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Understand China, says Blackmores CEO

Chinese consumers are more likely to visit a herbalist before seeing a general practitioner if they fall sick.

That's just one of the cultural aspects foreign companies should understand about China if they want to operate successfully there, says Blackmores chief executive Christine Holgate.

Vitamins and health products supplier Blackmores is a China success story, having lifted sales there from $2 million two years ago, to $130 million mid-way through the current financial year.

Ms Holgate says she has never had to explain to anyone in China, or the rest of Asia, the benefits of natural health and 74 per cent of consumers prefer a natural solution for health issues.

"It's in their DNA," Ms Holgate told the Stockbrokers Association of Australia conference in Melbourne on Wednesday.

"When I lived in Hong Kong, I remember calling in sick - my secretary organised me to see a herbalist, not to go see a GP (general practitioner).

"It's a very different proposition in Asia."

Ms Holgate says success in China is built on giving Chinese consumers what they want, not by imposing on them products made for the Australian market.

Ms Holgate expects Blackmores' China sales to reach between $250 million and $300 million by year's end, this in a country where the total health market is worth $US45 billion.

The Blackmores boss said strong local management or joint-venture partners who know local regulations, politics and government relations, business practices, and linguistic nuances, are also important factors.

Chinese investors in joint ventures in China often have the last word even if they do not hold a majority stake in the investment, she said.

"You could own 80 per cent of the company, he (the Chinese investor) has 20, but he's Chinese so his word goes," Ms Holgate said.

"I don't blame them for that. Those are the rules of the game."

Properly understanding Chinese language is another crucial factor for success: Ms Holgate said recent changes to Chinese import regulations initially caused consternation for some Australian nutritional supplements and infant formula suppliers probably because the regulations weren't translated correctly.

There is one Chinese word, she said, that has 26 different meanings and can be spoken in four tones: it could mean yes or no, depending on the words used with it and the tone in which it is spoken.

"Sitting here in Australia and putting something through `Google interpret', may I suggest, is slightly risky," Ms Holgate said.

Ms Holgate said that although American companies dominated the nutritional health market in China, Chinese consumers loved Australian products because they were considered "clean and green" and produced under very high manufacturing standards.

The Chinese also had a sense of pride in working for and representing international companies.

"They really want to do a good job, not just for you but their families," Ms Holgate said.

"They really want to build it; they see themselves as `CEO China'."