Special Report – Diversification: TCM tops the list

More so than his predecessor, Ho Iat Seng has singled out TCM as the main element of economic diversification. The path, however, is not an easy one

Macau Business | January 2022 | Special Report | Traditional Chinese Medicine – Breathing a new life


Numbers don’t always tell the whole truth. According to 2019 data from the Statistics and Census Bureau, the gross value added (GVA) of financial activities, the MICE (meetings, incentives, conferences and exhibitions) sector, the cultural industries and the Chinese medicine sector amounted to a combined MOP36.01 billion, representing 8.2 per cent of the total gross value added for all economic activity.

However, the GVA for the Chinese medicine sector accounts for just 0.07 per cent of the total, a proportion that has remained broadly unchanged since at least 2016 (Chinese medicine was worth slightly more in 2017 than in 2019 – MOP320 million vs. MOP316 million).

“The reason behind this is that the statistics on the gross added value of the Chinese Medicine sector have included merely a portion of local Chinese medicine sector data: industrial manufacture and retail trade of Chinese medicines, tertiary education in Chinese medicine and Chinese medicine services,” Edmund Li Sheng tells Macau Business.

The Professor of Political Economy and Public Policy, Department of Government and Public Administration, University of Macau, cites the report Analysis Report of Statistical Indicator System for Moderate Economic Diversification of Macao 2019, in which he identifies “a remarkable growth in the number of enterprises and the receipts” of the Traditional Chinese Medicine Science and Technology Industrial Park of Cooperation between Guangdong and Macao (GMTCM Park) between 2018 and 2019 – a park “in which the Macau SAR Government has invested considerably.” (Receipts grew from RMB3.019 billion to RMB4.8311 billion; the number of enterprises grew from 111 to 144.)

“This kind of data was not included in the statistics on Macau’s Chinese medicine sector,” Professor Sheng points out. “The real development of the Chinese medicine sector and its benefit to Macau is far greater than the data shows.”

The leading pundit on Macau’s economic diversification adds, “This divergence of Gross National Product (GNP) from Gross Domestic Product (GDP) is an inborn dilemma for a highly open, small economy.”

Professor Sheng highlights the fact that the Macau government appears to be preparing to develop a new calculation system, particularly for Macau assets and companies in the Hengqin In-depth Cooperation Zone “to solve just such problems”: the Financial Services Bureau (DSF) recently stated that the Government is still looking for the best way to measure the GDP of the Macau–Guangdong Cooperation Zone in Hengqin and its impact on Macau’s economy.

DSF director Iong Kong Leong, in a written response to former lawmaker Sulu Sou, pointed out that since Hengqin represents a new, practical implementation of the “One Country, Two Systems” Principle, calculation of the Cooperation Zone’s GDP will continue to be done in line with international standards.

In this same statement Mr Iong highlighted the importance of demonstrating the economic dynamics and the contribution of the Cooperation Zone to the economic diversification of Macau.

The Government’s preoccupation is evident: from the start of Ho Iat Seng’s tenure as Chief Executive, traditional Chinese medicine (TCM) has always topped the list of priorities when it comes to diversification (along with the issuance of debt securities, for example).

Among the goals in the second five-year plan on economic and social development from 2021 to 2025, whose public consultation phase ended in November, TCM ranks first: seizing on development opportunities in the Greater Bay Area and Guangdong-Macau Deep Cooperation Zone in Hengqin, the Government wants to create “an appropriate environment for a health industry with the research, development and manufacture of traditional Chinese medicine products as its objective,” together with a modern finance industry, a new and advanced technology industry, and a convention, exhibition and trade industry, along with culture and sport industries, “to promote the adequate diversification of the industrial structure, increase the capacity for economic development and broaden the employment market for Macau residents.”

According to the authors of an important Macau paper on the subject, although the “Belt and Road Initiative offers historic opportunities for Macau’s development, at the same time, it also makes us recognize that there are still many difficulties and challenges to be faced by the TCM sector.”

The research team, led by Kou Seng Man, believes that “there are political and technical barriers to Chinese medicine” and that “the room for advancement does not bring as much optimism.”

Another scholar with doubts in this regard is Esther Un Pui Seong, who in 2017 presented a master’s thesis in Portugal titled Economic diversification of Macau.

On the Chinese medicine sector’s GVA figures, Esther Un underlines that “return on investment for the MICE sector and cultural industries is quick when compared to the Chinese medicine sector. There is more interest from hotels in developing the MICE sector. And I haven’t seen much investment in the Chinese medicine sector from other companies, just the largest investor in the GMTCM Park, the Macau government.”

Ms Un, now the marketing director of a media company, believes “Chinese medicine is a huge market,” based on China’s aging population and the demand from other countries. She therefore sees “huge potential to meet the needs of the market, especially for health products – whether Macau can seize the opportunity, that is the question.”

In conclusion, she tells Macau Business, “I think the Government should look at the bigger picture in this regard, meaning the target is not to build up a TCM industry, but rather to diversify the economy of Macau, with the TCM industry just a part of that. The Government should evaluate how much effort we need to devote to this particular industry, and make an adjustment at the right time.”

“There’s huge potential to meet the needs of the market, especially for health products – whether Macau can seize the opportunity, that is the question” – Esther Un Pui Seong


Wanglaoji, from Macau to the world

Guangzhou Pharmaceutical Holdings Ltd (GPHL) is widely regarded as “China’s largest TCM manufacturer”, with products like the red-canned herbal beverage brand Wanglaoji.

The conglomerate is also the first company with TCM as its major business in the list of world’s top 500 companies, the “Fortune Global 500”.

One of the biggest pharmaceutical enterprises in China, GPHL established the local enterprise Guangzhou Pharmaceutical Group (Macau) International Development Co., Ltd (GPGM) two years ago in cooperation with Nam Yue (Group) Company Limited and True Point Global Limited, commissioning a 2,000-plus square metre factory in the city.

Prior to this GPHL and the University of Macau had reached a consensus on research and joint development of Chinese medicine and signed a cooperation framework agreement.

The company, with its headquarters in Guangzhou, wants to make Macau the bridge for its internationalization and recently announced that it aims to explore the Portuguese-speaking countries market by way of the MSAR.

Last December Li Hong, deputy chairman of GPGM, said to Macau Business that “Macau is very important for us in terms of taking our business abroad” and that it is now ready to manufacture “Made in Macau” TCM products.

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