Chinese medicinal materials ride the internet toward industrial upgrading

At the opening meeting of the 12th National People's Congress, Premier Li Keqiang proposed "formulating the 'Internet Plus' action plan," and the Premier stressed that "riding the trend at the forefront of 'Internet Plus' will make China's economy take off."

What is "Internet Plus"?

"Internet Plus" refers to using the internet platform as a foundation and leveraging information and communication technologies to achieve cross-sector integration with various industries, that is, "internet + traditional industries = internet-specialized industries."

Why is it said that "Internet Plus" will make China's economy take off?

The internet has characteristics such as breaking down economic asymmetry and reducing transaction costs; it does not subvert traditional industries but rather upgrades them.

Traditional Chinese medicine, also called Han medicine, is a precious treasure of the Chinese nation. As a "national quintessence," it has always been an industry with great advantages; however, in the Chinese medicinal materials industry, there exist problems such as "lack of information navigation, severe imbalance between production and sales, drastic price fluctuations, layer upon layer of markups in intermediate links, and widespread counterfeit and shoddy goods." It is precisely these problems that have severely constrained the development of the Chinese medicinal materials industry.

So how exactly should the traditional Chinese medicinal materials industry combine with the internet in order to ride the trend upward?

First move: Internet + Chinese medicinal materials trading

The Chinese medicinal materials industry is the same as other traditional industries: trading is essentially just two sides, "procurement" and "sales," but these two sides are often subject to many restrictions such as "interpersonal relationships, region and time," thereby constraining the development of the entire Chinese medicinal materials industry.

As an enterprise, "finding high-quality suppliers, controlling raw material costs, and controlling inventory and product market share through price fluctuations" are all links in a chain, each crucial yet fraught with difficulties, often requiring a great deal of manpower, material resources, financial resources and time to resolve. As an individual, problems such as mastering industry information, expanding sales channels, and overcoming shady corporate procurement are all laid out before one's eyes, and resolving them is exceptionally strenuous.

It is precisely when "both enterprises and individuals have no choice but to face layer upon layer of difficulties" that the internet, with tremendous advantages, breaks through barrier after barrier. Through information technology, from offline to online, from enterprises to individuals, the internet makes Chinese medicinal materials trading transparent, broad in scope and diversified, thereby accelerating the circulation of Chinese medicinal materials spot goods and promoting the development of the industrial economy.

Second move: Internet + Chinese medicinal materials finance

"Lack of funds" is a common and thorny problem in any industry, and "funds" are the solid guarantee for smooth transactions and industrial expansion. However, due to factors such as the inherent characteristics of the Chinese medicinal materials industry itself and excessive price fluctuations, it is very difficult to obtain financial support from banks or loan companies, and this is also an important factor in the slow development of the Chinese medicinal materials industry.

Recently, under the influence of "Internet Plus," P2P financing for Chinese medicinal materials has also surfaced.

P2P financing is an emerging business model that pools small amounts of funds through the internet and then lends them to people who need funds.

In the past two years, as the internet's influence has increased across all industries, P2P is gradually replacing the pledge-based forms of banks and micro-loan companies, directly becoming a model in which free lenders from all over the country independently choose lending relationships and time limits, thus both meeting individual funding needs and improving the utilization rate of idle social funds.

From rejection to embrace, traditional pharmaceutical giants are also quietly changing.

At present, some traditional pharmaceutical companies have changed their attitude toward the internet and pharmaceutical e-commerce from initial rejection to acceptance and embrace, and this change in mindset has created a better tomorrow for the combination of Chinese medicinal materials and the internet.

Against the broader backdrop of "Internet Plus," the traditional Chinese medicine leader Kangmei Pharmaceutical is also accelerating its layout and building a grand strategy for the entire Chinese medicine industry chain. The Kangmei Chinese Medicine Network e-Yaogu bulk trading platform for Chinese medicinal materials, as an important part of Kangmei Pharmaceutical's implementation of the "whole Chinese medicine industry chain strategy," provides the first basic trading service for the upstream circulation link of Chinese medicine, offering customers diversified channels for purchasing and selling medicinal materials and financial support for the Chinese medicinal materials industry through four business models: "Chinese medicinal materials spot immediate trading, spot listing trading, bidding and auction trading, and e-Daitong trading."

As of 2015, e-Yaogu had successively established 13 regional service centers and more than 300 secondary service outlets in major Chinese medicinal materials production areas such as Bozhou in Anhui, Anguo in Hebei, Puning in Guangdong, Yulin in Guangxi and Longxi in Gansu, and had gathered more than 60,000,000,000 medicinal materials merchants from the physical Chinese medicinal materials markets in these regions and more than 600 large pharmaceutical companies, who trade through the e-Yaogu platform, place orders online and complete physical delivery offline, quickly completing the purchase and sale of medicinal materials.

Having developed to the present, the e-Yaogu platform is highly favored by the Chinese medicinal materials market; currently the platform's average daily transaction volume reaches 2 billion, and the total financing amount of e-Daitong has also reached 46 million yuan. It is disclosed that in the future, e-Yaogu will focus on improving the platform's operational standards and service quality, thereby promoting industry development and expanding social influence.