Taiwan health care food market is very attractive based on sales analysis for past several years, also Taiwan people very care about health regardless of age or sex and it make more foreign company trying to seek the chance to establish business in Taiwan. However, foreign company should have thorough understanding for below points which are mainly related local characteristic.
1) What is definition and difference between health food and health care food?
2) Do you understand ‘Health food control Act’ in Taiwan? , do you have a plan to get health food mark?
3) Do you understand where customer purchase health care food and how many distribution channels exist in Taiwan?
Second, company should prepare for appropriate marketing strategy regarding product, price, place, promotion, and below is high recommended strategy which is already verified as successful cases.
1) Product strategy
Taiwan people used to check the ingredient very carefully and set a high value on the scientific evidence. So, product development should be very detailed even label description or product manual also checked if there is any violation or not. Also, the quality of food is highly concerned by Taiwan government and mass media. So, quality assurance process should be settling down in Taiwan even the product imported from other nations.
2) Price Strategy
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short term and long term price strategies to increase sales. In the beginning stage (launching stage), most of case, used to do early adopters price to knock previous market and give a impression to customer. But setting too low price often misleading customers depreciate the product value, and if the promotion period too long, customer may not accept when the price back to original price. So, this study suggests that price gap should not bigger than 15%discount from original price and the period should not longer than 1.5months.
3) Place strategy
In case of foreign company, it is not easy to manage channel directly from the beginning stage, most of case, it is necessary to set up local agency who handle distribute product to wholesales and managing each channel`s issue. However, it is very important to make a distribution strategy which is focus on customer basis. There are two kinds of way to make distribution channel management.
One is manage based on Agent`s coverage, which is depend on Agent capability and give them a permission to handle each channels. This way looks simple, but Agent focus on their profit, so try to pick good profit product, not based on customer benefit. Therefore customer cannot have variety of products and service. Also there will be competition between different agent and it will cause profit down. Finally, the control power for channel should be in Agent and foreign company has less bargaining power.
The other way is separate channel based on customer group and each agent only take care of their own area not touching other channels. This way looks complicated but Agent focus on their channel, so try to find out more benefit to customer to increase sales. Therefore customer
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can have professional service and products. Also the possibility of channel conflicts decreases a lot. Finally foreign company can have bargaining power to control agent.
After foreign company settle down in local management, the company should analysis each channel`s fixed cost, valuable cost, and expected revenue in each case and make short term/long term plan for management channel. Then try to do business directly not through local agent when the sales volume can fully cover fixed cost. Of cause, it is necessary to establish each channel`s relationship and systems to supply product directly to local market.
Figure 14: Direct and Agent Management in KGC
As shown in figure 12, KGC in Taiwan manage distribution channel by Agent for home
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department store shop and brand shop business. Each channel has its own character in case of customer contact, cost, service level, and company’s plan. So, foreign company should consider these four sides of point when they decide what channel they should do direct management and what channel should hand over to agency.
4) Promotion strategy
Normally in Taiwan distribution channel, there are two kinds of promotion. Most common promotion is TV, Radio, Magazine, outdoor advertisement which called ATL. The other is BTL which is related with local channels like special display in Carrefour or Costco. However, company should decide how to allocate between ATL and BTL. If the health care food product targeting general customer and didn`t receive health care mark, it is better to focus on BTL which is special display or testing activities where customer directly can see and purchasing. Then, if customer can distinguish the product easily when they visit convenient store or any other shop, it is highly time to focus on ATL which are TV commercials, Radio, or magazine. Moreover, if the product received health food mark which is necessary more than 1 and half year, it is recommended to make commercial advertisement which can directly appeal the efficacy. As figure 11 showing, when customer received information about efficacy, it is surveyed highest reason to purchasing healthcare food.
However, some foreign company much cares about ATL which is easy to execute because it is not related with real channel`s involvement, but it should be good enough to showing up what the local company doing and easy to report to original headquarters. Then, the result of ATL may comes out only half if any kind of BTL(special display, local event for customer, etc) is not running at the same time with ATL.
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Reference
[1] Health food Control Act
http://mohwlaw.mohw.gov.tw/Chi/EngContent.asp?msgid=300&KeyWord=%B0%B7%
B1d%AD%B9%AB%7E%BA%DE%B2z%AAk
[2] 陳淑芳,《台灣保健食品產業現況分析與趨勢》，2008.
[3] 全國意向 Trendgo survey, The reason Taiwan people buy health care food 2012 [4] 台灣人口高齡化之趨勢與對策分析
www.shs.edu.tw/works/essay/2006/10/2006101915553612.pdf
[5] Aging population analysis (Global Industry Analysts 和臺經院生技中心 [6] Taiwan Certificated Health Food product (2013, ITIS 食品産業年鑑) [7] Donga business review
m.dongabiz.com
[8] D. Cohen, "Consumer Behavior", New York Random House Inc., 1981.
[9] D. A. Arker, "Strategic Management", John Willy and Sons, 2nd ed., 1988.
[10] Duffy M. E. "Determinants of Health-promotion in midlife woman", Nursing Reserch 37(6), 1988, 358-362.
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Promulgated on February 3, 1999.
Amended and promulgated on November 8, 2000.
Amended and promulgated on January 30, 2002.
Amendments of Articles 2, 3, 14, 15, 24 and 28 pursuant to the President’s Order Hua Zong (1) Yi Zi No. 09500069821 promulgated on May 17, 2006.
Chapter I General Provisions Article 1
This Act is enacted to enhance the management and supervision of matters relating to health food, protect the health of the people of the republic and safeguard the rights and interests of consumers. Matters not addressed herein shall be governed by other applicable laws.
Article 2
For the purposes of this Act, the term "health food" shall denote food with health care effects, having been labeled or advertised with such effects.
The term “health care effects” shall mean an effect that has been scientifically proven to be capable of improving people’s health, and decreasing the harms and risks of
diseases. However, it is not a medical treatment aimed at treating or remedying human diseases; such “health care effects” shall be announced by the central competent authority.
Article 3
A health food permit shall be issued only if one of the following requirements is met under the purpose of this Act.
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1. Duly supported by scientific assessment of the safety and and health care effects of food that they are harmless and carry definite, certain health care effects; if current technology cannot identify ingredients contributing to such effects, the ingredients with the relevant health care effects and supporting literature shall be enumerated and provided to the central competent authority for evaluation and verification.
2. Ingredients conforming to the Health Food Specification Standards set by the central competent authority.
The methods by which health care effects and safety are assessed, and by which standards are determined in the preceding paragraph shall be determined by the central competent
authority. If the central competent authority has not yet determined a method to assess the health care effects, a method submitted by academics shall be reviewed and approved by the central competent authority.
Article 4
The health care effects of health food shall be described in any of the following ways:
1. claiming the effect of preventing or alleviating the illness relating to nutrients when deficient in the human body if intake of the health food can make up said nutrients;
2. claiming the impact on human physiological structure and functions by the specified nutrients or specific ingredients contained in a health food or the food itself after the health food has been taken;
3. furnishing the scientific evidence to support the claim that the health food can maintain or affect human physiological structure and functions; and/or
4. describing the general advantages of taking the health food.
Article 5
For the purposes of this Act, the term "competent authority" shall denote the Department of Health, Executive Yuan at the central level, the municipal governments at the municipality, and the county/city governments at the county/city level.
Chapter II Health Food Permit
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No food shall be labeled or advertised as health food unless it is registered as such in accordance with this Act.
This Act shall govern any food that is labeled or advertised as food furnishing specific nutrient or specific health care effects.
Article 7
No health food shall be manufactured or imported unless and until an application for review and testing registration supported by information on its ingredients, specifications, functions and effects, a summary of the manufacturing process, specifications and methods of analysis, other relevant data and documentation, as well as label and sample are submitted along with permit fee, review and testing fees to, and a product registration permit is issued by, the central competent authority or the organization commissioned thereby.
The permit fee referred to in the preceding paragraph means the fee for the issuance,
replacement, or supplementary issuance of the health food permit against the application for review and testing registration. The review and testing fees mean the fees for the review and testing. The relevant fee amount shall be prescribed by the competent authority.
An application for change of the registered items of the health food after permit is issused must be filed with the relevant review fee to the central competent authority.
The central competent authority may, where necessary, commission relevant organization (institution), school or group to deal with the review and testing referred to in the first paragraph. The relevant regulations shall be prescribed by the central competent authority.
Regulations of the application for permit referred to in the first paragraph shall be prescribed by the central competent authority.
Article 8
A health food manufacture or import permit is valid for five years. Application for renewal shall be filed within three months prior to the expiration of the term with the central competent authority if continued manufacture or importation after the expiration is desired. The term of each renewal shall not exceed five years. Such permit shall automatically become null and
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void if the above application for renewal is not filed within the prescribed period or renewal is not granted.
If the above permit is stained, damaged or lost, an application shall be filed, with reasons stated, with the original issuing authority for a replacement or new permit, and the original permit shall at the same time be surrendered for cancellation or canceled by the issuing authority by public notice.
Article 9
The central competent authority may re-evaluate approved health food during the validity of the health food permit for any of the following reasons:
1. where scientific research raises doubts about the effects of the product;
2. where the ingredients, formula, or method of production of the product is subject to doubt ; or
3. where the re-evaluation is considered necessary by the competent food sanitation authority.
Where the health food does not pass re-evaluation, the central competent authority shall request the company concerned to make improvement within a prescribed period, and may revoke the permit if the improvement is not made within such period.
Chapter III Management of Safety and Sanitation of Health Food Article 10
Health food shall be manufactured in accordance with good manufacturing practices.
Imported health food shall conform to the good manufacturing practices of the country of origin.
Standards for the good manufacturing practices mentioned in the first paragraph shall be prescribed by the central competent authority.
Article 11
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Health food as well as its containers and packaging shall conform the sanitation standards which are prescribed by the central competent authority.
Article 12
No health food or raw materials thereof shall be manufactured, prepared, processed, sold, stored, imported, exported, offered as gift, or publicly displayed if the health food or raw materials thereof:
1. deteriorate or become rotten;
2. are contaminated by pathogens;
3. contain any residual pesticide exceeding the permissible tolerance set by the central competent authority;
4. are contaminated by nuclear fallout or radioactivity exceeding the permissible tolerance set by the central competent authority;
5. are adulterated or counterfeited;
6. exceed the shelf life; or
7. contain other substances or foreign matters detrimental to human health.
Chapter IV Labeling and Advertisement of Health Food Article 13
The following material facts shall be conspicuously displayed on the containers, packaging or written instruction of health food in Chinese and in commonly used symbols:
1. product name;
2. name, and weight or volume of the contents; in case of a health food which is a blend of two or more ingredients, the ingerdients shall be separately labeled;
3. name of food additives;
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4. expiry date, method and conditions of preservation;
5. name and address of the responsible business operator; the name and address of the importer shall be specified if the health food is imported;
6. the approved health care effects;
7. reference number of the permit, the legend of "health food" and standard logo;
8. amount of intake and important message for consumption of the health food and other necessary warnings;
9.nutrient and its content; and
10.other material facts designated by the central competent authority.
The format and contents of the labeling described in subparagraph 9 above shall be prescribed by the central competent authority.
Article 14
No health food labeling or advertisement shall misrepresent or exaggerate, and the health claims shall not extend beyond the approved scope and shall be limited to the content registered at the central competent authority.
No labeling or advertisement of health food shall claim or refer to medical efficacy.
Article 15
No mass communication business shall publish or broadcast advertisements for health food in respect of which no permit is obtained in accordance with Article 7 hereof.
A mass communication business retained to publish or broadcast a health food advertisement shall keep the name, ID number or reference number of business registration, residence (place of business or operations), and telephone number of the person (or legal person or name of organization) who retains the advertising services for six months from the date the
advertisement is published or broadcasted and shall neither evade, impede or refuse to provide the above information for inspection upon being so requested by the competent authority.
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Abbreviation below
Chapter V Inspection of and Enforcement on Health Food Chapter VI Penal Provisions
Chapter VII Supplementary Provisions