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The outbreaks of the bird flu and SARS (Severe Acute Respiratory Syndrome) in 2003 and the global ageing population resulted in the international recognition that health is one of the most critical issues that requires greater attention. Increasing affluence and better educational opportunities have also equipped people in different corners of the world with the financial and knowledge resources to consume health-related products and services. In light of the increasing global awareness towards a holistic and naturalistic approach to health, one of the most popular health-related products and services is traditional medicine.

The Hong Kong Trade Development Council estimated in 2002 that the size of the Chinese medicine market in China was about Rmb 40 billion (US$5 billion), and that China had emerged as one of the world’s largest markets for traditional Chinese medicine (TCM).1 This was due to a number of political, economic, social, cultural and technological factors. The Chinese government’s active promotion of TCM as part of the 5000-year-long Chinese cultural tradition and the related structural reforms, the potential purchasing power of the huge 1.3 billion Chinese population, changing demographics and living habits as well as the increasingly sophisticated TCM research and development facilities are various reasons accounting for the vast potential of this emerging market for TCM products.

In spite of such immense potential, multinationals wanting to enter the Chinese TCM market face some challenges. The inadequate intellectual property protection, complex regulatory processes, the Chinese government’s health reinsurance reimbursement system as well as the pricing, bidding and distribution practices are among some of the major issues that multinationals may have to deal with when devising a strategy in gaining a competitive advantage.
1 Hong Kong Trade Development Council (2002) “The Post-WTO Opportunities for Global Chinese Medicine Players – Opportunities in the China Market”, [www document] (accessed December 1st 2004).
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