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Business
Print Edition> Business
UPDATED: March 5, 2012 NO. 10 MARCH 8, 2012
Traditional Business, Modern Ambition
The traditional Chinese medicine maker Tongrentang makes steady headway into overseas markets
By Hu Yue
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GOING GLOBAL: Ding Yongling, Vice General Manager of Tongrentang (second left), and one staff member introduce TCM products to local customers in Dubai, the United Arab Emirates (LI ZHIHUI)

Open any medicine cabinet in America or other Western countries and an assortment of bottles is sure to fall out. Tylenol and pain relievers, sleep aids, syrups to battle the common cold and multivitamins will be well stocked. What won't be are the herbal and natural supplements of traditional Chinese medicine (TCM).

That may be changing as TCM suppliers, like Tongrentang, expand operations abroad, and, more importantly, as foreigners begin to embrace this age-old medicinal style.

A case in point is Simon Coburn, a 20-year-old student from Sydney, Australia. Coburn, who has been studying Chinese in Beijing for two years and enjoys traveling, never embarks on an excursion around China without first making sure he has a few packets of Yunnan Baiyao bandages and Tongrentang Banlangen Granules to treat colds.

"I learned about TCM from my Chinese roommates, and quickly got used to them because they cause less side-effects than Western medicine," said Coburn.

Since becoming a fan of TCM, Coburn has also introduced the medicine to his parents. "Nowadays, my father regularly goes to a Tongrentang store in Sydney for acupuncture to cure his neck pains," said Coburn.

Old Tongrentang

Tongrentang is the oldest and largest producer of TCM in the country and has become a household name in China. The Coburn's experience with TCM is also a vivid reflection of how this centuries-old company plans to extend its reach beyond China's borders.

The appeal of TCM is in its treatment. While Western medicine treats symptoms, TCM focuses on addressing the underlying causes of illness. Tongrentang, in particular, outshines competitors by producing more than 1,000 TCM products.

While Tongrentang dominates the domestic market, its overseas forays have been no less aggressive.

In 1993, Tongrentang set up a joint venture in Hong Kong. The financial strength, logistics efficiency and trade freedom of the metropolis significantly helped the company step onto the world stage.

Despite the sweeping financial crisis in 2008, overseas business has maintained double-digit growth rates annually in both revenues and profits during the past decade, according to Ding Yongling, Vice General Manager of Tongrentang. Last year, Tongrentang exported $33.92 million of TCM products, accounting for nearly 20 percent of the country's total and making it the largest TCM exporter of China.

In its latest move, it opened a new store in Dubai, the United Arab Emirates, the first one in the Middle East.

"The new store marks a remarkable step toward overseas expansion, though we still have a long way to go before building a global market foothold," Ding said. "Our goal is to own at least 100 overseas stores by 2015, and make TCM more accepted by global consumers."

Standard and flexibility

Tongrentang's first footsteps outside China were slow and cautious. Before looking to the West, it first approached Southeast Asia where overseas Chinese provided a solid customer base.

In a move to boost its brand recognition, the time-honored enterprise standardized its overseas operation model. Now, whether in Hong Kong, Singapore, or Seoul, Tongrentang drugstores are located on the most bustling commercial streets. All drugstores are furnished in classic Chinese style, with wooden shelves and red lanterns hanging at the entrance. In addition, veteran physicians are on hand to consult customers and give herbal prescriptions.

"When our first store in Hong Kong opened in 1993, customers lined up to get our medicine," Ding said. "The rapid growth in Singapore was also beyond our expectation. We believed the market would be saturated with just one store in such a tiny nation, but now we have five stores in Singapore."

But Tongrentang's outbound inroads were not without barriers. A lack of market access was the biggest one since TCM products are regulated in foreign countries to varying degrees due to ingredients such as heavy metal and some natural herbs.

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