Tongrentang looks to expand overseas with more stores in Europe and US
BEIJING - Beijing Tongrentang Group Co Ltd, a traditional Chinese medicine (TCM) producer, plans to open three more stores in Europe and is looking for partners to set up shop in the United States, a company executive said.
From its origins as a pharmacy which served the Chinese royal family for nearly two centuries, the company will open three stores in Europe this year - one each in Germany, Poland and Hungary, Mei Qun, vice-president and general manager of the company, told China Daily.
Those in Poland and Hungary will open in the first half of the year, while the German store is still under negotiation, he said.
Beginning its overseas expansion in 1993, the company now has 45 joint venture or wholly-owned stores in 16 countries and regions.
In 2009, its sales were about 10 billion yuan ($1.5 billion) with exports accounting for $25.4 million. That figure is expected to rise to $28 million in 2010.
Most of the company's overseas shops are in Asia where Chinese culture and TCMs are popular, partly thanks to the presence of large Chinese communities.
Tongrentang's presence in the West is smaller. It has one store in Europe - in London - and two in Canada. It also has two stores in Australia.
Mei said Tongrentang is looking for partners in the US to set up its first shop.
"We have sales agencies in the US now and pay lots of attention to the market. To set up a store there is our next stage of development," he said.
"We have been seeking appropriate partners in the US, as a joint venture is normally the best way to do business overseas. The local partners know more about the market and medicine regulations," he added.
According to Mei, Tongrentang's gear-up for expansion in the Western market comes after "the rise of China as an economic and cultural powerhouse and greater recognition of TCMs in the West".
Non-Chinese customers have also increased. In Canada, about 10 percent of the customers are local and the proportion is 20 percent in Australia.
But experts said the Western venture faces a lot of challenges.
"The TCM's global journey has never been smooth and its future could be worse as global supervision on medicines will become stricter," said Xu Ming, head of the Traditional Chinese Medicine Department of the China Chamber of Commerce for the Import & Export of Medicines & Health Products.
Chinese-patented TCMs cannot be sold as medicines but as dietary supplements in the European Union and US.
Exports of Chinese-patented TCMs reached $160 million in 2009, up 30 percent from $125 million in 1996, a "not-so-handsome performance" if the exchange-rate changes and inflation are taken into account, Xu said.
"TCMs are recognized by some people in the West. But the principles of Western and Chinese medicines are totally different, and it is hard for TCMs to fit the conditions and regulations of Western medicine," said Han Liwei, a professor at Beijing University of Chinese Medicine.
