| Traditional Chinese Medicine (TCM) is part and parcel of Chinese culture, which has a long history. TCM is not only an old and rising industry, but also one of the few industries with primary intellectual property in China. Along with coming of trend of "Returning Nature" and "Green Consumption" within the range of the world, it tends to pay more attention to natural medicines. The market share of natural medicines is rising with rate of 20% -30%. Therefore, TCM has a bright and broad prospect in world markets.Under the background of globalization of economy and accession to WTO of China, Chinese economy was jointing with world markets. Chinese enterprises have more opportunities to face competition from transnational medicinal corporations. But on the other hand, Chinese enterprises have to be confronted with lots of difficulties such as cultural difference, law obstacle, and technical barriers to trade (TBT) during internationalizing operation. How to overcome the difficulties and find a way to open the international TCM markets? How to construct the competitive advantages of Chinese TCM enterprises? These are problems for all corporations aim at not only domestic market, but also internationalizing operation.Tongrentang (Group) Co. is an old and very famous TCM enterprise with more than 300 years history. High-quality herbal medicine products and reputed brand are the core competences of this corporation. Hutchison Whampoa Ltd., Hong Kong, said its subsidiary Hutchison Chinese Medicine Investment Ltd. has agreed to form a joint venture with China Beijing Tongrentang (Group) Co. to develop and invest in a traditional Chinese medicine business in November 2003. This suggested that Tongrentang quickened the steps of internationalizing operation actively and effectively. Through more than 10 years of international operation, Tongrentang has accumulated much valuable experience. This paper analyzes the relative problems concerning internationalizing operation of TCM enterprises by discussing the Tongrentang case.The paper is divided into 5 chapters.Chapter-1 reviews classical theories of internalizing operation of enterprise. According to "Eclectic Theory of International Production" created by English economist John H. Dunning, a multinational enterprise should have all of ownership advantages, internalization advantages, and location advantages if it wants to make foreign direct investment (FDI).Chapter-2 introduces international competitive situation of present TCM industry. World market can be divided into 4 market segmentations of TCM according to the cultural difference, including HongKong and South East Asia, Japan and Korea, Europe Union, and America. Through analyzing different characteristics of these market segmentations, the author will find location advantages owned by the host country.Chapter3 introduces the main advantages of Chinese TCM enterprises.Tongrentang integrated its ownership advantages, intemalization advantages, and location advantages by extending its value chain vertically in the world, so as to obtain monopolization advantages.Chapter4 compares the differences of internationalizing operation between Tongrentang (Group) Co. and Sanjiu (Group) Co. These two corporations have different history, internationalization strategy, and competitive advantages. But both of them faced the same problem, which is internationalization experience.Chapter5 puts forward some suggestions. The main idea is TCM enterprises may choose appropriate internationalization strategy and tactics with steady step. In order to develop global medicine market, TCM enterprises should adopt some effective methods such as strategic alliance and intellectual property protection. |
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