"The Chinese herbal medicine industry is full of down-and-out middle-aged men who are eager to try and give it a go."
Text / Ba Jiuling
In an economic environment where housing prices are falling and everything is rising, there is a category that has risen sharply but is easy to ignore because it does not belong to the category of conventional consumption, and many times, people have to put up with its expensiveness.
And what? Chinese herbal medicines. The price increase of some Chinese herbal medicines is shown in the chart below.
Atractylodes macrocephalus (about 17,000 tons per year), white peony (about 15,000 tons per year), gardenia (about 6,000 tons per year) and so on are common bulk Chinese medicinal materials. During the epidemic, the main raw material of the anti-epidemic drug "Jade Screen Granules" recommended by Academician Zhong Nanshan was Atractylodes.
It is not difficult to find that during the epidemic, the value of traditional Chinese medicine is quite prominent. The government's policy of vigorously developing traditional Chinese medicine has also been frequently introduced. Compared with previous years, it has become common for people around me who are willing to try and love to respect Chinese medicine.
Then, we can't let the "roadblock" of soaring prices undermine people's confidence in traditional Chinese medicine.
As the saying goes, as long as there are Chinese medicinal materials, there are Bozhou people. In China, Bozhou, Anhui Province, is known as the "World Capital of Traditional Chinese Medicine", with a trading volume of 138 billion yuan last year, and an annual transaction volume in the professional market accounting for 50% of the country.
So, a few days ago, the minibus ran and sought knowledge from the streets of Bozhou and all kinds of industry insiders, and at the same time was more convinced and worried about this: behind this surge is unusual.
Source: Photographed by minibus
Pickup truck dealers with 5 million yuan "fast in and fast out",
The layman's bank loan of 4.5 million yuan more than doubled
In mid-May, the temperature in Bozhou has reached 30 degrees Celsius, and in Kangmei Traditional Chinese Medicine City, the largest local Chinese herbal medicine trading market, there is still an endless stream of middle-aged men in the façade room of Li's Pharmaceutical near noon.
They are all locals, and they are here for the "uncle", Mr. Li, who is in his sixties. Mr. Li is known as the "veteran of medicinal herbs" by the locals and has been in the industry for 36 years.
The minibus was led into such a private meeting place by an interviewee. I saw that Mr. Li had half black hair, leaning over, looking older than his age, dressed as an old farmer who had been polished by wind and frost, with a thick accent that was almost inaudible, but he could write on the small blackboard with a marker, and "shoot jokes" (that is, shoot short videos) in front of the mobile phone camera, and analyze the problems of the Chinese medicine industry in a clear manner.
Source: Photographed by minibus
Especially happy to see everyone, almost every timid man can get one-on-one feedback from him.
The tall and fat Dapeng is one of them. He has probably been here many times, and Mr. Li knows him well, and revealed to the minibus with a smile that he has earned 500,000 yuan.
Last year, Dapeng was a declining pickup truck dealer, and this year it is already an emerging wholesaler of Chinese herbal medicines. He suddenly entered the Chinese herbal medicine industry that "the whole world is using" (Dapeng language), and prepared 5 million yuan in one go. When he told the minibus the number, he just spread his five fingers, looking relaxed.
It is understood that he mainly does the four flavors of danpi, licorice, red peony and poria cocos, and does not do the current popular categories, and his business strategy is fast in and fast out. "If it rises by three or five yuan, I will ship." He said. Sometimes it is bought in the morning and shipped in the afternoon. The reason is: if you can't sell it for a long time, it is easy to become inventory, resulting in only selling at a loss. Perhaps, this strategy is also in his comfort zone of experience.
At present, he has hoarded 80 tons of licorice (5-8 dings) in his hands, taking advantage of the medicine farmers, pressing 3.5 yuan and starting at 31.5 yuan/kg.
Source: Photographed by minibus
Mr. Hou was quite satisfied with Dapeng's results, and he also specially helped him connect with a senior colleague on WeChat, which meant that he hoped that the other party would take care of Dapeng a little.
The situation of Li's Pharmaceutical is a microcosm behind the surging prices of Chinese herbal medicines in Bozhou, where people gather around "opinion leaders", thus contributing to the most vivid information circulation centers and the most exciting business battlefields.
In Jiangli Village, more than 10 kilometers away from Li's Pharmaceutical, the minibus visited the suburban Huatuo Baiyao Garden organized by the Bozhou Chinese Herbal Medicine Association the day before, and also learned to a certain extent that the organization was conducting a large meeting with the participation of a group of senior pharmaceutical companies.
Perhaps it is the activity of such loose or close-knit local herbal medicine groups that has stimulated the efficiency and breadth of information circulation, and many online car-hailing drivers can tell some surprising stories of getting rich:
"The most ruthless thing I heard last year was that there was a local who had never done this business before, and directly borrowed 4.5 million yuan from the bank to deposit white peony, and sold it in a month, and his profit more than doubled. Apparently someone gave him a message. In addition, it is through his investment behavior to spread the news and encourage others to follow suit. A ride-hailing driver said to the minibus.
"When the price rises relatively fast, they (referring to speculators) even buy their own higher-priced goods to raise the market price." Another ride-hailing driver said
Behind the layman's "hype" of Chinese herbal medicines:
The rise of the "Ministry of Information".
Of course, most local veterans do not deny the hype of the Chinese herbal medicine market.
"There must be a reason for the hype, after all, no matter how much you reduce production, it is impossible to reduce it so much. For example, the annual production capacity of a certain Chinese herbal medicine is 1,000 tons, which is half of the production, and the price will not increase by five times, or even ten times. At the time of SARS, some Chinese herbal medicines also rose sharply, but they could not last a few days. A person in charge of the Bozhou Chinese Herbal Medicine Association said frankly to the minibus.
Source: Photographed by minibus
Brother Yang, who was born in a family of medicine farmers and is now starting an e-commerce business of Chinese herbal medicines, revealed to Xiaoba the general process of "speculation institutions". It is similar to the common situation of small groups in the process of domestic stock and property speculation.
"Speculation institutions" are generally some Chinese herbal medicine "information departments" organized by a number of local senior industry professionals, whose functions include uniting and encompassing key people in the main links of the Chinese herbal medicine industry chain, such as medicine farmers, wholesalers, hoarders, pharmaceutical factory leaders, and Chinese medicine short video bloggers, through the collection and insight of key information such as Chinese herbal medicine production capacity and inventory, to provide accurate investment information, purchasing and sales channels and other resources to domestic and lay investors who hold idle funds to enter the market, and earn a certain percentage of commissions. There is even no shortage of operations such as taking the initiative to create a supply gap in the market and launching propaganda tools to raise the price of Chinese herbal medicines.
"Bewitched some people who have not been involved in the Chinese herbal medicine industry." Brother Yang said. These people are both locals and outsiders. With such a clear division of labor and a high degree of professionalism, the attributes of a large number of Chinese medicinal materials are no longer just simple agricultural products, but also endowed with financial attributes.
Brother Yang's statement was also corroborated by Yin Bo, another "old gun" of Chinese herbal medicine and now an executive of a local Chinese medicine tea company. "The pattern is nothing more than coaxing. For example, if you ask the 'big V' to post a video now, talk about these things, and then find a few 'Internet celebrities' to push them together. ”
In 2013, he purchased American ginseng from Ji'an, Jilin Province, at a price of 328 yuan/kg, and after returning to Bozhou, the price spun to 670 yuan/kg. Of course, there were also losses.
He had just returned from a sojourn abroad for more than a year. Previously, their method of investing in Chinese herbal medicines was still relatively extensive: they were optimistic about the price prospects of a certain Chinese herbal medicine, and several friends who were close to each other gathered dozens or millions of dollars to stock up on some goods.
Source: Photographed by minibus
There is also circumstantial evidence that this year's star medicinal materials are atractylodes and white peony, and the main production areas are Bozhou. The local Chinese medicinal materials in Bozhou have "three white and one black" (Atractylodes macrocephalus, white peony, Angelica dahurica, peony bark), and these four flavors have shown a significant increase in recent years. In addition to Atractylodes macrocephalus and white peony, the price of peony skin (core pulling rate of 85%) was 30 yuan/kg two years ago, and now it has reached 100 yuan/kg.
He deliberately took the mobile phone of the minibus, opened Douyin, entered the name of a Douyin blogger of Chinese herbal medicines, clicked on his homepage, and opened several of his videos one by one - among them, sometimes standing in the position of consumers, denouncing pharmacists and pressurists, and sometimes saying that "the price of Chinese herbal medicines has risen and fallen, which does not affect the treatment of diseases and saves people", and sometimes when analyzing the reasons for the abnormal rise of several varieties, he affirmed: "What drives this thing (price increase) is nothing more than popularity and big brother." ”
There are two products in his Douyin store, titled "Breaking the Thinking of the Chinese Medicine Industry", with prices of 9,980 yuan and 15,800 yuan respectively.
Unrecognizable:
A high-level "conspiracy" of many objective conditions and subjective manipulation
If we only summarize the crude price increase of Chinese herbal medicines this year as the malicious manipulation of some people, it is actually not comprehensive.
First of all, the amount of money invested in Chinese herbal medicines has increased significantly. This is Mr. Li's assertion about the minibus: "There is no hype, this is too much money." ”
In front of the small blackboard in the façade room of Li's Pharmaceutical, Mr. Li analyzed the minibus at a glance: "Due to the three-year epidemic, people are not circulating, and in 2022, the epidemic will be released, people will circulate, and various diseases will be active." Banks lend heavily to stimulate the economy. However, the main investment methods such as stocks, real estate, enterprises, and factories are not very good, resulting in the inflow of some idle funds into the Chinese herbal medicine industry. ”
Under the general trend of lowering bank loan interest rates, many people wonder why everyone is not taking out loans.
There may be some exceptions in Bozhou. The above-mentioned layman's bank loan of 4.5 million yuan to invest in Chinese herbal medicines is a typical example. And the source of funds for the former pickup truck dealer who brought 5 million yuan into the game is also questionable.
Secondly, the demand for Chinese herbal medicines has grown rapidly overall.
Xiao Ming, who was born in 2002 and majored in traditional Chinese medicine at Bozhou Vocational and Technical School, said to Xiaoba that when he was a child, everyone used traditional Chinese medicine, but for a long time in the middle, traditional Chinese medicine was "disappeared" - that was the popular period of "the uselessness of traditional Chinese medicine", and in recent years, the popularity of traditional Chinese medicine has begun to become obvious.
The parent company of Yin Bo's TCM tea company, a foundry of 130 people for pre-packaged Chinese medicine products, provides industry data: "In the past, the market for Chinese patent medicine accounted for more than 10%, but now it accounts for more than 30%. ”
In addition, according to the "Survey on the High-quality Development of China's Pharmaceutical Industry (2021-2023)": In the first half of 2023, the profit growth rate of Chinese patent medicine will be 26.5%, and the growth rate of operating income of traditional Chinese medicine decoction pieces will be 18.0%, ranking among the best in the national industry. The vast majority of the 75 A-share listed companies of traditional Chinese medicine maintained a double-digit year-on-year increase in operating income and net profit.
Third, in the face of a sharp increase in demand, the supply of production capacity of some Chinese herbal medicines is seriously insufficient.
Teacher Li and Xiaoba gave two examples: atractylodes and white peony. For example: "Bozhou Atractylodes has not increased in price for 15 years, the people have abandoned the seeds, and the weather has reduced the yield of Atractylodes year by year." Zhong Nanshan said, 'Jade screen granules, very good for the new crown', its main components are atractylodes, parsnip and astragalus, and now people all over the country are drinking it. This year, 25,000 tons of atractylodes are used, can it not increase in price? ”
"The growth cycle of white peony is 4-5 years, and the price is low for a long time, and the people even clean up the three-year-old white peony." He said.
Yin Bo mentioned the family situation of a friend who does a small workshop of medicinal materials: this is a family that has been doing peony production and processing for 31 years, and there are four people in a family who need to go through a series of cumbersome processes such as manual peeling, cramping, sifting, cutting, scraping, etc., and their annual family income is 70,000 or 80,000 yuan at the highest.
"This industry has been doing it for more than 30 years before it has encountered this year's skyrocket." He said. This obviously also means that during this period, many practitioners changed careers because the industry was not profitable.
The following are the three-year price changes of some Chinese herbal medicines collected by minibuses - at least 1 times the increase, most of them are 4-6 times the increase, and the highest is as much as 10 times the increase. To sum up, it is not difficult to summarize:
Behind the high price increase of these Chinese herbal medicines, there are various factors such as speculation, insufficient production capacity, and soaring demand. On the road to both price and quantity, Chinese herbal medicines are shallow or deep, so that they are unrecognizable and difficult to distinguish.
What to do?
Bozhou people prescribe "plugging prescription"
The price increase of Chinese herbal medicines is of symbolic significance. Against the backdrop of a lack of opportunities in a large number of investment areas, it is easy for investors who are good at taking advantage of the bank's low-interest loan facilities to go on a rampage like a beast, or to coax some of the steadily developing industries, or to speculate on investment products, such as gold, whose prices have reached new highs.
Source: Photographed by minibus
In Lee's Pharmaceutical, Dapeng was forced to enter the more profitable old business he gave up more than ten years ago and is now more profitable when a car was swept up by his peers and only a few hundred yuan was left for pure profit.
Compared with the "wealthy" Dapeng, Xiaoba noticed Xiao Gan who was still in confusion in Li's Pharmaceutical.
This is a 36-year-old young man who still looks immature. He also just entered the industry last year, and said that he spent 20,000 yuan last year to buy peppercorns, and now he has cut them at a loss of 14,000 yuan. Now some businessmen from other places want him to take advantage of the local people - to help buy Chinese medicinal materials once a month, and pay 3,000 yuan a month.
Whether active or passive, the Chinese herbal medicine industry is crowded with down-and-out middle-aged men who are eager to try and give it a go.
"More people and more money come into the Chinese herbal medicine industry to invest, which is a good thing. But they are not invested in the place where they should be invested, not in the planting end, the processing end, and the product end. "Brother Yang, who has been in the Chinese herbal medicine e-commerce industry for more than a year and is determined to make high-quality goods, said to the minibus.
In the hype game of "drumming and passing flowers", people are hungry for the ultimate profit while worrying about a fatal fiasco, as has happened in many industries.
The result can be a mess of chicken feathers. On the planting side, one situation is that in the context of the sharp rise in Atractylodes this year, seedling merchants in Hebei, the main production area of Atractylodes atractylodes seedlings, have slice and sell annual Atractylodes seedlings. And in general, it takes at least three years for Atractylodes to mature.
On the wholesale side, "there is still a situation where intermediate wholesalers are purchasing at a high price, so they are unwilling to sell, which makes it difficult for prices to come down." The person in charge of the Bozhou Chinese Herbal Medicine Association mentioned above said to the minibus.
In front of us is a complex problem in the development of the Chinese herbal medicine industry. Finally, it is worth mentioning the "plugging prescription" prescribed by many Bozhou Chinese herbal medicine people to the industry as a reference.
The first is to plug the loopholes. In terms of policy, we should more seriously investigate and deal with the main Chinese herbal medicine speculation enterprises or individuals. A number of people in Bozhou Chinese herbal medicine said that the policy norms in this area have not been followed up in time or lack of strength.
It is generally recognized that before the epidemic, the state had strict control over the price of Chinese herbal medicines. It is especially mentioned that in 2011, Kangmei Pharmaceutical, known as the "king of traditional Chinese medicine decoction pieces", "hoarded 3,000 tons of Panax notoginseng" (42% of the annual demand of 7,000 tons at that time), making a profit of 120 million yuan, which was exposed by the media and named by the National Development and Reform Commission.
The second is the sparse money. Guide social funds to invest in urgent development such as improving the quality of Chinese herbal medicines and innovating Chinese herbal medicine derivative products, so as to make the reputation of Chinese medicine, which is gaining momentum, more "solid".
The most common pain point in the perception of Chinese herbal medicines by people inside and outside the industry is: the decline in efficacy. This is due to the fact that the planting, processing, and retail sides are more focused on production or sales, and lack of attention to quality.
According to the above-mentioned industry insider, online sales have not yet been opened, and the proportion of e-commerce of Chinese herbal medicines is still below 10%.
Yin Bo, a new entrepreneur in the Chinese medicine beverage track, told Xiaoba that they have spent 7 million yuan to develop standardized Chinese medicine tea products, and plan to roll out 500 Chinese medicine beverage stores across the country by 2026 with the franchise model, and have now signed 51 contracts.
"If it's still hard for us to start a business on the tuyere, then it proves that there is really something wrong with the market." Yin Bo said at the end.
*Mr. Li, Dapeng, Brother Yang, Xiao Ming, and Xiao Gan are pseudonyms
The author of this article | Limpo | Editor-in-Charge | He Mengfei
Editor-in-Chief | He Mengfei | Image source | VCG