For years, if foreign dietary supplement companies wanted to take their products to the Chinese marketplace, they’d have to bring their blue hat. Supplements going into China had to undergo a lengthy registration process, and approval was symbolized by a logo resembling a blue hat. Many companies from the U.S. and other countries decided to skip China rather than go through the daunting and costly process. However, China is considering a major change to its regulation of dietary supplements, possibly going from a registration process to a notification model.
Over on the U.S.-China Health Products Association website, Jeff Crowther, executive director of the association, detailed the struggles foreign companies have faced when trying to export to China via the blue hat system, as well as ways domestic companies and others who long ago invested in winning key blue hat registrations might be enjoying unfair advantage.
“The … system has allowed a select group of companies to monopolize the industry as they have invested heavily to obtain blue hat registrations in the 1990s," Crowther wrote, noting the majority of registrations between 2010 and 2013 went to domestic companies (3,154 domestic, 56 foreign). “It is a well-known industry rumor that many of these domestic registrations are in fact being held by companies that look to sell them and make profits because transferring a registration from one company to another is faster than going through the entire process. Because the registration process is so costly in both time and capital, there are companies willing to pay for these ‘pre-registered’ products in order to expedite their entry to market."
The good news is the legislature in China has proposed changes that would scrap the blue hat system and, instead, place supplements under food regulations, resulting in a more streamlined notification system that would improve the ability to bring foreign supplements to the Chinese market. It would also solve some of the unfair market issues by opening the door for increased competition and foreign investment. As Crowther pointed out, an expanded market that more easily involves cutting edge products from around the world is better for China’s swelling aging population.