Mak­ing TCM ac­cept­able abroad

Bei­jing Ton­grentang Group ratch­ets up its over­seas play through branches, M&A, R&D and train­ing cour­ses

China Daily (USA) - - BUSINESS - By FANFEIFEI fanfeifei@chi­nadaily.com.cn

Bei­jing Ton­grentang Group Co Ltd, the world’s largest pro­ducer of tra­di­tional Chi­nese medicine, plans to in­crease in­vest­ment out­side China and open at least 200 over­seas branches in the next five years.

“We will es­tab­lish lo­cal­ized fac­to­ries in ma­ture over­seas mar­kets, open TCM clin­ics and health­care cen­ters,” said Ding Yongling, vice-pres­i­dent of Ton­grentang.

The com­pany has al­ready set up 115 re­tail ter­mi­nals, TCM clin­ics and health­care cen­ters in 25 coun­tries and re­gions by June-end, and treated over 30 mil­lion pa­tients.

It em­ploys nearly 900 staff over­seas, 90 per­cent of them lo­cals.

“Our goal is to en­ter Europe and theUnited States, but the plan is very dif­fi­cult to ex­e­cute. The big­gest chal­lenge is how we could break prod­ucts’ ac­cess bar­ri­ers, said Ding.

Founded in 1669, Ton­grentang was ap­pointed to pro­vide medicines for the royal phar­macy of the im­pe­rial palace of the Qing Dy­nasty (1644-1911) for eight gen­er­a­tions of Qing em­per­ors span­ning 188 years, ac­cord­ing to its of­fi­cial web­site.

Ton­grentang be­gan over­seas ex­pan­sion in 1993 when it opened a re­tail phar­macy in Hong Kong.

In 2003, it rolled out its South­east Asia net­work. In 2006, it es­tab­lished the first over­seas pro­duc­tion andR&D base in Tai Po In­dus­trial Park of Hong Kong, cov­er­ing an area of 11,700 square me­ters

It got listed on the Hong Kong stock ex­change in 2013 and raised HK$699 mil­lion ($90 mil­lion). The 347-yearold Ton­grentang be­gan to ex­pand into Europe and US main­stream mar­kets out­side the bound­ary of the drug mar­ket.

Last year, it for­ayed into the Nether­lands and New Zealand through ac­qui­si­tions. It bought out a lo­cal TCM en­ter­prise in New Zealand, which now has seven re­tail stores.

It also es­tab­lished an R&D com­pany in Switzer­land and opened a TCM clinic in Prague, the cap­i­tal of the Czech Repub­lic.

Ding said TCM is yet to re­ceive le­gal recog­ni­tion as a main­stream sys­tem of medicine world­wide. TCM prod­ucts are gen­er­ally rec­og­nized as food ad­di­tives and di­etary sup­ple­ments and al­lowed en­try into Europe and US mar­kets.

“With re­gard to this is­sue, we have set up teams to an­a­lyze poli­cies in dif­fer­ent coun­tries,” said Ding, adding they have ex­plored a devel­op­ment method in over­seas mar­kets, cov­er­ing prod­ucts, re­tail stores, med­i­cal treat­ment and cul­ture.

It now has three core busi­nesses: mod­ern phar­macy, re­tail busi­ness and health ser­vices. Its pro­duc­tion line has passed the GMP (good man­u­fac­tur­ing prac­tice) test in Hong Kong, Ja­pan and Aus­tralia.

“In the past, Western­ers had lit­tle knowl­edge about TCM, but now, we teach aboutTCM­cul­ture and his­tory by hold­ing lec­tures and of­fer­ing health­care ser­vices,” Ding said.

China’s cabi­net, the State Coun­cil, is­sued a guide­line in Fe­bru­ary on de­vel­op­ing TCM dur­ing the 2016-30 pe­riod. Ac­cord­ing to the plan, the out­put of the TCM in­dus­try will ac­count for 30 per­cent of the na­tion’s over­all phar­ma­ceu­ti­cal in­dus­try.

The coun­try has in­ten­si­fied ef­forts to ex­pand TCM out­side the coun­try, push­ing for the an­cient dis­ci­pline to be ac­cepted world­wide.

Ding said there are both op­por­tu­ni­ties and chal­lenges for Ton­grentang now. “We have pol­icy sup­port from the cen­tral govern­ment, butTCM is still dif­fi­cult to en­ter Europe and US mar­kets as a medicine.”

Ton­grentang has a plan to have a pres­ence across the in­dus­try chain over­seas and aims to build up an in­ter­na­tional and spe­cial­ized TCM group, in­te­grat­ing plant­ing (of herbs and saplings), pro­cure­ment, R&D, man­u­fac­tur­ing, sales, ser­vice, cul­ture and ed­u­ca­tion.

It is ex­pand­ing its mar­ket­ing chan­nels, try­ing to con­nect dif­fer­ent in­dus­tries by an online-to-of­fline or O2O model to pub­li­cize the charm of the brand.

Last Oc­to­ber, it launched a cross-bor­der e-com­merce plat­form to pro­vide health­care prod­ucts and ser­vices for global con­sumers.

Ding said, “We will fur­ther ex­portTCMprod­ucts to more coun­tries and re­gions, and in­tro­duce ex­cel­lent over­seas re­sources to China.”

InMarch, Canada’s Fac­tors Group of Nutri­tional Com­pa­nies Inc, a man­u­fac­turer of branded nat­u­ral health prod­ucts, signed a li­cens­ing agree­ment with Ton­grentang to dis­trib­ute its flag­shipNat­u­ral Fac­tors brand in China.

“We will strengthen co­op­er­a­tion with over­seas re­search in­sti­tutes to come up with new prod­ucts which cater to the taste of lo­cal peo­ple. More­over, we will also co­op­er­ate with over­seas uni­ver­si­ties to pro­mote the TCM ed­u­ca­tion to cul­ti­vate lo­cal TCM tal­ents.”

Huang Ting, a phar­ma­ceu­ti­cal in­dus­try an­a­lyst from Si­no­link Se­cu­ri­ties, said Ton­grentang, as a time-hon­ored TCM brand, en­joys a large space in the non-medicine busi­ness field. “Its brand eq­uity, phar­ma­ceu­ti­cal tech­nol­ogy and ex­clu­sive va­ri­eties can­not be repli­cated eas­ily. I am bullish on its long-term devel­op­ment.”

The num­ber of Ton­grentang’s re­tail ter­mi­nals, TCM clin­ics and health­care cen­ters in 25 coun­tries and re­gions by June-end.

MENG QING / FOR CHINA DAILY

A phar­ma­cist pro­cesses a tra­di­tional Chi­nese medicine at a Bei­jing Ton­grentang Group Co Ltd's fac­tory in Bei­jing.

/ FOR CHINA DAILY ZHAO JING

Bei­jing Ton­grentang Group Co Ltd's em­ploy­ees pre­pare tra­di­tional Chi­nese medicine for their cus­tomers at a Ton­grentang phar­macy in Chengdu, Sichuan prov­ince. The Chi­nese TCM com­pany plans to broaden its over­seas busi­ness by open­ing at least 200 branches over the next five years.

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