Consumers have healthy respect for brand names

Traditional Chinese medicine and products with multiple functions also are popular with Chinese consumers, many of whom are concerned about the side effects of Western OTC products.

"TCM is popular with consumers of all ages, not only the older generation," said the report, adding that TCM is preferred by 55 percent of residents of large cities, compared with 35 percent in small ones.

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But to get a bigger share of an increasingly attractive market, manufacturers should invest more in brand strength, product efficacy and expertise, Wu said.

"Before jumping in and committing valuable resources to secure a foothold, most companies are wrestling with a variety of strategic issues, such as which consumer segments to target, which products to offer, how city size affects consumer behavior and which distribution channels to use," said Wu.

But the consumer health market in China remains quite fragmented due to a broad range of preferences, based on things like age group, city size and income level, so companies must develop product portfolios that play to distinct business strengths.

Added to this is the fact that better-known brands are considered safer and of higher quality than lesser-known brands, especially when it comes to OTC products and self-medication.

In order to capture the market, companies should focus on brand building, according to BCG.

"Companies with strong brand equity may be able to capitalize on it by extending the brand into other product areas or consumer segments," said the report.

Along with developing campaigns to educate consumers about product quality and value, as well as to correct common product misconceptions, the report said it is critical for companies to have a retail presence and shelf space in major pharmacy chains, which are considered the most important sales channel for health and wellness products.

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