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Xiangxue Invests in Hong Kong and Indonesia for Global Growth

Guangzhou-based Xiangxue Pharmaceutical unveils ambitious international expansion plans, with its Hong Kong subsidiary playing a key role in R&D and marketing, while Indonesia is set to prove a vital gateway into the lucrative ASEAN market.

Photo: Looking to go out well beyond its Guangzhou Base: Xiangxue Pharmaceutical.
Looking to go out well beyond its Guangzhou Base: Xiangxue Pharmaceutical.
Photo: Looking to go out well beyond its Guangzhou Base: Xiangxue Pharmaceutical.
Looking to go out well beyond its Guangzhou Base: Xiangxue Pharmaceutical.

In March of this year, Xiangxue Pharmaceutical officially injected HK$130 million into the Xiangxue Group, its wholly owned Hong Kong-based subsidiary. In one move, this raised its registered capital from HK$70 million to HK$200 million, with the sole intent of boosting the group's trade in the import and export of Chinese and Western drugs and medical equipment.

There were a number of reasons why Guangzhou-headquartered Xiangxue Pharmaceutical chose to establish and nurture a subsidiary operation in Hong Kong. While the city's free trade status was a major lure, Hong Kong's pre-eminence in the fields of capital flow, information exchange and biological research were also key factors. It is also hoped that this latest investment will allow the company's Hong Kong offshoot to expand its marketing activities, both domestically and internationally, while also providing a boost to its R&D initiatives.

The history of the business dates back to 1986. This was the year that Xiangxue Pharmaceutical was launched, initially trading solely in the Luogang District of Guangzhou. In 2010, it listed on the Shenzhen Stock Exchange.

In the early days, it focussed on the production and sale of Chinese and Western medicines, medical equipment, medical supplies and health care products. In more recent years, the business has diversified somewhat. Most notably, it has made a move into beverages, with the launch of a number of soft drink brands, including Yashashi, Chengbao and Bining. Its highest profile move, though, has been into the world of football, with the company now a lead sponsor for both the Chinese Super League and the China League.

Indeed, for many in Hong Kong, the brand is arguably best known for its former sponsorship of Sun Hei, a local football team playing in the Hong Kong First Division League. Those with longer memories, however, may recall the key role two of its products – Xiangxue Oral Anti-viral and Isatidis Radix – played in combatting the SARS outbreak of 2003.

Recently, the HKTDC's Guangzhou office caught up with Zeng Lun, Xiangxue's Vice-president, for an update on the company's current plans, particularly with regard to its domestic and international expansion.

In terms of recent initiatives, Zeng said Xiangxue had now bought a sizable stake in Chuangmei Pharmaceutical, southern China's third largest pharmaceutical distributor. With Chuangmei currently distributing more than 5,700 different medical products through its southern China network, this acquisition is seen as a considerable boost to Xiangxue's overall reach across China.

With regard to overseas moves, Xiangxue has now partnered with an Indonesian company, with the two planning to jointly launch 10 of Xiangxue's pharmaceutical products into the Indonesia market by the end of this year. Xiangxue's Indonesian partner is said to a have a 10,000-strong affiliate network of retailers across Indonesia. On the back of this, Xiangxue is also hoping to introduce its soft drinks range to the country.

Xiangxue's joint venture, however, is not solely about gaining access to Indonesian consumers. Indeed, such an alliance actually sees the company well-placed to service the huge, and lucrative, ASEAN market.

Photo: ASEAN-bound: Xiangxue’s proprietary pharmaceutical range.
ASEAN-bound: Xiangxue's proprietary pharmaceutical range.
Photo: ASEAN-bound: Xiangxue’s proprietary pharmaceutical range.
ASEAN-bound: Xiangxue's proprietary pharmaceutical range.

Looking to the future and Zeng believes that innovation will be the key to Xiangxue's ongoing success. With this in mind, the company is now looking to acquire both compatible overseas technology as well as to set up strategic partnerships with appropriate foreign companies. It is through such tactical arrangements that the company hopes to develop increasingly sophisticated medical products for both the domestic and overseas markets.

In a bid to achieve these aims, the company was one of the lead exhibitors at the recent HKTDC Hong Kong International Medical Devices and Supplies Fair.

Wayne Chung and Christine Deng, Guangzhou Office

Content provided by Picture: HKTDC Research
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