China needs to set up dedicated funding and more encouraging policies to boost the growth of its ginseng sector in order to compete with its rival South Korea, industrial watchers said yesterday.
"Funding is one of the major problems. Without funds, economies of scale cannot be achieved and famous brands cannot be established," An Fengyou at the Ginseng Sector Development Association of Wanliang Township in Northeast China's Jilin Province told the Global Times yesterday.
Wanliang is the largest ginseng production and distribution centre in Asia. China produces 70 percent of ginseng globally and its exports account for 70 to 80 percent worldwide, Beijing-based International Business Daily (IBD) reported Friday.
The production volume of ginseng by South Korea is only 10 to 15 percent of that of China. However, the total value of its ginseng output is more than triple that of China, IBD reported.
Though a giant producer itself, IBD said, China is becoming a source of raw materials for its neighbor, with South Korea importing Chinese ginseng and then processing, packaging and selling it at far higher prices to the EU, the US, South Asia and even back to China.
Ginseng priced at 160 yuan ($25) per kilogram in China can sell for as much as 34,000 to 60,000 yuan per kilogram after being processed and packaged in South Korea, People's Daily reported last November.
China's ginseng sector has been struggling for profits for a long time. In the late 1980s, Jilin Province, which is home to 70 to 80 percent of the country's ginseng production, encouraged locals to plant ginseng.
Thousands of families started growing the herbal plant, but this led to demand being exceeded by supply.
Another problem is that ginseng is listed as a medicinal product in China. "For a long time, ginseng has been defined only as a herbal medicine, which has blocked many ginseng farmers from expanding their businesses," a ginseng trader surnamed Wu from Jilin Province told the Global Times yesterday.
Ginseng farmers have also suffered from prices of land and labor going up over the past few years, said another trader from Wanliang who wished to remain anonymous. "It takes four to six years from seeding to harvesting of ginseng. And in case of poor weather, it is hard for the farmers to make profits," the trader noted.
In November 2010, the Ministry of Health announced a trial policy for 41 derivative products of ginseng to be defined also as food products.
"Though this is a stimulating policy, its effect might not be seen in the short term," An said.
Meanwhile, South Korea offers subsidies to ginseng producers, but China has no similar policies or funds.
"Without favorable policies and financial support, it may be impossible for small Chinese ginseng producers to compete with giant brands in South Korea," An noted.
The marketing and packaging of Chinese ginseng products also lags far behind those in South Korea.
"In the shopping malls of South Korea, ginseng products are displayed in eye-catching places and presented as delicacies and souvenirs to tourists. But in China you won't get the same impression," said Qu Xue, a Beijing resident who bought South Korea ginseng products last month.
Source:chinesestock