Gold Partner Sales Fell &Nbsp; Health Care Products Behind Shi Yuzhu Lake

Chairman of giant network group, known as "an idler without mobile phone"

In April 28th, Shi Yuzhu said on micro-blog that he was thinking about persuading a friend to shut down the health care products business and switch to selling insurance.

"Health care industry in developed countries is rising."

But only 10 days later, he changed his name on micro-blog, saying that he had apologized to the 300 people who were on holiday because of improper remarks on health products.

Behind Shi Yuzhu's remarks sparking controversy in the health care industry, according to reporters' remarks on Shi Yuzhu's discourse

Take Shanghai golden partner Biotechnology Co., Ltd. (hereinafter referred to as "golden partner company") as an example, a reporter survey shows that as early as 2008, the profits of gold partner companies had dropped sharply.

Compared to 2009, an anonymous insider told reporters that the sales of gold partners decreased by 16.7% in 2010 compared with that of the "melatonin" health care products that were once popular in China. Its sales in 2009 also dropped to half of the market's highest value.

If we refer to the current competitive environment of the Chinese health care products market, we will also have a strong enemy as well as a pursuer.

Gold partner sales decline tracking

If it were not for the annual report and quarterly disclosure of the four way holding company listed in Hongkong (hereinafter referred to as "four links Holdings", 00409.HK), perhaps the sales performance of the gold partner company established in 2001 in recent years will not be known by the outside world.

According to the information of the Hongkong stock exchange, in the four way holding three major businesses, in addition to the IT electronic and network services business and investment business based on the mainland, the rest part is based on the golden partner company as a subsidiary company, with the products of nuke platinum, gold partner and gold blood Kang as the products.

Statistics show that in December 2003, the four way holding company acquired 1 billion 240 million stake in Shanghai gold partner with a price of 1 billion 240 million yuan.

Shi Yuzhu also said on micro-blog: "eight years ago, I was divorced from the company's decision making and management, only one of the shareholders."

According to the four pass holding 2008 annual report, although the gross profit margin of its health products remained high at that time (the gross profit margins of platinum, gold partners and gold blood products were 71.6%, 70.2% and 48.1% respectively), and the annual turnover increased by 43% to HK $2 billion 144 million, but the operating profit (net profit) of the health products business was only HK $31 million 880 thousand, which was 77.8% lower than the 144 million Hong Kong dollar in 2007.

At that time, a common view was that the reason for the decline in operating profit, however, was that the sales revenue did not reach the output ratio of the original advertising input.

In September 23, 2009, at the special shareholders' meeting of the four way holding company, the four way holding privatization scheme with total performance and sustained losses was approved by the shareholders. In October 21st, the four way holding company closed the market at a price of HK $0.48 per share.

Compared with its market share of platinum in 2003, according to the information released by the golden partner company on its website in April 13, 2010, the share of 2009 brain platinum in the Chinese health care market is only 5.13%.

After the Shi Yuzhu micro-blog "Oolong", a core member of a domestic Association holding a gold partner sales data revealed to reporters that the annual sales revenue of the gold partner company has dropped from about 2 billion 400 million yuan in 2009 to 2 billion yuan in 2010, down 16.7% from the same period last year.

Yesterday, the reporter verified the authenticity of the financial data to the gold partner company, but the company rejected it as "our foreign propaganda is not very convenient recently."

Health care products market in China

For Shi Yuzhu's "sunset industry", many people in the health care industry interviewed by our reporter did not agree with this view. According to our reporter's investigation, 8 years after Shi Yuzhu bid farewell to health products, many changes have also taken place in the Chinese health care products market.

"The health care products market is definitely not the sunset industry."

Zhu Haifeng, an expert in China Health Care Association, told reporters that "with the increase of residents' income and the increase of sub-health population, the trend of fatigue and youthful trend appears, and the future demand for health care products is huge."

Zhu Haifeng also pointed out that in the future, health care products will develop towards a small profit. As profits decline, consumers will become more rational. Health care products enterprises will hardly be able to produce large amounts of money as advertised in the past.

At present, the advertising input output ratio of health care products has dropped from 1:5 to 1:1.5. With the decline of advertising output ratio, it is difficult to rely solely on a large number of advertisements to obtain output.

Another industry insider, who declined to be named, said that compared with the whole Chinese health care product market, product aging is new and weak. This is the sunset challenge that the old generation of health care products represented by melatonin is facing. This can be seen from the golden blood Kang launched by the golden partner company.

Compared with the Shi Yuzhu era eight years ago, the competitive power of Chinese health care products market has also changed.

By the end of 2007, China has approved more than 8900 kinds of health food products, and more than 1640 health food production enterprises, with an annual output value of more than about 100000000000 yuan, according to the China industry consultation network "market survey and trend analysis report of Chinese health care products industry" for the end of 2010-2015.

According to the reporter's combing of the domestic health care enterprises, besides the large food enterprises represented by COFCO, they are entering the health care industry. The companies that originally belonged to the traditional medicine and food industry have also entered the market, such as A shares listed on the 600664.SH shares, 600664.SH, and so on.

The sales figures of gold partner companies declined, while sales of health products increased by 68% and 84% respectively, according to the 2010 annual report of health products companies listed on A shares (300146.SZ) and 000078.SZ.

On the day before Shi Yuzhu considered closing down the health care business, China's first food nutrition research institute, the COFCO nutrition and Health Research Institute, was founded. As a central enterprise, COFCO has since joined the competition in the domestic health care products market.

According to Guo Fanli, a researcher at CIC's pharmaceutical industry, the scale of China's health care products market has reached 91 billion 100 million yuan in 2009. Compared to 28 billion 500 million yuan in 2001, it has increased by more than 3 times over 8 years.

In addition, according to the Research Report of the health care industry information company, Zheng Kang Xun, the growth rate of China's health food industry will exceed 20% in 2010 and become the fastest growing year in recent years.

Delicate competitive ecology

However, this is not enough to represent all the Chinese health care products market.

If we consider the competitive factors of international health care products giants such as Amway, Procter & Gamble and sunrise, and compare the differences between domestic and foreign health care companies, it is too early to say "Chaoyang" only on the scale of the market.

According to Amway (China) research and development center, Amway sold 9 billion 200 million dollars in the world in 2010, and sales in China amounted to 22 billion yuan.

This means that in 2010, just one Amway would be the equivalent of eleven gold partner companies.

And if the market share of 5.13% of the 2009 brain platinum is calculated, only a Amway Corp product, corresponding to it, occupies more than 50% of the market share.

Behind the huge gap is the different styles of Chinese local health care companies and overseas health care companies.

"The health care industry in China has developed rapidly in recent years. This is the development of industry through a large number of advertising inputs, while foreign health care products focus on product R & D and innovation, and continuously satisfy consumer demand through high cost R & D investment."

Liang Mingxuan, a researcher at CIC's food industry, said.

Shi Yuzhu also mentioned that "ten years ago, the top ten enterprises in the health care industry were bankrupt and demonized under the external environment, and they had to go bankrupt and turn around.

For this reason, Zhang Dachao, President of the China Health Care Association's Health Advisory Service Committee, told reporters that the illegal health care products, which did not receive the approval of the national health food, claimed to have health functions, though not many, but also caused extremely bad effects on health food, and further demonized the health food.

It has been understood that for a long time, the traditional thinking of Chinese health food companies seems to be more willing to invest in equipment, advertising and promotion, and the investment in science and technology as the lifeblood of enterprises and industries is negligible.

This has also led to the beginning of the Chinese health food industry since its birth in 1996. It has been hovering at the initial stage of development. Not only is the product homogenization serious, but also the market competition environment is becoming increasingly brutal.

Qin Xiaoming, executive vice president of the State Health Association and the State Council counselor, said that some health food enterprises had "fooled" consumers, wantonly hyped concepts or expanded publicity, contrary to market rules and consumer wishes.

Advocating corporate self-discipline and orderly and fair competition, scientific consumption guidelines should become a top priority for the healthy development of the health food industry.

According to other data, compared with the proportion of consumers in Europe and the United States who spend more than 2% of the total expenditure on health products, China has only 0.07%.

However, this is not the key to the debate of sunset or sunrise industries.

Perhaps more importantly, who will be the future market?