ooking from the surface, the Gross National Income (GNI) per capita would be an indicator telling the market potential in the sense of market size. From the above statistics, using Hong Kong, our host region, as a base for comparison, most probably Indonesia, the Philippines, and Vietnam would not be a satisfactory choice for reentering. Their GNI per capita is far below Hong Kong’s which means limited potential for further development. Then, we look into the health expenditure per capita of each country.
Even though health expenditure not only composed by the spending on health products, the figure can reveal the need of people on health care. Since our products are classified as health product field, this indicator would be worth considering. For the already kicked out countries, we can see that their health expenditures are far way behind some favorable countries like Australia, Canada, the USA and the Netherland, which account for over thousands US dollars per capita in those countries. Elimination till now leaving four choices left, they are Australia, Canada, the USA and the Netherland.
By checking up the rules and regulations, Netherland would not be a favorable option since she implements the strict rules and regulations of the EU lately which is unfavorable to Chinese herb supplements, saying that the usage and ingredients are in doubt according to their authority’s point of view. We further look into the population pyramids of the countries: Source: US Census Bureau Our products’ target customers are mainly 50-59 aged population because people at this life stage are more health conscious and more willing to spend on health supplements according to research findings.
In order to find the most suitable country choice, we have to see where more potential customers are. From the population pyramids, it is not difficult to see that the three countries have potential aging populations and there are not few populations in our target customer age. We have to look carefully into the units that the graphs used. Although the bars of the 50-59 aged populations in Australia are outstanding, the unit is in thousands. In fact from the statistics, the most potential country is the USA with over 40 million of the targeted populations there.
According to the analysis of our choices for reentering market, we make up the conclusion of choosing the America as our decision. We believe that with the substantial market potential, it is worth reentering with more resources and further introduce the Chinese herb supplements into non-Chinese customer market. With more lenient regulations on Chinese herb supplements and the arising awareness of Chinese health philosophy, we would have an advantage to distinguish ourselves from the natural health product market.
Porter’s Diamond Model USA: A Strategic Location Choice In this section, we shall evaluate the competitive edges the USA may provide Wai Yuen Tong with in terms of government regulations and factors in the conventional Porter’s Diamond Model. Government The relevant laws and policies in the USA indeed appear to be very much in favour of Wai Yuen Tong. Dietary Supplement Health and Education Act (DSHEA) The DSHEA provides a clear definiation of “dietary supplements” as distinguished from pharmaceutical products.
Insofar as is material to Wai Yuen Tong, a “dietary supplement” is ‘a product that is intended to supplement the diet and contains … a herb or other botanical … or a concentrate, metabolite, constituent, extract, or combination of any of the above. ‘1 It must also ‘be intended for ingestion in pill, capsule, tablet, powder or liquid form … ‘ The majority of Wai Yuen Tong’s products fulfills such definition and would therefore be categorized as “dietary supplements” under the US law. Regulations by the Food and Drug Administration (FDA)
Such categorization of its core products provides a clear advantage to Wai Yuen Tong. Its products need not be pre-approved by the FDA before being pushed to the market. The FDA has also adopted a Current Good Manufacturing Pratices (cGMP) policy to ensure the manufacturing standards in the industry2. Wai Yuen Tong has already been awarded the certification of GMP by the Chinese Medicine Council of Hong Kong and the Australian Therapentic Goods Administration3. We are very confident that Wai Yuen Tong’s manufacturing practices are up to the standards as set by the cGMP policy.
Office of Dietary Supplements (ODS) The ODS has been established to coordinates research efforts on dietary supplements4. The availability of authoritative papers have significantly boosted consumer confidence in dietary supplements. Firm Strategy, Structure and Rivalry According to the Nutrition Business Journal, the data shows that in the US dietary supplement market, herbal supplements accounted for 1/5. With the continuous improvement of quality, the market continues to expand, it proves that US have great acceptability towards the herbs.