First Company to Target Chinese Consumers with CBD Products
How One Company is Taking an Early Lead in What Could be the World’s Largest CBD Market
In China, where cannabis remains illegal, hemp-derived cannabidiol (CBD) is opening significant new opportunities.
Forward-looking companies have already started to usher in the movement, marketing both CBD and hemp in China and other Asian markets.
Backed by extensive research, innovation, and growing demand, CBD is poised to become one of China’s largest industries over the next decade.
China is the most populous country in the world and is the largest e-commerce market in the world, representing 55% of total global e-commerce ($0.55 of every dollar spent online is by a Chinese consumer).
China’s demand for medicinal therapies such as CBD and hemp-based CBD falls in line with the country’s overall efforts to boost consumption due to higher spending power. Armed with more disposable income, the Chinese shop a wide variety of product categories, including healthcare, where spending is expected to grow as much as 10% per year.
As disposable income increases in China, there is an upward trend in aspirational consumerism which includes health, wellness, and skincare. Such product categories have grown by as much as 20% in recent years, double the rate of overall consumer spending growth.
With a strong foundation of trust in alternative medicine and natural remedies to treat illnesses, CBD is expected to gain rapid traction in China as a tested alternative with numerous potential benefits.
Overall, economists predict China’s CBD market could top $20 billion by 2022.
Under the Radar Opportunity
ChineseInvestors.com (OTCQB: CIIX), while still relatively undiscovered by Wall Street, has built a large and unique customer base in the Chinese-speaking market, both in the US and globally.
Launched in 1999, the San Gabriel, California-based company has traditionally offered a range of consulting services, information products, and web-based tools for investor education, including real-time market commentary, analysis, and education to the Chinese-speaking investor community via the company’s website, www.chinesefn.com.
Over the past 12 months, CIIX has undergone a transformation.
The company’s legacy financial media business is expected to remain and continue to do well, but management has turned its focus to capitalizing on the out-sized potential of the nascent CBD market.
While there is no shortage of CBD companies today, CIIX has carved out a unique niche by focusing where it has historically generated success – the Chinese speaking markets – and area so far ignored, and potentially impenetrable, by outsiders.
Interview with CEO Warren Wang
Record Revenue for Most Recent Quarter: Up 175% YoY
Hemp and CBD sales were a key driver in CIIX’s recent strong quarterly performance.
For the first quarter of fiscal year 2020, ended August 31, CIIX reported total revenue of $1.96 million, up 175% from the same quarter of fiscal year 2019.
Hemp and CBD sales jumped nearly 600% in the first quarter, hitting $0.9 million.
“Fiscal Year 2020 is off to a great start evidenced by continued growth in both the Company's core business and its industrial hemp/CBD product business," said Mr. Warren Wang, ChineseInvestors.com, Inc. CEO. "During the quarter, we continued to implement our strategic plans for expansion of CBD Biotechnology Co. Ltd.'s industrial hemp/CBD product lines in China evidenced by new product launches and initiatives taken to expand geographically in the Asian market.”
The Company's wholly owned subsidiary, CBD Biotechnology Co. Ltd. ("CBD Biotech"), was recently a featured exhibitor at the Vietnam Expo where it introduced its hemp-infused skincare line and hemp wine. An overwhelmingly positive reception at the expo resulted in the exhibitor’s entire inventory selling out within the first hour.
CBD-based Skincare Products are in Big Demand
Cronos Group (NASDAQ: CRON) is investing $300 million in the US hemp market through the acquisition of Lord Jones, giving the Canadian cannabis producer a foothold in the fast-growing US CBD market.
Lord Jones, founded by retail veteran Cindy Capobianco and her husband Robert Rosenheck in 2015, manufactures, markets, and distributes hemp-derived cannabidiol-infused skincare and edible products. The duo founded the business in California and originally sold products with THC, too, but eventually transitioned into a CBD-only business.
“Rob and Cindy have built a differentiated, best-in-class platform with hemp-based CBD formulations that stand for quality and consistency. Our goal is to preserve the integrity of all Rob and Cindy have created, while also learning from them and leveraging Cronos Group’s resources to capitalize on the significant demand for skincare and other consumer products derived from hemp,” said Mike Gorenstein, Cronos Chairman, President and Chief Executive Officer.
According to beauty publisher Glossy, Lord Jones was estimated to have grown sales 900% in 2018.
Rebranded Consumer Product Line
In February, CIIX launched its rebranded its CBD consumer product line under the new opt brand.
In conjunction with the rebranding, CIIX consolidated its retail e-commerce sites into a single site, www.365CWC.com, providing busy consumers with a single platform intended drive overall sales.
As part of the rebranding, CIIX now features the following product lines:
opt Hemp which includes products infused with industrial hemp-derived CDB, such as the currently offered gummies, oils, soft gels and tinctures, and topical, cosmetics and other hemp-derived CBD products in development that will compliment this line.
opt2mist™ an innovative spray vitamin product line which will also feature full spectrum hemp-derived CBD-infused formulas.
The Company's CBD Biotech subsidiary has its own product lines specifically designed for the Chinese market abroad, including CBD Biotech's skincare lines, the Live Oxygen Series, featured on Alibaba's Tmall online store and its Magic Hemp Series featured on Alibaba's Taobao Platform, China's largest e-commerce marketplaces for brands and retailers, with over 500 million registered customers.
"The unification of our domestic consumer products under the opt brand, is a step in the right direction to building optimal brand recognition as we continue to roll out new industrial hemp-infused CBD products and other health and wellness products, such as the opt2mist sprays, throughout 2019 and beyond,” said Wang.
Accelerating Sales in China
CIIX launched a two-tier, direct selling initiative to accelerate its CBD sales into China, last August.
As part of its marketing strategy, the company’s CBD Biotech subsidiary is establishing a CBD Community Center in Shanghai, to create a new channel to increase customer awareness of CBD and the benefits of hemp-infused skin care.
CBD Biotech brought in Mr. Fengxian Xie as President of its CBD Community Center beginning in August 2018. Xie brings the company nearly 20 years of marketing experience with Hainan Coconut Island Group Co. Ltd., a Chinese A-listed company, and its subsidiary Zhejiang Marketing Company, where he was able to triple sales in the Zhejiang region within his first year at this role.
To learn more about CIIX, contact a RedChip Specialists today at 1-800-Red-Chip or email email@example.com.