National Animal Supplement Council makes inroads into China amid business complexities

Prior to the COVID-19 pandemic, Bill Bookout, founder and president at NASC, planned a delegation to the country to explore more opportunities to open trade pathways between U.S. supplement companies and those in the world’s second most populous nation. However, that trip was cancelled when “COVID raised its head and shut the country down,” he said.

Fast forward a few years, and the NASC now has its ‘man in China.' 

Chris Wang, director of China Markets for the organization, regularly travels between the United States and his native country, establishing relationships with high-level officials in hopes of removing business barriers to entry. Wang spoke at this year’s NASC annual conference in May via teleconference from China touting the council's connection to Dr. Xiaogun Lai, one of the country’s most prominent veterinarians with ties to the Chinese government. Dr. Lai helms one of China’s largest vet associations, which is comprised of more than 50,000 members.

Bookout said these connections are important for NASC members, who represent some of the biggest supplement manufacturers in the U.S. One reason is that as China becomes more culturally westernized, more and more Chinese households are pet owners. According to Dr. Lai, China’s pet supplement market is valued at $1.3 billion annually.

Another reason the relationship is important, Bookout said, is that China supplies 70% to 75% of the raw ingredients for supplements.

“[This economic tie is] a big thing for human dietary supplements, and it’s a big thing for animal supplements as we’re so dependent on this sourcing of vitamins, minerals and other functional ingredients that are utilized in products,” Bookout added.

Despite this reliance, the sentiment of many U.S. companies and consumers is that anything from China is “bad” and anything from the U.S. is “good,” which is not accurate, he said.

That’s part of the reason NASC seeks to make inroads into the region. It wants to broaden the dialogue about quality of goods but also open the doors to trade in a country whose government has in the past made it difficult for international companies to do business.

One factor that prevents more trade is the violation of intellectual property rights in everyday business as well as at the state and federal levels, which Bookout mentioned the Chinese government was trying to get a handle on prior to COVID.   

“You’re getting the sense the Chinese government really wants to make an effort to crack down on this, but at the same time, you’ve got competing cultural interests at play,” he said.

The moral argument​

Casey Jones is president at Arizona-based Primo Animal Health, a U.S. manufacturer of pet supplements that exports 70% of its product. Some of the company’s biggest markets include Korea and Taiwan. He attended the NASC annual meeting in May and said his company was interested in expanding to China, and he made several exploratory trips to the country prior to COVID. That’s when he decided doing business there was not the direction his company wanted to take.

One of the reasons surrounded the disrespect of intellectual property. Jones said Primo Animal Health knock-off supplements, which include the company’s branding, can be found in China.

“Variations of our brand copy and our logo are copied and pasted and sold on bags of dog food for example,” he said.

He added that some foreign companies send in a sample of their brand to the Chinese government for the intellectual property approval process and find that their products are in the Chinese market within a couple of weeks as a copycat.

Political unrest was the other factor that pushed Jones to reconsider options in the country. He traveled extensively in Hong Kong and was visiting the region during its period of civil unrest when he saw protesters and journalists get arrested. Between 2019 and 2020, Hong Kong experienced the largest series of demonstrations in its history as the Chinese government took steps to rein in dissent in that special administrative region of China.   

“What are we doing here in a place that is so much at odds with the values of an American company?” Jones asked. “That’s in terms of how we treat other people, but not just human rights. How do we structure our economy and who is in control of the levers of the economy?”

However, Jones said that regardless of trade wars and political differences between China and the United States, the Chinese people, as they move more into the middle class, are adopting greater Western cultural norms, including having pets as part of their lifestyles.

As for Bookout, he acknowledged that the world was becoming a more interdependent economic environment and that it is important to “have an eye toward the long term.

“Any country, no matter who it is, can’t remain economically isolated."