China’s OTC pharmaceutical market is the world’s second-largest behind the US, with $19.5 billion, and is expected to reach US$22.7 billion by 2023.
“In 2016, the size of China’s pharma market reached around 123.7 billion U.S. dollars and was forecasted to surge up to almost 574 billion U.S. dollars by 2022.”source
The OTC pharmaceutical market in China
OTC drugs are available without a prescription, simply “over the counter.” OTC drugs are in contrast to prescription drugs that require a doctor’s order. The OTC pharmaceuticals market includes traditional medicines, cough, and cold preparations, vitamins and minerals, indigestion preparations, analgesics, medicated skin products, topical OTC medicines, plasters & bandages, first aid kits, and others.
Growth is driven by China’s large population, by the rising consumption levels, and by the biggest awareness of health issues, also due to the Covid-19 pandemic.
For example, Chinese millennials are working more and more in tier 1 cities and are facing issues such as insomnia, fatigue, and weight gain. Instead of going to public hospitals, they prefer to conduct their own research to diagnose and treat minor illnesses.
While in the past there were severe restrictions on importing and selling OTC pharmaceutical items, these restrictions are gradually loosening up and sellers are selling OTC items through their Tmall stores.
The pilot program to import OTC drugs in China
In December 2019, the China National Medical Products Administration approved a pilot program for the bonded importing of OTC pharmaceutical products in Beijing. Thanks to it, merchants can store products in the Tianzhu bonded warehouse area.
- The applicant enterprise shall be an enterprise registered in the administrative area of Beijing and it must have a qualified corporate legal person representing the company.
- The imported products will be cleared through Beijing customs.
- The importing company should have warehousing capabilities that both meet requirements for the storage of cross-border pharmaceutical imports and it is be based in Beijing’s Tianzhu bonded warehouse area.
- Importing companies should sell through third-party e-commerce platforms that meet the requirements for the pilot program. This includes quality control systems and returns processing of cross-border pharmaceutical products, as well as risk prevention and control systems. Companies should provide pre-sales and after-sales services for customers.
- Products should be pre-registered with the National Medical Products Administration, and the product subcategories should be on the official list issued by the thirteen relevant ministries and commissions.
Tmall Health Risk Fee?
Tmall sellers of OTC pharmaceutical products have to place a deposit of 300,000 RMB; this is because of the greater health risks implied if the products turn out to be harmful to customers. Therefore, for this category, the barriers to entry are higher.
There are two ways you can take to sell on Tmall. Aside from the Hangzhou/Beijing route, you can also stock your inventory in Hong Kong.
The Hong Kong route is a little complex. While you do not have to register your products, you do need a licensed importer that can bring the products in, enlist them with Hong Kong’s Drug Office, and re-export them to China. The importer is a logistics provider or distributor/wholesaler/retailer.
Do you want to sell OTC drugs in China?
To sell OTC drugs in China thinks Reputation first
We are speaking about health so it is important to conquer the trust of Chinese consumers and to build a good brand image. Even if in Europe or in America you are known and famous, in China you have to gain consumers’ trust from zero.
The first thing you have to do when approaching the China market is to open a website on Baidu. Baidu is China most used search engine and it gives brands authority. In order to create an efficient website you have to:
- host it in China, so that pages will be charged quickly;
- conceive the content directly in Chinese because Baidu works better with the Chinese language, so a simple translation of your website may not be enough;
- and last but not least opt for an eccentric design of the website because Chinese people are used to visiting websites that are full of colors (red and golden are the most used colors) and full of information.
Promote your OTC drugs Brand on Chinese Forums undercover
In China, the word of mouth is really strong and powerful and you should take advantage of it to advertise your OTC pharmaceutical brand. Being present on forums like Baidu Zhihu or Baidu Tieba will allow you to answer questions about your field but also to educate your target audience about your brands/products in an undercover way. It is an excellent tool to increase your conversion rate and to generate awareness about your brands.
The growth of Zhihu
Once considered little more than a Quora copycat, Zhihu has become China’s biggest knowledge-sharing platform. They claim to have 160 million registered users and more than 26 million daily users spending an hour on average on the site. In fact, it has become the primary channel for users to learn expert insights on various topics from corresponding professionals.
Build trust with Zhihu
Zhihu’s position as a producer and sharer of valuable content presents a unique offering to brands that have a lot of information and expertise they can share with users. Different from most social platforms where posting regularly is the norm, one piece of high-quality content on Zhihu is enough to yield long-tail results. It can be a powerful tool to establish long-term trust and thought leadership.
As we saw at the beginning of the article, the best way to sell OTC drugs in China is by transborder e-commerce. Of course, it is necessary to follow some rules (we have listed them before) but the benefits to be part of a platform like Tmall global are a lot.
Tmall global: the best e-commerce platform to sell your OTC drugs?
Tmall International, a B2C platform part of Alibaba Group, is a popular online marketplace in China where many international brands are selling their products. It has become the easiest way to penetrate into the Chinese market because Tmall International provides a cross-border business model for many foreign brands and retailers to expand their business into China.
Tmall Global offers logistics solutions that simplify the international shipment of orders as well as options for marketing in China. It reaches more than 307 million annual active buyers on Tmall Global; increases brand exposure and connect your OTC drugs brand with Chinese online payment systems.
Sell OTC drugs via Tmall Global: tip
Companies can pre-ship their goods to bonded warehouses in China. In this way, customs clearance will be quick and consumers will receive their purchases in less than a week.
Thanks to Tmal Global, international brands have the chance to sell their products in the Chinese market without a physical presence in China. In addition, with its already established infrastructure, Tmall drastically decreases the amount of time a brand takes to enter the Chinese market
How to advertise your OTC drugs on Tmall?
There are various ways to sponsor your products on Tmall. The two most effective activities are of content marketing and paid marketing both within e-commerce and outside it. Nowadays, digital platforms are now closely interconnected and users travel from one to the other during their customer journey. Furthermore, Tmall, owned by Alibaba, is part of an ecosystem of e-commerce platforms. Speaking about content marketing we have:
- good goods: product recommendation section, where there are articles shared by Kols,
- Taobao Toutiao: articles are divided for each category of goods, but only high category Kol can publish articles,
- Weitao: newsletter managed by the Flagship store.
Paid marketing on Tmall is divided into:
- Starshop: it is dedicated to the brand keyword and you can see it as a customized banner,
- Diamond booth: advertising retargeting,
- Ztc that stands for Zhi Tong Che, is similar to Google Ads;
- Super Recommended: advertising retargeting, used through a push of a specific product.
It is important to always keep in mind that without a good e-reputation, it is impossible to sell in China. Therefore, before thinking about e-commerce platforms, it is essential to invest in e-reputation and visibility. Gma can help you with this.
Gentlemen Marketing Agency is a digital marketing agency that is an expert in helping foreign companies to establish or strengthen their position in China. We can help your brand increase sales in China, thanks to our services like:
- Baidu SEO&SEM
- Social Media
- KOL & Influencers
- E-commerce and cross-border e-commerce