22 September 2018
Hong Kong firms can leverage the consumer trust and develop their own Chinese medicinal herb farms, rather than resort to imports. Photo: HKEJ
Hong Kong firms can leverage the consumer trust and develop their own Chinese medicinal herb farms, rather than resort to imports. Photo: HKEJ

HK firms must tap the opportunity in Chinese medicinal herbs

Chinese medical scientist Tu Youyou’s Nobel Prize win has fueled fresh investor interest in mainland pharmaceutical firms and also ignited a heated debate about the Chinese herbal medicine sector.

Interestingly, however, the subject of the debate is not, as one might have expected, about how promising the future of Chinese herbal medicine is, but rather, how the industry is struggling to survive these days.

In fact many experts on the mainland even see gloomy growth prospects for the herbal medicine industry in the days ahead, not because of any shortage of medical talent or low market demand, but because of the continued deterioration in the quality of the herbs themselves due to environmental pollution, overproduction and pesticide abuse by farmers.

As there are lots of highly contaminated herbs in the open market these days, it has not only undermined consumers’ confidence in Chinese herbal medicine, but also scared off many big customers.

Among them are the Japanese, who have long been holding Chinese herbology in high regard due to the historical connection between the two countries, but who have ceased importing herbs from China several years ago and begun to grow their own after they found that a terrifying 90 percent of herbs imported from China contained highly excessive pesticide residues.

With poor regulation on the mainland taking a toll on the long-established reputation of Chinese herbal medicine, I am reminded of a proposal put forward by former Hong Kong Chief Executive Tung Chee-wah to develop a “Chinese herbal medicine port” in the city.

Although we don’t have much farmland to grow herbs in Hong Kong, I believe we remain at a definite advantage in developing our own herbal medicine industry, because we still command the confidence of consumers worldwide in our products.

As Yue Hwa Group CEO Yue Pang-chun told me, apart from jewelry and luxury items, Chinese herbs are one of the most sought-after items by mainland visitors in Hong Kong.

He explained that although most herbs available in our city are actually imported from China, many mainlanders still prefer to buy them here simply because they believe that our retailers would only import genuine and safe herbs, and therefore they have confidence in the products on offer.

That prompts me to suggest this idea: why can’t Hong Kong companies rent or purchase uncontaminated farmland across the border and grow their own herbs, subject them to rigorous testing standards, and then put them on sale in our own brand names across China or even around the world?

Some local drug companies are in fact already doing that now, but most of them are only producing rare herbs currently such as the Ganoderma and Caterpillar Fungus, because they have a much higher profit margin than common herbs.

For the same to happen in the production of common herbs, given their relatively low profitability and massive investment needed, government support and policy incentives would be necessary.

This article appeared in the Hong Kong Economic Journal on Oct. 15.

Translation by Alan Lee

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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