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UPDATED: May 30, 2011 NO. 22 JUNE 2, 2011
TCM's Waterloo

Traditional Chinese medicine (TCM) is facing headwinds as it looks to go global. Recently, it lost ground in the world's largest herbal medicine market: the European Union (EU).

Starting May 1, herbal medicinal products without a special license from respective EU countries have been banned in the EU market, according to the EU Traditional Herbal Medicinal Product Directive passed in 2004. The directive's seven-year transition period ended on April 30.

Unfortunately, no TCM products have completed the registration process or obtained a license. This means they will have to say au revoir to the EU market, which accounted for 14 percent of China's total TCM exports.

The reasons behind China's failure to acquire a license, according to Chinese exporters, were the registration costs and difficulties in providing evidence of the product's 30-year safe use record, including 15 years of safe use in the EU.

This was undoubtedly a heavy blow to China's already weak TCM export industry. Currently, China only enjoys a miniscule 3-5 percent of the $20-billion international TCM market, which is extremely incompatible to its status as the resource-rich origin country of the centuries-old TCM.

The underlying reasons behind the lackluster performance of China's TCM products in the international market lie with the country's TCM industry. A severe shortage of investment in research and development and a lack of industrial standards and strict quality control have become the main barriers deterring China's TCM's entry into foreign markets.

Most of China's TCM exports are still raw materials with low added value. China's processed TCM products, which are widely accepted by Westerners, only take up a tiny proportion—less than 10 percent of last year's total exports. China even recorded a trade deficit in processed TCM products last year.

Meanwhile, China's TCM exports often fall short of the standards of foreign markets. These standards can't simply be regarded as trade barriers, as many are related to safety, such as those for heavy metals or pesticide residues. The EU's requirements on safety are evidence enough.

TCM's waterloo in the EU market has exposed the internal weaknesses of China's TCM industry. Now, lessons should be learned so that China's TCM industry can put itself on a better track.

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