By Tony Lai
Photos by Cheong Kam Ka
A small tube of metallic pink adorned by popular Japanese cartoon character Hello Kitty: which some may mistake as a lip-gloss or nail polish. In fact, it is the latest product launched by major local traditional Chinese medicine (TCM) firm Macau Union Pharmaceutical Ltd.
Focus Up – a new product line with a package design more appealing to youngsters – is one of the latest attempts by Macau Union to inject new momentum into the development of the local TCM industry. With the continuous influx of travellers supporting the stable growth of the local market the company believes the future of the industry lies beyond the territory.
With a factory in the northern district, Macau Union has supplied some 500-600 types of TCM product for topical use to the local market since its establishment in 2008. “This is characteristic of the Macau market: there is a variety of product types but the amount of stock for each is limited,” says Alan Choi, Chief Executive Officer of the company. “Each batch of products may only have hundreds to 1,000 units.”
According to the company, Macau Union is the biggest local player for topical TCM products, including both ointment and oil products, accounting for over half of market share.
Projected sales of Macau Original products in upcoming year
“We’ve seen stable growth in the past decade due to robust tourism, attracting many Mainland Chinese travellers visiting the city and buying [our products],” he told Macau Business. The territory received over 32.6 million travellers last year, up 42.2 per cent from 2008, government figures show, with visitor arrivals leaping 8.9 per cent year-on-year in the first eight months of this year.
Besides local retail, Macau Union helps other brands manufacture topical TCM products and handle exports to the North American market. Not disclosing the name of these brands but stressing some are major non-local TCM brands, Choi revealed that this part of the business made up nearly 20 per cent of the company’s revenue last year.
Gaining a strong foothold in the local market, it is natural for the company to take the next step: venturing beyond the territory. There is, however, no easy way.
Mr. Choi points out that the local TCM manufacturing industry is now apparently at a different stage compared to its international counterparts, given the lack of TCM product registration system here and the difficulties manufacturers have in acquiring Good Manufacturing Practice (GMP) certification. In many other markets like Hong Kong, TCM products are only permitted for sale once manufacturers have obtained GMP certification – a pre-requisite that is absent in Macau.
“These make it hard for us to develop the overseas market, thus local TCM manufacturers can only service the local market at the moment,” he explained. “Meanwhile, we face competition from overseas TCM brands in the local market. This is one of the biggest challenges we face.”
“To develop the international market, we have to enhance our production standards and quality, as well as developing innovative products, in a bid to raise our competitiveness,” said Alan Choi, CEO of Macau Union.
Apart from the limited size of factories that make local TCM manufacturers difficult to be GMP certified, operating costs add to the hurdles. “Following GMP certification, manufacturers have to follow established standards in the manufacturing process, which means higher operating costs,” said the Macau Union CEO. “The more product types you have the higher the cost.”
“If we’re going to obtain GMP certification, we will have to cut down our product types to be [economically] feasible,” he said, adding that the operation of its production plant, however, now closely follows GMP practices and standards.
Help from Hengqin
Nevertheless, these challenges do not hinder the ambitions of Macau Union venturing abroad. With the assistance of Guangdong – Macau Traditional Chinese Medicine (GMTCM) Technology Industrial Park Development Co. Ltd., a joint venture between firms controlled by the Macau and Guangdong governments, Macau Union now have two TCM products subject to registration procedures in Mozambique. Once approval is granted, the products can be sold in the African Portuguese-speaking country.
“The process could be completed soon,” Choi believes. “We don’t anticipate a huge sale [in Mozambique] but this experience could help us prepare for similar procedures in the future in other places. It is also a recognition of Macau-made TCM products.”
Last year, GMTCM Park Co. helped another local TCM product manufacturer, Cheong Kun, successfully register its pain reliever oil product in Mozambique.
In addition, Macau Union has in recent weeks developed and launched Focus Up, a new line of aromatherapy products comprising natural essential oils without medicinal ingredients.
“This new product line might not be regarded as a TCM product so it could be available for sale in markets like Mainland China,” says the CEO.
Speaking of the key to venturing abroad, he stressed that the company has to keep improving. “To develop the international market, we have to enhance our production standards and quality, as well as developing innovative products, in a bid to raise our competitiveness,” said the businessman.
Apart from helping them register their products in Mozambique, Mr. Choi hails the assistance provided by GMTCM Park Co. in developing new products.
“The requirements and standards for medical manufacturing will only get stricter and stricter to safeguard the health of people,” said Alan Choi. “As other places are also getting better and better, the Macau industry must not be left behind.”
“Lack of human resources and hardware are also some of the problems hindering the development of the local TCM industry,” he said. “The facilities and team of the industrial park company could help us in such areas.”
GMTCM Park Co. manages a 500,000 square metre zone in nearby Hengqin, which serves as a platform to foster the industrialisation and promotion of TCM culture, as well as promoting the economic diversification of Macau. Macau Union, in fact, was recently approved subsidies from the Macau Science and Technology Development Fund concerning the application of nanotechnology in topical TCM products.
“Macau has never had any study like this so we’re now collaborating with the industry park company to see how to conduct the study and [introduce] new elements to Macau TCM products,” he commented.
In view of market competition, Macau Union believes it is of paramount importance for its products to have a niche – not only limited to the application of innovative technology or formula in the products but also regarding brand image and design.
The company developed a new TCM product brand – Macau Original – in 2011, whose products have a more colourful and fashionable design than other traditional TCM products. The logo of the brand is the Rooster of Barcelos, a common emblem of Portugal, reflecting the Portuguese roots and intercultural elements of the city, explained Mr. Choi.
Macau Union has also collaborated with prominent Japanese firm Sanrio Co. Ltd. in the latest product line of the brand, Focus Up, by inorporating some of the cartoon characters of Sanrio – namely, Hello Kitty, Little Twin Stars and Melody – in the product design. Coupled with the use of natural essential oils, he hopes this product line can entice a younger clientele while eliminating the stereotype that TCM products are solely for the older generation.
The annual sales of Macau Original products in the past two years reached some 100,000 units, with the Focus Up line expected to double its sales in the upcoming year to 200,000 units.
Looking ahead, Mr. Choi reiterates that the company has to keep improving.
“The requirements and standards for medical manufacturing will only get stricter and stricter to safeguard people’s health,” he concluded. “As other places are also getting better and better, the Macau industry must not be left behind.”
25 Macau firms registered in TCM Park
While the public service area of Guangdong – Macau Traditional Chinese Medicine Technology Industrial Park (GMTCM Park) came into use last year, some 25 Macau firms have registered in the industrial park.
With the objective of promoting the internationalisation of TCM culture and the economic diversification of Macau, the industrial park occupies a 500,000 square metre plot in Hengqin with a gross floor space of about 900,000 square metres. Since the inception of this initiative in 2011 by both the Guangdong and Macau governments, a total of 99 companies had registered in the park as of September 2018, including 25 Macau firms in areas of TCM, healthcare products, medical engineering and medical services, GMTCM Park Development Co. Ltd. confirmed in a statement.
Following years of construction, the public service area of the park ‑ including the research and development headquarters, GMP-standard production base, inspection centre and other ancillary facilities – came into use in September of last year.
‘Through the establishment of the professional public service platform, [the industrial park] facilitates the development of Macau TCM companies and provides room for them to conduct product research and development, improve their skills, enhance the quality and standards [of their products], and explore more market opportunities,’ said GMTCM Park Development Co. Ltd.
According to the latest information provided by the management company of the industrial park, two Macau companies have commissioned them to research and develop three new products, while one Macau firm has requested its assistance to upgrade and improve one of its existing products.
Besides the public service area, the incubation area of the park, which occupies over 128,000 square metres, ‘has basically been completed’, GMTCM Park Development Co. Ltd. said, adding that the area could provide a leasing area of nearly 100,000 square metres, and accommodate about 300-400 companies. In addition to physical space, the area will provide financing, consultancy services and others to facilitate the development of companies, it added.