Taiwan's long history of interest in Chinese medicine makes it a prime market for Western-style vitamins, minerals, and health foods. But suppliers say local sales are only one-fourth what they should be because of overregulation.
By Laurie Underwood
Seated casually on a dressing-room chair, surrounded by bright makeup lights, actress Chin Su May exudes an unexpected aura of strength and calm. The leading woman in The Wedding Banquet has had a rough time of it since the film was nominated for an Oscar in 1994. In 1999, Chin was diagnosed with liver cancer. Two years later, she has made a triumphant recovery from the illness; her most recent checkup showed the cancer to be in complete remission. Meet Chin face to face and it quickly becomes clear that it is her success in the battle against illness that has instilled a quiet but tangible strength. Today, the actress is dedicating much of her time to educating Taiwan's public about how she is keeping cancer at bay through a diet of organic food plus Chinese herbs, tai chi, and meditation. In Taiwan, information on health improvement through nutrition and a healthy lifestyle, Chin says, is not passed to patients even at the best hospitals. "The quality of the doctors in Taiwan is really good but the doctors are too busy and seldom communicate with patients," she says. "Then a patient learns he has cancer, he has so many questions, but the doctor has so little time." To help spread her newfound knowledge, Chin is establishing her own cancer prevention and treatment foundation in April. The foundation -- focused largely on exercise and proper nutrition -- will open just in time to fill a much needed niche on the island and to fuel growing interest in Western-style health foods.
Appetite for Health Food
At the American Institute in Taiwan, commercial officer Christina Wu Harbaugh says Chin Su May's well-known promotion of health foods and Chinese medicine treatments, and her famed success in battling cancer, have boosted local interest in the broad industry of nutrition supplements. It is good news for both importers and local makers. AIT estimates Taiwanese buy NT$25 billion to NT$28 billion in dietary supplements yearly, (not including Chinese medicine or products promising to improve appearance, both of which are categorized and regulated separately). "The market is there," says Harbaugh. Taiwan's Food Industry Research & Development Institute (FIRDI) estimates the local market for vitamins, minerals and nutritional supplements alone now stands at NT$18 billion. Add to this such popular items as vitamin fortified milk powder, which draws NT$7 billion in local sales annually, infant formula (NT$5 billion), plus health-related foods such as yogurt drinks, and the figure nearly doubles. Best of all for health food executives, there is much potential for growth. "Asians tend to take more dietary supplements than Westerners," says Harbaugh. She cites a study showing that 71 percent of Taiwan's adult population has taken at least one dietary supplement, creating a broad consumer market covering many demographic groups (see page 36). She also describes Taiwan consumers as worldly and trend conscious. "Whatever is popular in Japan, six months later is popular here," says Harbaugh. While specific products may come and go -- bee pollen is hot now, but cod liver oil was in last year -- the reasons for taking supplements are fairly constant. Harbaugh says Taiwanese are especially keen to build their immune systems, especially against cancer and liver problems, and to decrease the effects of aging, while women are also concerned with increasing bone density to stave off osteoporosis. A recent survey by FIRDI found that the top-selling nutritional supplement products in Taiwan now are: the immunity booster Ganoderma, weight loss products, herbal tea, essence of chicken, multi-vitamins, vitamin C, fish oil, and calcium. In the future, the institute expects weight loss products and calcium to maintain their popularity while new products enter the market including natural antioxidant, herbal supplements, and dietary fiber. At present, importers have an advantage in the market; Roughly 69 percent of vitamins, minerals, and dietary supplements sold in Taiwan are imported, mainly from the United States and Japan. But this may change. Already, domestic suppliers make up the number two source of product for sale locally and the percentage is likely to increase because two of the island's largest food product conglomerates have moved aggressively into the field: Uni-President Group and Wei Chuan Corp. But despite Taiwan's healthy interest in health food and supplements, both local manufacturers and importers say the market is being stymied, and even becoming dangerous, because of overregulation.
Despite strong consumer demand, FIRDI data shows that sales of vitamins, minerals, and dietary supplements in Taiwan have shrunk in recent years, from NT$25 billion in 1996 to NT$18 billion expected for 2000. The reason, suppliers say, is not decreasing demand but increasing regulation. "The market is about NT$20 billion, but it should be four or five times bigger than that," says Elaine Salt, marketing and sales vice president for Zuellig Pharma Taiwan. The culprit holding back the market is the 1999 ROC Health Food Control Act. "The law is so stringent, it is absurd," she says. "Compared to what is done in the States, in EU countries, in Australia, Taiwan is very, very strict." The main criticism from suppliers is that the law prohibits health food or supplement companies from advertising any therapeutic benefits for a product until that product is registered with the Department of Health. The registration process includes more rigorous clinical testing than is needed in many other countries and requires testing to be conducted in Taiwan. To date, 13 products have been approved, each receiving an official seal to be added to its packaging. However, the process takes up to two years, and requires considerable expense. When the Health Food Control Act was promulgated in August 1999, Taiwan's nutritional supplement market went from being relatively loosely monitored to being more strictly regulated than that of the United States. While the U.S. government classifies health food, vitamins, and supplements as foods, Taiwan now categorizes them as drugs. As such, companies selling calcium tablets, for example, in both the United States and Taiwan, will face far tougher restrictions here on what can be advertised as benefits. DOH officials at the Bureau of Food Sanitation (BFS), which regulates the nutritional supplement industry, acknowledge that the new law is "suite strict." Any company advertising the therapeutic power of an uncertified product, or even referring to that product as a "health food," now faces three years in jail or a US$31,000 fine. Chen Lu-Hung, BFS deputy director, says the strong punishments are needed because Taiwanese society is too willing to try dietary supplements even if they promise unrealistic improvements to health or appearance. He cites one supplement craze that ended tragically in 1995 when eight Taiwanese died after taking an imported Indonesian weight-loss product. "It is characteristic of Chinese people that it is quite easy for them to take Western or traditional Chinese supplements," says Chen. "If a friend of a relative says it is good, they believe it." In the 18 months since the new law went into effect, many false products have been chased off the market, or at least underground. To date, 1,540 cases have been investigated by the DOH, leading to 77 products being investigated in court. Of these, 12 products have been found falsely advertised, bringing punishment for the manufacturers. Chen Lu-Hung says the most prevalent fake products are supplements that boost immunity or prevent cancer. Even critics say the new law had valid reasons for fighting previously rampant false claims of nutritional products, but they say the regulations go too far. "The government is too black-and-white here. Three or four years ago, the cable TV channels were selling a lot of these products promising, you know, 'Buy this and tomorrow you'll have blonde hair, blue eyes and weigh 25 kilos," says Elaine Salt. "But now they're decided, that's it, everything must be registered." The downside, say suppliers, is that it is now nearly impossible to promote legitimate products in Taiwan, even those already proven in other advanced nations. Suppliers say the certification process takes too long and is too expensive in a market that already bears extremely tight margins. Anyone who has shopped for vitamins in Taiwan knows prices are far higher than in the West, mainly due to import tariffs of up to 50 percent and high markups charged by individual pharmacists. Add the expense of a six-month to two-year clinical testing process, and the cost passed to consumers would likely be prohibitive. Companies that do not register their products are severely restricted in their promotions, allowed only to use approved phrases such as claiming the product will "benefit overall health." One company feeling the squeeze is Wei Chuan Corp., one of Taiwan's largest food product manufacturers. The 48-year-old company, best known for food staples and dairy products, broke into nutrition supplements by launching four products in January. The company has so far registered one of its new products with the DOH, and received approval, but says the procedure was so expensive that representatives are not certain they will try it again. Without registration, however, nutrition products marketing manager Sophia Tseng says sales are proving difficult because consumers are not sure what the products do. As a result of the difficulties, many companies have pulled their products from Taiwan and cancelled plans to launch new ones. "Why launch a product here? You can't promote it," asks Elaine Salt. After the new law went into effect, Salt says sales of Zuellig Pharma's dietary supplement products failed to reach their potential in Taiwan. "The key to this industry is product positioning and price promotion," Salt says. "If you can't promote your product, you can't even have a sale. We've had huge problems getting pharmacies to carry our products." Other companies have simply pulled out of Taiwan. "Some OTC vitamin manufactures have no product in Taiwan now, but sell everywhere else in Asia," Salt says. Nutritional companies are urging the DOH to loosen its guidelines, for example to accept clinical studies approved in other advanced countries or to approve product lines rather than insisting on testing each individual product. Says one local manufacturer, "This product might be in the market already for many years, with a lot of research published in good international journals, but the DOH says that is not your product, not your final formulation."
Undesired Side Effects
The thing keeping supplement suppliers in Taiwan despite the obstacles is strong consumer demand. "Before [the Health Food Control Act], the market was much more buoyant here," says Elaine Salt. She points out that the demand for products is so high that many Taiwanese who travel overseas bring back suitcases full of vitamins and supplements as gifts, bypassing Taiwan's fierce markups and limited selection. With demand high, suppliers have inevitably found ways to circumvent the no-advertising rules. Some spread the word to Taiwan consumers through Chinese-language websites hosted in, say, Singapore. A more popular method, one that poses potential dangers for consumers, is for suppliers to work directly with pharmacists, offering fat profit margins in return for promoting their products verbally to customers. In such a scenario, products can easily be misrepresented by ill-informed or over-eager pharmacists. Says one supplier, "It means that some operators 'buy' pharmacists, undermining consumer confidence. There's a lot of junk products here." Concerning the inflated price of nutritionals in Taiwan, the DOH has announced a bit of good news for local consumers. First, upon Taiwan's entry into the WTO, tariffs on imported vitamins will be reduced from 50 percent to 30 percent in the first year, and then to 25 percent thereafter. In addition, officials promise that within the next year, they will loosen regulations on vitamins so that more categories are considered foods rather than drugs. Suppliers say loosening the regulations and helping the dietary supplement industry to thrive is good medicine for Taiwan's overall health. "Taiwan's healthcare system should promote preventative medicine," says Elaine Salt. "Taiwan is now a modern society. Its major diseases are caused by modern living -- stress, pollution, eating too much, not exercising enough. You need preventative health products." She stresses that correct dietary supplements can help people better their chances of avoiding many of the most prevalent diseases in Taiwan. But if the market remains unattractive enough to keep nutritional companies away, Taiwan consumers will suffer.