Deer Industry NZ Asia manager Rhys Griffiths and chief executive Dan Coup have returned from a 10-day market planning tour excited about the good noises coming out of Asian velvet markets.
They are confident the Korean leap of faith for NZ deer velvet can be replicated in the Chinese market.
Griffiths said most of the 23 products use NZ velvet.
There are a few are using Russian velvet as a point of difference.
Yuhan Pharmaceuticals, which signed a memorandum of understanding with DINZ last year, is now a major player in the market.
Griffiths and Coup visited Yuhan’s New Origin concept store-cafe featuring recently launched products that contain NZ velvet. It runs NZ deer farm imagery on large video screens inside, at a high-end mall in Seoul.
“There has been an explosion in consumer demand for consumer-ready, velvet-based products in Korea,” Griffiths said.
“Ten years ago this product category didn’t even exist.
“At the time we were dealing with a traditional Korean oriental medicine market that appeared to be in slow decline.”
Griffiths said the Chinese market for velvet has yet to make the leap but many of the manufacturers they met with believe it can be repeated in China.
“The main barrier is a lack of confidence in the path to market for consumer products based on NZ velvet.
“These products cost millions of dollars to develop and market so manufacturers need to be convinced they are not infringing a rule or regulation along the way.”
DINZ, based on discussions with Chinese regulators, believes there is no problem.
But to provide confidence to potential customers DINZ is working with some exporters and NZ Trade and Enterprise to commission a report by a respected Chinese regulatory expert on the path to market.
It will be given to key manufacturers when completed.
Griffiths said it is understandable why Chinese manufacturers might be unsettled.
In the past three years, to improve consumer safety, there has been a major tightening of the rules governing food and traditional medicines in China.
That has included tighter standards for overseas suppliers and as a result NZ velvet producers have had to create clean areas in their deer sheds and meet tougher cold chain requirements.
“In China velvet processors have had to make similar upgrades. Some have built completely new factories.”
In a significant move announced in March, a major new Chinese super ministry is being established and expected to have regulatory oversight of the trade in traditional medicines and manufactured health foods.
The State Administration of Marketing Regulation will be supported by a new State Drug Administration that reports to it.
At the same time the formerly powerful General Administration of Quality Supervision, Inspection and Quarantine is being dismantled.
Its border inspection and quarantine role is being merged into China Customs with the aim of streamlining import and export procedures.
Griffiths said until the new regulatory regime is operating manufacturers will be uncertain about the rules that will apply to their operations.
A further unsettling factor has been the recent clamp-down on importers of illegal products and for evading customs duties.
Some smaller velvet importers have been prosecuted.
“Larger, reputable importers say this will be a good thing in the long-run for the reputation of imported velvet and particularly for NZ. It will tidy up the industry.”
Meantime, the traditional velvet market in China remains strong.
“The clamp-down on dodgy importers may further increase demand for NZ velvet because buyers can be sure it meets all current Chinese regulatory requirements,” Griffiths said.
In Taiwan, Griffiths met representatives of the local Deer Farmers’ Association.
“They were interested to hear how the prolific marketing activity by large food companies in Korea led to a general increase in velvet consumption.
He also met some leading food companies in Taipei who appeared very interested in the positive developments in the Korean market.
“With market access restricted for frozen velvet, exporting processed velvet that can be used as a premium health food ingredient is a natural next step,” Griffiths said.
