percent less’. Just the right story for the quality and price-conscious local market.
A market in which I should mention at least one very positive aspect: in one year of selling on consignment out of displays in 28 local gyms, only one product item has gone missing. Only one. Nothing got stolen, taken by employees, ‘misplaced’ or ‘borrowed’. The Taiwanese are a very honest people. In any European city, we would have been required to use expensive vending machines to sell our products. Not in Taiwan!

Photo Credits: SupplementsSA/Raymond Koot

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Our blogger Ray lives in Taipei & gives updates on doing business in China & Taiwan. This time his opinion & experience on smog in Taipei.