The nation is putting an emphasis on global standards in the production of herbal medicine and strengthening technological innovations.

There are more than 1,000 companies in China making traditional Chinese medicine , but large and medium-sized enterprises account for less than 20 percent of the total business players in the Chinese market.

However, Sunday saw the launch of the China Medicinal Materials Group, the nation's largest conglomerate of traditional Chinese medicine business.

The move indicates a shake-up in the industrial landscape.

The group, formed by a number of leading Chinese manufacturers, distributors and innovators of traditional Chinese medicine, shows the country's ambition to have an industrial giant competing on the world stage.

"The group will lead the way in R&D to advance China's traditional Chinese medicine in the world market,'' said Li Zhenji, the deputy director of the State Administration on traditional Chinese medicine.

The changing scene follows warnings from industry experts that the nation has been pushed to the edge of the booming global business.

This has been caused by low efficiency due to poor management and a lack of insight related to market expansion.

It is also a result of too many companies scrambling into the same business with almost the same strategies, leading to a glut in production that reduces their capability for profit. A low high-tech content in the production of herbal medicine has also prevented China from competing effectively on the world stage.

The country was the birthplace of traditional Chinese medicine and has thousands of years of history but has been losing ground to Asian rivals such as Japan and South Korea.

Ren Dequan, deputy director of the State Drug Administration, said yesterday that China will iron out stiffer regulations this year regarding getting medicines up to global standards. The fact that they aren't up to these standards already is one of the key problems for Chinese drug firms trying to enter the global market.

"If we fail to do this, the global market will slip out of our hands,'' said Ren.

The US and Europe have paid a lot of attention to imported medicine to make sure all products are up to global standards in terms of safety and quality.

China recently revised its law on drug administration, the latest but boldest effort ever to tighten the grip on medicine production and supervision.

The updated law strengthens supervision and keeps a closer eye on the whole process of manufacturing drugs as well as monitoring their quality, underscoring China's bid to ensure production goes by global rules.

And the government is strengthening its financial support of technological innovation in the traditional Chinese medicine sector.

This has become one of the key issues on the agenda for China's high-tech innovation plan over the next five years.

Cash will be ploughed into planting the raw materials needed for traditional Chinese medicine, upgrading facilities to produce them and promoting quicker commercial applications of research on the drugs, officials said.

"Modernizing the traditional Chinese medicine industry by technological innovation and other measures will be the key to improving China's competitive edge in the global market,'' said Fu Jingying, a senior expert with the China Society of Traditional Chinese Medicine.

The industry in China has seen steady growth in the last few years, with an annual expansion of 20 percent. Last year, around 50 billion yuan (US$6 billion) of traditional medicine products were made, 23 percent of the total medical production in China.

The growth came on the back of a brisk demand for ancient Chinese medical formulas and practices as foreigners become increasingly receptive to different techniques.

Global sales of traditional Chinese medicines and herbal products are around US$16 billion per year, with an annual expansion of 10 to 20 percent, official statistics said.

But China is still not getting enough from the boom. Its share of the global market is only 2 percent, while 80 percent of the cake is eaten up by Japan and 10 percent by South Korea.

"Drug producers in China have been plagued by the inability to have economies of scale, backward technology and a lack of money, making it hard for them to compete with foreign rivals,'' said Fan Hongzhe, general manager of China Medicinal Materials Company, a leading player in China.

(China Daily 05/21/2001)