The Traditional Chinese Medicine (TCM)… Industry?


In its journey toward (economic) world domination, China needs any edge it can get and in the eyes of the Beijing authorities, Traditional Chinese Medicine (TCM) represents just that: something China-specific that can be used as an economic growth engine. For the sake of clarity, please note that this is not a medical article and as such, no claims can be made as to whether or not TCM is effective and if so, how effective it is compared to “regular” medicine.

We will limit ourselves to stating that the topic of TCM tends to be controversial for reasons which revolve around scientific evidence, or as other would put it lack thereof. In other words, there isn’t enough in the way of peer-reviewed scientific method-oriented evidence to satisfy a lot of experts or, to put things into perspective, the same tends to be said when supplements are compared to “regular” drugs: it’s not that TCM or supplements have been proven to be ineffective, the main issue is represented by the lack of scientifically sound evidence.

However, the Chinese authorities stress that TCM has been around for millennia, is practiced in 183 countries/regions according to a State Council white paper and aside from that, WHO lobbying efforts have paid off in light of the fact that WHO has been giving TCM more attention.

Will Traditional Chinese Medicine ultimately become mainstream?

Time will tell.

Will it prove to complement Western medicine?

We do not know.

What we do know is that from an economic perspective, it is a “work in progress” industry but one with already-impressive numbers behind it in light of the fact that TCM represents a roughly $50 billion market at this point in time.

Why is China giving this industry so much attention when it could simply be focusing its energy toward status quo medicine instead?

For reasons primarily dictated by simple supply and demand economics, especially the supply side.

Simply put, yes, China can develop its regular medical sector as well and has been doing just that (more on the progress thus far can be read by accessing our article about the Chinese medical system) but it is difficult to envision scenarios in which it can compete with players such as the United States, Japan or European Union nations.

Or, to put it differently, let us try to see things from the perspective of a medical tourist.

If that person is interested in standard medical services, how likely is he or she to choose China? Most likely not all that likely, as there are various other nations with superior health systems (again, countries such as the US or nearby Japan) on the one hand or for those interested in proverbially saving a buck, there are jurisdictions capable of putting a better cost/benefit ratio on the table. While it is not impossible for China to eventually dominate the status quo medical landscape, it is unlikely as well as extremely difficult for that to happen anytime soon.

Should that same person be interested in let’s say complementary medicine, China all of a sudden becomes an attractive destination in light of its track record when it comes to just that, a track record that spans not decades or centuries but downright millennia.

Once again, we are not discussing the effectiveness of one option or another but rather simply pointing out that from a supply and demand perspective, China has a more straightforward path ahead of itself when it comes to the goal of establishing itself as a global leader when it comes to TCM compared to status quo medical services.

This explains the lobbying efforts of the Chinese authorities when it comes to gaining academic recognition (WHO lobbying for example, as mentioned previously), spreading awareness (marketing and PR campaigns) and so on.

Some of the top Chinese players when it comes to the TCM space at this point in time are the Tongrentang Hospital Beijing Hua Kang Hospital, Dongzhimen Hospital, Beijing Chinese Medical Hospital and so on… let’s just say it isn’t difficult to notice a patter when it comes to Chinese dominance. However, as an interesting tidbit, it is worth noting that even prestigious Western entities such as Mayo Clinic are interested in gaining a slice of the TCM pie, with the economic equation being more tempting than meets the eye. As such, classifying TCM as something that is of economic interest exclusively to Chine and perhaps a few other nearby jurisdictions would be shortsighted at best.

In a nutshell, understanding why the Chinese authorities are eager to brand China as a top medical destination by leveraging its appeal when it comes to Traditional Chinese Medicine revolves around studying economic incentives (with TCM already being a lucrative as well as reasonably large industry) and, at the end of the day, having a firm grasp on simple supply and demand. China is merely trying to leverage something it perceives as being a unique selling point… business 101.

Even if you are not directly interested in investments that have to do with the TCM space, the industry is worth studying because it represents a piece in China’s complex economic dominance puzzle. Battles are being fought on all fronts, with each nation doing its best to leverage the various advantages it has. In China’s case, the Beijing authorities perceive Traditional Chinese Medicine as already being or at least potentially representing just that, which should explain the aggressive manner in which the industry is being promoted. For the time being, this much is certain: Traditional Chinese Medicine isn’t just a concept with economic potential, it is already a 50 billion dollar industry and the growth prospects seem impressive enough to attract interest not just from the Chinese authorities but also when it comes to prestigious Western players. As such, from a strictly economic perspective, TCM is most definitely not just in “potential” territory.