Herbalife to open first product innovation centre in ‘China’s silicon valley’ next year
The centre will be located in Zhangjiang Hi-Tech Park, Shanghai, which is often referred to as ‘China’s Silicon Valley’.
With the centre, the firm plans to conduct studies around weight management, sports nutrition, and personalised nutrition to meet market demand in China. These are also the top health issues that the firm will focus on in the general APAC market.
Over RMB$100m (US$14m) will be invested in the next three years.
Covering over 21,500 sq ft, the centre will include research and development space dedicated to creating new products and packaging and house several laboratories.
“Opening the Center allows us to strengthen our local research and development capabilities to deliver more science-backed, quality products and we expect to double both the number of products and speed to market in the next five years,” said Dr Qunyi Zheng, senior vice president of Herbalife Nutrition and chairman of Herbalife Nutrition China.
Herbalife Nutrition first opened its first factory in China in 1998.
Besides the upcoming innovation centre, it also previously opened a botanical ingredients centre in Changsha and two production technology centres in Nanjing and Suzhou.
With a strong focus in the first tier cities, meal replacement products and protein milkshake are the firm’s most popular products amongst the Chinese consumers.
In an earlier interview with NutraIngredients-Asia, Dr Zheng also pointed out that the younger generation made up the bulk of the firm’s customers.
He said that more than 80% of the firm’s product distributors were born after 1980.
Growth strategies for China
With the crackdown on the dietary supplements industry and direct selling firms on the Chinese authorities’ radar, Herbalife said it “recognised China is an issue” and had announced strategies to support the market.
During its Q2 investors’ conference call this year, the firm said performance in China was “still below the level seen prior to the 100-day operation”, although it had seen moderate improvements in June’s volume performance.
Nonetheless, it believed that Q3 will show an improving trend as it implements new market strategies.
For example, the firm had expanded its e-commerce platform in late Q2, allowing retail customers from China to buy products from the company directly.
This is the first stage of a larger project which the firm is working in partnership with Tencent, a leading e-commerce and social media platform, said chairman and CEO Michael Johnson.
The full platform is expected to launch in Q4 of this year.
On the other hand, Johnson said the firm had focused on enhancing the profitability and activities of the Nutrition Clubs, so as to improve the earnings of the firm’s service providers.
Other plans include increased media exposure by sponsoring high-key sports events, such as the International Champions Cup, an annual summer soccer tournament, featuring football clubs such as Manchester United and Juventus.