Domino effect: Proposed China CBD ban leads US-based BOTA to ‘shut down’ APAC expansion plans
The news of the potential cannabidiol (CBD) cosmetics ban came as a shock to the company which also owns CBD health and wellness brands CBDistillery and CBDistilleryRx.
“I’ve been trying to wrap my head around it and figure out exactly why. It seems a bit aggressive. I was shocked to see that it was not just CBD but also hemp oils. China has been a huge producer of hemp for thousands of years and the only thing I can think of is that they are having trouble distinguishing hemp from marijuana,” said Chase Terwilliger, CEO, Balanced Health Botanicals.
BOTA only launched in Hong Kong only six months ago and was in talks with potential partners in China, such as Alibaba, to expand into the mainland.
However, the firm has ceased any further discussions since China’s National Institutes for Food and Drug Control (NIFDC) announced plans to introduce legislation to prohibit the use of cannabis and cannabis extracts in cosmetics on March 26.
Terwilliger told CosmeticsDesign-Asia that the news was a shame considering the potential of the market for CBD beauty products in China.
“It’s only been six months in Hong Kong but it's been going well and the brand has started to take off. We've also been talking to companies in China for about a year and a half just trying to find the right partner to help distribute. Those conversations were going pretty well too.”
Investing in other ‘hot’ markets
Now that the Chinese market is no longer a viable expansion option for the company, Terwilliger said it would no longer focus its attention on the APAC region as a whole.
“It has completely shut down our plans all over Asia Pacific. We will still sell into Hong Kong, but I don’t think we will invest any more time into it,” said Terwilliger.
While it does not rule out the potential in other APAC markets like Japan or Thailand where CBD is legal, the firm prefers to focus its efforts on other “hot” markets.
“It makes more sense to go after other markets that are starting to heat up, like Mexico and Europe, so we will allocate more resources there. For instance, we have an office in the UK because we are really active there and we’ve already made a large investment into that market,” said Terwilliger.
He added that the firm would not be submitting any suggestions to the NIFDC and will continue to observe how the situation in China develops.
“We’re not going to participate. We will stay on the sidelines and watch how it evolves for now. If things go the right way for the CBD industry, and I hope they do, then we will start to get involved again. If not, we will pass and invest our resources into opportunities elsewhere.”