An interview with Mr. Arthur Tsao, CEO of Standard Foods Corporation
The health industry has become a national priority in China and a new engine for its economy. The total value of China’s market for health products surpassed 3 trillion RMB in 2016, 4.5 trillion RMB in 2018 and is estimated to reach 7.4 trillion RMB by 2022.
The market for health products in China is rapidly developing. In terms of market consumption, total expenditures on medical treatment and public health in the United States account for over 15% of its GDP. In both Canada and Japan, they account for over 10%. In China, however, total expenditures account for only 6.2% of its GDP. As the country’s average residential income continually increases, China’s economy advances and its citizens’ expectations for quality of life rises. The health industry, therefore, has vast potential for future development.
To learn more, SpaChina interviewed Arthur Tsao, CEO of Standard Foods Corporation. After receiving his M.B.A. from Stanford University, Arthur served as an Enterprise Management Consultant for McKinsey & Company before becoming the General Manager of Standard Foods (China) Company Limited. Born in Taiwan, Arthur is dedicated to promoting healthy living and developing his company further. Standard Foods sells a wide range of products including oats, cereal beverages, milk powder, edible oils and condiments, tonic drinks, special nutritional foods and more. In certain markets, the penetration rate of Standard Foods’ products has reached 90%. Standard Foods’ MIGHTY Edible Oil brand has consistently ranked in the top three among mid- and high-end edible oil brands and has won several awards. MIGHTY has cooperated with World Heart Day for over 10 years and has helped popularize useful aerobic exercises in more than 500 cities nationwide.
In efforts to fortify China’s health sector, Arthur oversaw in 2015 the company’s merger and acquisition of Swissline, Switzerland’s premiere cosmetic anti-aging brand, introducing Standard Foods’ to the cosmetic industry. Arthur’s goal is to develop a new realm of health products that promote healthy foods alongside skincare using cutting-edge technology from around the world.
What are the main categories of Standard Foods’ health products?
Standard Foods’ health products fall into three main categories. The first category is “healthy foods,” which consists primarily of our nutritious dairy products. Nowadays, thanks to stricter food regulations in China, food safety is basically guaranteed. So, consumers have now shifted their focus toward nutritious products. Consumers choosing an edible oil, for example, now have higher expectations for its nutrient content. In the past, people talked a lot about refined oil. Now, however, people want it with its natural nutrients. Standard Foods’ sunflower oil caters exactly to these needs with rich nutrients like vitamin E and phospholipids.
We also have “functional foods.” This category consists of food products that fall somewhere between ordinary foods and tonics. Functional foods target certain bodily functions and work to improve them in the long-term. For instance, given that lutein is good for eyes, we produce lutein powder sachet and soft sweets. For much of its past, China’s market was flooded with all kinds of tonics, many of which consisted of illegal additives and were therefore extremely harmful to the body. Thankfully, the government recently launched a series of stringent policies that combat the illicit actions of these profit-driven companies. So, this has given us a great chance to develop milder and more natural functional foods. The wife of one of my foreign colleagues drinks Chinese Wolfberry water every day to replenish her energy and blood.
We are also considering how we make our food so it can more easily win the hearts of our consumers. In Taiwan, we sell ginseng a lot. Its penetration rate among young people, however, stays low because they think it sounds like a kind of geriatric medicine. We believe, therefore, it is important to innovate the ways in which we make and sell food.
Now, Standard Foods is united with Swissline. This marks a new opportunity for us to develop even more interesting foods that can be sold with skincare products and spa treatments in order to promote beauty, both inside and out.
What are the characteristics and distinctive requirements of China’s consumers towards health products? What products will you offer to meet their needs?
We predict that more and more Chinese consumers will turn to functional foods for both short- and long-term health management. Currently, however, health and medical expenses still primarily consist of medicine and treatments that are meant to be administered after diseases occur. This is unlike many other developed countries, which aim to promote preventive products and services instead.
Today, people battle more stress than ever before due to fierce social competition, resulting in various physiological conditions which can develop into serious diseases if not tackled in time. Most people who receive negative diagnoses from their doctors, however, will not follow their advice. Over time, these neglected conditions develop into more serious illnesses. There are also some people who are genetically predisposed to certain diseases. So, if they consume preventive functional foods from the beginning, they are more likely to change the outcomes of their lives. To solve this problem, Standard Foods hopes to create more functional foods that target these conditions and improve daily life.
There is another trend, too, triggered by “aging China.” In Shanghai, citizens over 65-years-old occupy 25% of the total population. As life expectancy rises, so too have society’s expectations for quality of life in old age. Japan exemplifies the proper way to care for their senior citizens through food design. In Japan, 65% of their senior citizens live alone. This necessitates a wide variety of support that not only includes improved facilities, but also improved food design. The biggest obstacle many older people face while eating is chewing. So, in Japan, there are many creative food products specifically designed to make chewing easier, such as super soft, easily chewable potato. There are also many low-GI choices being sold in their market.
What is your guiding concept when developing products?
Our guiding concept is to “make health easier.” It doesn’t mean to “buy food more easily,” which is now possible with online shopping. What we aim to do is help people receive the nutrition they need by creating different kinds of food. We don’t want to just sell people a product, but rather provide a holistic solution that can really make their lives easier and protect their health.
Presenting food creatively is important. No one will really want a tonic if it looks like medicine. As they grow busier, most young people don’t want to spend as much time cooking for themselves. It seems nearly impossible to them to collect all the necessary ingredients to prepare a dish for themselves at home. They seek faster, more convenient and healthy ways of eating. Older people, too, have adapted their ways of living and consumption. As travel becomes especially popular, time spent on household minutiae diminishes, as well.
We want to provide a product that is both healthy and time-efficient. What we have created, thus, is an integrated ingredient packet containing most of the necessary ingredients and flavours needed for a typical dish. For instance, suppose you want to eat Mapo Tofu, a stewed bean-curd mixed with minced pork in pepper sauce. With our product, you would need only to buy the beancurd; all of the other ingredients would come in the ingredient packet. This product would not only make cooking much more efficient and interesting, but also make the product healthier, since the package can also be madewith low-GI ingredients.
Additionally, we intend to make a lutein sachet that mixes well with yogurt.The yogurt turns a brilliant yellow after being mixed with lutein. We can also create “sweet” packages, which are made of different nutrients that we need every day. And we can design different combinations, too, mixing sweets with different properties functions in one package, tailored to your own needs. A sweet for the eyes, a good energy boost, and hormone regulation, all bound into one.
People can take a small packet with them and enjoy these sweets during the day without feeling like they’re taking medication. This is a highly effective personalized approach.
Why did you enter the beauty industry and merge with Swissline?
Skincare and diet complement one another. This merge helps someone achieve healthy beauty, inside and out. We chose Swissline because of their exceptional medical and skincare technology. I firmly believe that technology is crucial and definitely gives a brand an edge. Only when we master it can we make more applications and innovations.
Swissline has just opened up its flagship spa store. Our vision is to deliver guests personalized solutions that combine spa treatments and dietary plans in order to achieve optimal health management. This not only means providing healthy snacks for consumption before and after treatment, but also a set of tailored dietary plans which guest can follow. I believe this is a great step toward a personalized, healthy life.
To develop and combine certain treatments and dietary plans that both target the same health needs will magnify their positive effects.
Why is mental health important?
Mental health is an essential part of overall health. Mental health is an important pillar of physical health; the latter is the basis for the former. A healthy psychological state enables the body to function at its best, and a bad one weakens or deprives physiological functions and triggers diseases. So, we need both physical and mental health.
In addition to exercise, more and more studies have revealed a close correlation between mental health and a quality diet. Experts have reported how unhealthy diet and poor mental health in children can directly affect their school records. In recent years, more research has demonstrated that dietary improvements can effectively prevent mental disorders.
Have you developed products to improve brain health?
Yes, we have. For over 20 years, Standard Foods Corporation has stayed dedicated to the research and development of healthy products, including a rich range of products geared at improving mental health. Standard Foods has obtained the official health food certification both in mainland China and Taiwan. We aim to deliver our “total nutrition” concept and meet market demand.
With a growing population of older citizens, many geriatric diseases – most notably brain diseases – have captured the attention of consumers and scientists alike. Food supplements and other products targeting mental health have become an important sector of the market. Today, as demand for these supplements rises, the sector only continues to grow.
