Impact of trade frictions raises concerns for global health

Julia Pierrepont III & Huang Heng

LAS VEGAS, UNITED STATES (Xinhua) – As over 17,000 attendees gathered last Friday at an annual global exhibition on health ingredients in Las Vegas, they were faced with the burning question of how the United States (US)-initiated trade frictions with China is affecting their business.

Speaking at the SupplySide West 2019 Trade Show, participants acknowledged that the industry relies heavily on its ability to source ingredients at competitive prices across the world, with China being one of the most important suppliers and the US the largest market.

More than 350 Chinese companies joined this year’s fair, and China’s pharmaceutical ingredient industry is witnessing expansion, according to Deputy Secretary General of the China Chamber of Commerce for Import and Export of Medicines and Health Products Chris Cai.

Brand Director and Vice President of Sales for events company Informa’s SupplySide portfolio Danica Cullins said that the Chinese suppliers “represent the largest number of exhibitors at the show outside of the US group”.

“They (the Chinese suppliers) bring a great deal of business and value to the show,” Cullins added.

While the future of the trade war remains uncertain, US buyers and consumers are grappling with tariffs.

It would be bad for business if they move raw material sourcing to some other countries which do not have the rigorous testing capabilities and quality control documentation they get from the Chinese sources, said Product Scientist at AIDP Xiao Wong

Pacific Rainbow (PR), a US-based nutritional supplement company which imports raw materials and ingredients from China and Southeast Asia and sells to US manufacturers, was definitely affected.

“We felt the pressure from both sides – suppliers and customers. Our customers were concerned about a shortage of suppliers from China and over the higher prices because of tariffs. So it’s been very disruptive for our business,” said Forrest Zhang from PR.

“It’s the small businesses that suffer because the big companies can absorb a cut in 25 per cent of their profits. Small companies can’t. That puts a lot of good, innovative companies out of business,” said Robert, who declined to reveal his last name.

Robert lost his job last year when his former employer, a US food supplement manufacturing company, went belly up. Now he owns a start-up company and took part in the trade show to look for suppliers.

Among the participants there was a consensus that thanks to high demand, good ingredients with real science behind them will continue to do well no matter where they come from, regardless of the trade scuffle.

Take US functional ingredient companies AIDP in Southern California. The company supplies more than 200 commodity ingredients for diverse health and anti-aging formulations, many of which are sourced from China as the company relies heavily on the Asian country’s safety standards in the food supplement sector.

“We source from many countries, but mostly from China,” said Product Scientist at AIDP Xiao Wong. He added that it would be bad for business if they move raw material sourcing to some other countries which do not have the rigorous testing capabilities and quality control documentation they get from the Chinese sources.

“The connections to manufacturers of ingredients in China are very deep in this business, so you can feel the trade war is impacting the energy here,” said Cullins.