Dong-E E-jiao, with an annual profit of over ¥2 billion, has recently gone viral on Moments of Wechat due to the change in accounting estimates. The donkey is living longer and is more “valuable” after “retirement,” affecting only ¥3,255,500 in profits. Our reporter learned that the market condition of traditional tonics such as donkey-hide gelatin, bird's nest, dendrobe is running into a “cold spring” in this warm spring season. Dietary supplements are becoming hot items both online and offline. 

Dong-E E-jiao lately issued a notice of changes in accounting estimates of the company. It was considered unreasonable to define the working period of a breeding donkey as five years. The actual situation saw donkeys work for 10 years; donkeys used to become worthless after working for five years, leaving only 5 percent of the book value, but in fact the donkey has a net residual value rate of 60 percent when it is old and “retired.” This change in accounting estimates does not have a high impact on the company's profit, only ¥3,255,500.

The company explained, "The donkey breeding used to be small and most of it was used for research and development, so the period of depreciation was short, basically five years. There are more productive donkeys after breeding in recent years, and the proportion of research and development is relatively small. Therefore, the period of depreciation is almost 10 years based on the normal growth cycle of donkeys.” The company stated that the residual value rate of 5 percent is the standard in the vast majority of the current breeding industry. However, the donkey is rather special. After reaching the end of the service life, the rate is much higher than 5 percent according to the present market price of the donkey meat and skin.

Traditional tonics in off-season

The market condition for several high-end traditional tonics is somewhat "chilly,” no matter whether donkey-hide gelatin, bird’s nest or dendrobe. “The Gu Yuangao, with donkey-hide gelatin as the main ingredient and one of the products that sell well in retail pharmacies, has also obvious ‘low and peak seasons.’ It’s turning into the off-season as the temperature rises after New Year holidays. The sales have declined, whether for personal use or gifts. But it basically falls in the normal range.” An industry source said the price of donkey-hide gelatin kept rising in the past years. The sales rely mainly on the “sticky” old customers. Lots of donkey-hide gelatin enterprises have begun to develop derivatives to attract young customers and to produce more snacks to attract new consumer groups.

It’s still difficult to sell bird's nests in retail pharmacies. A head of a local pharmacy said the bird's nest is not the leading category and is in stock in the long term without being recommended until customers inquire.

Dendrobe, once popular, is another product in the off-season. “The price of dendrobe and maca was driven far too high by speculation a few years ago, but the effect of maca was soon questioned. However, dendrobe retains its value, but the price has gone down to reasonable levels without any speculation.”

High-speed expansion of the nutritional supplement market

Nutritional supplements are becoming hot items. By-Health’s annual report, released recently, reported a 30 percent year-on-year increase in revenue last year and a net profit of ¥766 million, a year-on-year jump by 43.17 percent. By-Health has returned to the high-growth track, revealed that the company's Keylid Glucosamine achieved a growth rate of more than 160 percent last year. The company's sport-nutrition brand segments also grabbed a notable share of the online market.

H&H Group seems happy as well as it has earned a lot from the takeover of Swisse, a well-known health food brand in Australia. According to H&H Group, the sales of Swisse in China accounted for about 26.5 percent of its entire revenue in the first three quarters of last year.

Amway made its health shaping product Nutrilite Carb Bloc available on the overseas shopping platforms on March 21. The company is gradually improving its health-shaping product line. Amway’s performance in China made a bound last year, exceeding the previous expectation for performance.

The sports nutrition, fitness nutrition and beauty nutrition markets are all experiencing a high-speed expansion and a higher level of market segmentation. Industry observers said that nutritional supplements are no longer as monotonous as they used to be. Instead, each of them has made a unique move to meet the individual needs of the urban customers. Their ability to capture the core appeals of various customer groups has led to a high and fast market acceptance. Traditional tonics might learn from this that it is not always the same product that nourishes different people.