China’s 100 Days of Action and its Effects on Consumer Health Marketplace

Delivery

This report comes in PPT.

Key findings

Direct selling companies witnessed different degrees of sales decline in China in 2019, impacted by the “100 Days of Action” crackdown

100 Days of Action imposed great scrutiny on the direct selling industry in China. Under a more stringent regulatory environment, most direct sellers saw sales decline in China in 2019 from restrictions on their selling activities. In addition, high-profile incidents regarding false claims and misleading advertising fostered negative perceptions towards direct selling among consumers, making it harder for a rebound in the short term.

Joint governance by Chinese provinces builds a surveillance system unprecedented in its stringency to regulate the direct selling industry;

Thanks to 100 Days of Action, the regulatory system for direct selling was tightened, with the focus on establishing a fair competitive market environment and protecting consumers’ legal rights moving forward. Inspection of false claims and misleading advertising will continue. Spot checks will be continuously conducted to assess regulation compliance. The entire consumer health market continues to face increasing regulations.

Direct sellers struggle to grow under the increasingly challenging regulatory environment

Direct sellers strive to go beyond the traditional direct selling model and adopt more diverse ways to reach out to consumers through, for example, social commerce and cross-border e-commerce. Direct sellers also have put more efforts into organising offline community activities to alleviate consumers’ negative perception towards the industry.

The COVID-19 pandemic provides opportunities for both the consumer health market as a whole in China and direct sellers with consumer health portfolios

Consumers’ rising awareness of healthy living was impacted by the COVID-19 pandemic, which is expected to dial up sales across several categories in consumer health in 2020, exemplified by products of general health and immunity enhancement. Healthcare-orientated direct selling companies, in this way, will have opportunities to grow sales from the improving commercial environment to offset some of the loss caused by 100 Days of Action and the tightened regulatory environment.