OTCs in Action Episode 48: Will increased Chinese OTC demand boost sales in Japan?

OTCinActionheaderThis week, OTCs are in Action in China, where the termination of the one-child limit will slightly increase demand for children’s OTCs. However, this will not only impact the Chinese OTC market, but neighbouring countries as well. Many younger, affluent Chinese consumers prefer fast-acting Western medicines to locally-manufactured OTCs and Traditional Chinese Medicine, but the lengthy, complex and expensive registration process deters many companies from entering the market.

Because of this, many Chinese tourists are buying OTCs in Japan, Hong Kong and other countries, according to the October issue of Nicholas Hall’s OTC INSIGHT Asia-Pacific. Neighbouring countries are welcoming these consumers with a variety of incentives:

Japan’s National Tourism Organisation reported that relaxed regulations for travel, depreciation of the yen and the MERS outbreak in South Korea were among the factors increasing the number of Chinese visitors to the country by 134% in the year to May 2015.

This increase in travel, coupled with last October’s consumption tax exemption for foreign visitors buying OTC medicines, has led several drugstore chains to adapt their stores in tourist hotspot areas to attract overseas consumers. In particular, leading chain Matsumotokiyoshi announced in late 2014 that it was planning to open 20 duty-free drugstores aimed at foreign shoppers, with all expected to be operational by March 2016.

Additionally, industry sources estimate that purchases by consumers from China account for 50-70% of OTC sales in Hong Kong. Planograms in chain drugstores appeal to them — large SKUs of infant milk powder and other products are shelved in high profile areas.

To see samples from OTC INSIGHT Asia-Pacific, click here.

With nearly 1.4bn residents, China is the world’s most populous country, albeit with a scarcity of children. To learn more about this emerging market, join us in Shanghai as Lynn Xu – Senior VP, Greater China Practice Leader at Nielsen, Jeff Crowther, Executive Director at US-China Health Products Association, and the Nicholas Hall team host the OTC Action Workshop. Click the link for more details: OTC Action Workshop Shanghai

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