Beating the odds: BY-HEALTH’s revenue 36% higher despite China’s stricter e-commerce and regulatory environment

By Tingmin Koe contact

- Last updated on GMT

BY-HEALTH says it hopes to cultivate new consumption habits for protein powder by selling the product in gift-packs. ©BY-HEALTH
BY-HEALTH says it hopes to cultivate new consumption habits for protein powder by selling the product in gift-packs. ©BY-HEALTH

Related tags: financial report, BY-HEALTH, China, e-commerce

Chinese dietary supplement giant BY-HEALTH’s revenue for the first half of 2019 increased by 36.8% year-on-year, despite a slowing e-commerce business and stricter regulatory environment.

According to its report published on the Shenzhen stock exchange on July 31, the company earned RMB$2.97bn (US$431m) in the first six months of 2019, which is a yoy growth of 36.88%.

Net profit also grew to hit RMB$866.8m (US$125m), which is 23% higher than the same period last year.

This is despite a stricter health foods and e-commerce regulatory environment.

Due to more stringent e-commerce rules​, the firm only witnessed a single-digit growth for its e-commerce business.

However, this was compensated by a faster uptake in offline sale, partly because Life-Space products – the Australian probiotics brand which it had acquired​ – have been made available in brick-and-mortar stores, such as the pharmacies and mother-and-baby retail stores.

Other performing brands include KEYLID – a glucosamine supplement – which brought in 53.7% more revenue than last year, while that of its flagship protein powder which also goes by the same name BY-HEALTH grew by 14.4%.

The firm added that in the short run, it would “definitely be impacted”​ by more stringent enforcement exercise, such as the “100 day operation”. ​ 

“During this period, national ministries have cooperated to stem illegal activities seen in the health and wellness industry. This is the purging and makeover of the health and wellness industry, which would definitely lead to serious, active, and positive effects to the industry, especially the Chinese dietary supplements industry.

“However, in the short run, the pressure and challenge on the industry have increased, and this is believed to continue for a certain amount of time,”​ the firm said in the report.

Strategies for next six months

In the remaining months of 2019, the firm’s flagship protein powder “BY-HEALTH”, along with KEYLID, Jian Shi Jia, and Life-Space will be its focus.

It plans to widen the target consumers of protein powder, which is currently mainly consumed by gym-goers and for weight management purposes.

A targeted group is consumers who are looking to boost their immune system.

The firm also hopes to “cultivate new consumption habits” ​by selling protein powder in gift-packs.

As for the other three brands, it will increase the number of distribution and enter markets in the lower-tier cities.

To drive sales, it will also integrate the use of its products into more real-life settings, such as consuming its products to supplement exercise workouts.

In response to slowing e-commerce activities, the firm said that it would implement its “3.0 strategy” – aimed at a more precise approach to driving e-commerce sales.

For its offline channels, it intends to speed up the growth in supermarkets and mother-and-baby product stores.

R&D

As compared to last year, the firm had poured in 46.28% more into its R&D initiatives, amounting to RMB$48.5m (US$7m).

It has been preparing the setting up of an anti-ageing R&D centre within the country this year and also planned to establish an overseas R&D centre in a bid to maintain its technical lead.

It is already in talks with multiple overseas technology industrial parks to find out their interest to cooperate in building the R&D centre.

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