By staff reporter SUN LI

TO anyone in the know, Tong Ren Tang is the brand name synonymous with TCM (traditional Chinese medicine).

Since China joined the WTO, foreign pharmaceutical groups have poured into China, and the century-old Tong Ren Tang has set its sights on trans-regional, trans-national, trans-ownership expansion.

It was in late 2003, when the Tong Ren Tang International Company was registered and established in Hong Kong, that Tong Ren Tang’s global operations began in earnest. The year 2004 marked Tong Ren Tang’s initial exploration of potential overseas markets.

Expanding Overseas Markets Via Hong Kong

As international trading port and world center for finance, trade, commerce, information and logistics, Hong Kong was an obvious choice of seaport for Tong Ren Tang. It was also the testing ground for its overseas market expansion, and the five retails outlets that opened there in 1993 all flourished and prospered. Since Tong Ren Tang’s main overseas market is in Southeast Asia, Hong Kong is its most advantageous location as it provides a base from which to sound out the overseas market and realize a more effective footing within it.

In January 2004, seven young, dynamic Tong Ren Tang International employees arrived in Hong Kong and, under the leadership of general manager Ding Yongling, deputy general manager of the Beijing Tong Ren Tang Group, got straight to work on a strategy set out by company headquarters.

Ding Yongling and her staff were soon aware that for the past few years the Hong Kong SAR government had encouraged development of TCM, and given financial and policy support to local TCM enterprises. Yet, despite a mature industrial zone, scientific research expertise and a wealth of talent, no substantial progress had been made. After reporting their findings to Beijing headquarters, Tong Ren Tang International promptly registered the Tong Ren Tang Chinese Medicine Company in Hong Kong, and two of its listed companies in Beijing jointly invested HK $150 million in the purchase of 11,700 square meters of land in HK Dapu Scientific and Technological Park. In collaboration with local scientific research institutes, Tong Ren Tang will build a manufacturing, processing and research and development base in the park whose products will meet the needs of the overseas market. Upon finalization of the design plan, construction started in April 2005 and is expected to be complete at the end of this year. It is estimated that the first Hong Kong-produced Chinese medicine will go on the market in the first half of 2006.

Tong Ren Tang International’s terminal sales network is also in full swing, having achieved impressive overseas development in 2004. January that year saw the opening of a drugstore in Taiwan, rapidly followed by five more in Singapore, South Korea, Hong Kong, Malaysia and Indonesia within the first half of that year. By the end of 2004, Tong Ren Tang had 17 branches and drugstores in 12 countries and regions, and earned foreign exchange from exports amounting to US $20.18 million. This represented an increase of 30 percent over the previous year and brought it a number one national ranking in traditional Chinese medicine exports.

Overseas Marketing

Traditional Chinese medicine’s impressive performance in the prevention and treatment of SARS and AIDS has reaffirmed its value as well as boosting its exportation. In 2004, the EU relaxed its access standards for herbal medicine, and for the first time acknowledged its medical legitimacy. Yet China’s exports of herbal medicine make up only 5 percent of the global herbal medicine market share. It still faces many difficulties and challenges in the form of legal restrictions and trade barriers. Tong Ren Tang’s advance into world markets nevertheless proceeds steadily.

Tong Ren Tang has chosen as its marketing targets countries and regions in whose populations are a high proportion of people of Chinese origin and Chinese students. In 1993 and 1994, drugstores bearing the Tong Ren Tang registered trademark opened in Hong Kong and London. In 1999 the group changed its tactics and began investing in funds and obtaining controlling rights in overseas joint ventures. Most of its overseas branches are joint ventures in which Tong Ren Tang has the dominant share of stocks. The group works on the policy of owning a minimum 51 percent share in all its joint ventures wherever possible, as this is the only way of ensuring that its operations retain the original Tong Ren Tang characteristics, no matter how far away they may be from China. This is how the company has gained such high prestige abroad. Yet Tong Ren Tang International has also been pragmatic enough to accept more flexible forms of joint venture. When local law precludes its dominant shareholding, it takes the maximum share allowed, and in certain countries has franchised operations. Tong Ren Tang has standardized operation modes, characteristics and services in all its overseas joint ventures. Whether in Hong Kong, Singapore, London or Seoul, Tong Ren Tang drugstores are located on the busiest commercial streets. All the drugstores are furnished in Chinese style, and in addition to retailing own-brand Chinese medicine, its drugstores have veteran physicians on hand to prescribe medicines and maintain Tong Ren Tang’s humanistic tradition.

Tong Ren Tang has high expectations of its cooperation partners, dealing only with influential enterprises of good economic performance that are on good terms with the local government. It carries out regular and stringent inspections of all its retail outlets.

Tong Ren Tang was China’s first enterprises to be designated as a “Chinese Famous Trademark.” Its brand name is a national treasure, and is particularly well known in Southeast Asian countries. Tong Ren Tang “look-alike” drugstores that have opened in countries abroad, however, hamper the genuine Tong Ren Tang’s overseas extension. Painfully aware of the importance of intellectual property rights protection, the group has invested in a whole section of specialized operatives that work exclusively on trademark registration and protection. Tong Ren Tang was the first Chinese enterprise to register its trademark in Madrid, and also the first mainland enterprise to do so in Taiwan. The Tong Ren Tang trademark is now commonly seen in more than 50 countries and regions, including Canada, Thailand, Australia and Madrid Agreement member countries.

Tong Ren Tang has won prestige among its consumers in all countries for the good quality and efficacy of its products and personalized service. One young man in Australia found that he needed take only one quarter of a normal dose of Zaoren Anshen Ye (Jujube Kernel Sedative Oral Liquid) in order to sleep soundly the whole night. Patrons of Tong Ren Tang’s London drugstore in Chinatown include as many Anglo-Saxons as Chinese.

In 2005, Tong Ren Tang International has set itself the goal of earning US $23 million, completing preparations for establishment of the Tong Ren Tang Chinese Medicine Company, and opening a further five overseas drugstores.