¡§Prince of Peace¡¨American Ginseng Makes its Presence Felt in Macao

Chinese people like American Gin seng very much and use it to prepare medicinal dishes because it is good for ones¡¦ health. Talking about American ginseng will naturally remind consumers of all kinds of medicinal recipes like ginseng tea and ginseng soup that are believed to be able to improve one¡¦s breathing and increase one¡¦s energy. ¡§Prince of Peace¡¨ American ginseng uses bona fide Wisconsin American ginseng from the US. It became famous for being the first brand of sliced American ginseng in tea bags. In its 20-year plus history, ¡§Prince of Peace¡¨ American ginseng has topped the sales list in the US for 20 consecutive years and was awarded ¡§World Super Brand Name¡¨. These achievements do not confine the company to its traditional roots. Rather, it remains creative and innovative and works hard to make sure its brand continually and gain even more international recognition and a bigger market share.

As an innovative international brand, ¡§Prince of Peace¡¨ is very interested in the Macao market. The company believes that Macao¡¦s booming entertainment industry promises a unique opportunity for its growth, so the company will increase its presence in the market directly by not using local agents anymore. Mr. Joey Wan, General Manager of Prince of Peace (Macau) Ltd., hopes that its product will become one of Macao¡¦s most popular souvenirs because of its superb quality and reasonable price. After gaining a firm foothold in Macao, the company will work its way into the vast Mainland market.

Market Expansion - No Efforts Spared
Chinese people have a tradition of using ginseng to prepare medicinal dishes. ¡§Prince of Peace¡¨ has a well thought-out plan to promote its products as a local souvenir. Prince of Peace (Macau) Ltd. was registered in Macau several months ago, marking its entry into the local market. In the several months since it¡¦s opening, the company has been working very hard to expand. They are talking with the Fisherman¡¦s Wharf consortium now about the possibility of opening an outlet there. Exuding optimism about the whole matter, Mr. Wan said he believed the fourth outlet in Macao would be ready in Fisherman¡¦s Wharf in September when the theme park is scheduled to open. The company will keep on identifying partners in Macao¡¦s core industries in the future.

There are three ¡§Prince of Peace¡¨ outlets in Macao now, selling about 100 kinds of American ginseng products, with more to come in the future. Mr. Wan pointed out that his company¡¦s target is to set up a flagship outlet and 10 branches in Macao over three years. But as the saying is ¡§more haste, less speed¡¨, the company will not invest blindly, and says it has a sound and prudent plan for Macao. As the first step, it will try to build up the brand name with high quality and excellent service and there would be no new outlet until the sales of each existing store exceeds MOP50, 000 to MOP100, 000 per month.

Macao¡¦s real estate market has heated up recently and to some degree, this affects the investment scale and plans of outside investors. ¡§Prince of Peace¡¨ (Macau) Ltd. has adopted some flexible measures.

Using CEPA to Enter the Mainland Market
The first co-operative ¡§Prince of Peace¡¨ outlet in Macao has been operating in the ParknShop Supermarket for about four months with good initial results. Mr. Wan underlined the fact that cooperation of this type is a win-win arrangement as it can, on the one hand, avoid the direct impact of property price hikes and help increase their sales volume as the supermarket has many customers and on the other hand, the presence of international brands can make the supermarket chain more attractive. The company plans to do more of this in the future so as to cut down operational costs and optimise the utilisation of resources. At the same time, he believes that Macao¡¦s economy will not be slowed down by rising property prices and he is fully confident about the prospects of the local market.

As for the investment environment in Macao, Mr. Wan stressed that the Macao SAR Government had been very helpful. IPIM, in particular, has made a lot of constructive suggestions and simplified relevant investment procedures. This makes him even more confident about investing in Macao.

As Macao¡¦s production, operational and logistics costs are relatively low, it has the potential to become a distribution centre. ¡§Prince of Peace¡¨ (Macau) Ltd. has developed a corresponding strategy in view of the situation. ¡§We hope to establish a manufacturing base in the Macao Cross Border Industrial Park and take advantage of zero-tariffs offered by CEPA to enter the Mainland market.¡¨ But American ginseng is not yet included in the zero-tariff products list, so the company has submitted an application to the relevant authorities of the Government and is waiting for the release of the new zero-tariff products list by the central government in December to see whether it can further implement its strategy. The company is anticipating good news.

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The Growth of Third Party Logistics Service in Macao

In December 2004, Macaoport New Logistics Company, Limited was established by Macao and Hong Kong shareholders, including Macaoport Sociedade de Administracao de Portos, S.A., Sun Hing Group and New Logistics Group. It is the first third-party logistics service provider in Macao.

Almon Yu, Executive Director of Sun Hing Group of Companies Warehouses and Logistics Division, said that two factors contributed to the making of the joint investment. One is that Macao¡¦s economy is growing rapidly and is attracting many regional and international companies, therefore demand for logistics services is on the rise. However, Macao still has much to learn from Hong Kong¡¦s experience, as it has few third-party logistics service providers. By doing so, Hong Kong companies should also be able to benefit from high-quality logistics services when doing business in Macao. The other reason is that the relationship between partners is close and their businesses complement each other. Based upon these factors, the new company is full of confidence.

Chao Chon, Director and Executive Board Member of Macaoport Sociedade de Administracao de Portos, S.A. is also optimistic about the prospects of the logistics industry in Macao. Mr. Chao emphasised that third-party logistics is mainly for the local market at present in arranging for materials to be delivered to Macao. Its rapid economic growth in recent years has brought about a large influx of people and goods so it is believed that there is a huge potential.

Huge Market Potential
For Macao enterprises, third-party logistics is a brand-new concept. Some of them believe that the sector is only about storage and distribution. But Mr. Yu points out that third-party logistics is not only about this, but also and more importantly, about inventory management. Customers will be able to tell how much stock they have in the warehouse and avoid situations such as shortages or over stocking by analysing their inventory. They will also be able to obtain information about when to order more stock because the IT technology allows for the volumes to be displayed. Customers need not forward large quantities of goods when they decide to do business in Macao, as they will keep themselves up to date on local market demands through management systems.

Since third-party logistics is a new business for Macao, the company represents a new system of logistics management. Can this new system be acceptable for a market which is made up of mostly small businesses? According to Mr. Yu, the logistics industry requires long-term investment and support from various fields, not like an ordinary business that can generate quick cash. Since the company was only established several months ago, its still needs to promote its services locally and look for potential customers. He also mentioned that the sector is relatively new to Macao, so the market needed time to familiarise itself with this new business system and the new services offered. Many local companies traditionally rent warehouse space on fixed rental terms, so they cannot switch to new service providers before the end of the existing contract. This is believed to be a vast market, which can be tapped.

Apart from the above-mentioned situation regarding old contracts, some factories that run their own warehouses are less likely to use third-party logistics services. Thus, the Macaoport New Logistics Company. is concentrating on new investors in Macao and current customers in other places who are interested in investing in Macao, in order to expand its business network. Mr. Yu said that Hong Kong customers are more familiar with this kind of service and they will not have any old rental agreements for warehouses since they are new comers to Macao.

Macaoport New Logistics Company provides services such as warehouse management, storage management, distribution management, packaging services and consultation services. The company occupies an area of 30,000 square feet, which includes an 8,000 square feet warehouse. The company will enlarge the existing warehouse or even build new ones to cope with the future growth of the business if necessary.

Tracing Your Goods on the Internet
The company uses the most advanced IT technology, such as Microsoft Axapta, to utilise a more accurate and flexible cargo management system. The multi-faceted reports, data analysis, annual reviews and periodical checks can help customers with accurate market forecasts and inventory management. The biggest advantage of the system is the linking of fees to the sales volume of customers. Mr. Chao said that the advantage of third-party logistics is that customers will not have to endure fixed costs as the fee is in line with their sales volume. The bigger the sales volume and the more frequent flow of goods, the higher the charges; while during a quiet period, the charges will decrease accordingly. This can lower the outgoing costs and therefore increase profitability.

Both executives also mentioned the fact that they will notify customers when they need to increase their stock to maintain a reasonable level allowing them to have a more cost effective operation. Customers may monitor their sales on the Internet. Therefore, customers are closer to the market. Stock levels can be kept to a minimum thus allowing for a better cash flow.

The two executives are very confident about the development of third-party logistics in Macao. In the future, they will use software adapted for the region to help customers deal with stock, centred on inventory distribution as well as third and fourth-party logistics. Although the company has already been in operation for six months, it is too early to reap any rewards. Both executives pointed out that the development of the company would not be restricted to Macao, while it and Hong Kong are two important markets, it is hoped that after achieving good results here, the company will provide services to neighbouring cities, even the whole South China region.

Mr. Yu and Mr. Chao both welcome competition, they believe that competition is the natural course of events in any sector. Regardless of whether there is competition or not, the most important factor is service and quality. Competition will drive the development of the industry. Old business modules have to change according to changes in the market; therefore costs in the whole supply chain can be lowered. More competitors will force them to improve their efficiency and focus on meeting customer needs, which will lead to the further development of the economy as a whole. This will promote the development of the economic system.

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Hansgrand - Macao¡¦s First Anti-AIDS Drugs Factory

There are about 40 million AIDS patients in the world with the addition of 5 million new patients every year. Africa has been hit particularly hard by the epidemic with 25 million people having already contracted AIDS. In the report ¡§AIDS in Africa - Three Visions in 2025¡¨, the United Nations made its latest warning, ¡§There will be 90 million new AIDS patients in Africa in in the next two decades.¡¨ According to the statistics released in 2003, China has 800,000 to 1,000,000 AIDS patients now, but many experts already warn that if AIDS is not properly controlled in China, the number will jump to more than 10 million by 2010.

Although prices of anti-retroviral medicines have fallen in recent years, they are still more expensive than other drugs. UNAIDS has already announced that they need almost US$10 billion for AIDS prevention and treatment for 2005 alone.

Anti-retroviral medicines are expensive, particularly for Portuguese-Speaking Countries in Africa. Hansgrand Pharmaceutical Factory Ltd., a dedicated anti-AIDS drug producer, was set up in Macao last year, hoping to play a part in the fight against AIDS by supplying Africa with affordable drugs.

With assistance from IPIM, Jiangsu Wuxi Zhengdong Pharmacy Company Ltd. set up Ju Rentang in 2002, a traditional Chinese herb manufacturing plant. They planned to mainly produce Chinese herbs but later they saw a huge potential for western medicines and the possibility to develop an international brand by using Macao¡¦s development advantages, so they built another pharmaceutical plant - Hansgrand Pharmaceutical Factory Ltd., to produce mainly western drugs. After acquiring industrial premises located on Avenida do Coronel Mesquita last April, the company now has a fully operational plant.

Hansgrand¡¦s plant is ready for production, all the machinery is set up. They have invested more than MOP40 million in R&D and hardware. As a result, the company now has a well-defined process from manufacturing to packaging located in separate areas, using sophisticated equipment to avoid cross-contamination. The workshop of 7,000 to 8,000 square feet is fully utilised thanks to a perfect design. An advanced interior air monitoring and purifying system installed in the workshop makes sure that the drugs will be produced in an extremely hygienic environment. The factory will start production as soon as the necessary administrative procedures are completed.

Hansgrand plans to manufacture zidovudine capsules, stavudine capsules, didanosine dispersibie buffered tabbies, nevirapine capsules, indinavir sulfate tablets, dihydroartemisinin tablets, riman tadine hydrochloride tablets and azithromycin.

Accessing the African Market on the Strength of Low Prices
Director and General Manager of Hansgrand, Mr. Liu Jimin, says all the drugs listed above will be manufactured if they can be registered. He said anti-AIDS drugs available now are still rather expensive, which most AIDS patients in developing countries cannot afford, so Hansgrand hopes to enter the market on the strength of low prices and by sacrificing some short-term interests for long-term clients and provide treatment for AIDS patients. This is the overall objective of the operation.

Mr. Liu also said that the high R&D expenditure of western pharmaceutical plants adds to the treatments costs for AIDS patients and that many patients are thus denied access. He believes it is very significant for a pharmaceutical plant to produce anti-AIDS drugs and participate in the fight against AIDS. In his view, supplying the market with low-cost drugs that will benefit society and give AIDS patients another chance for treatment is important. He says Hansgrand will first of all focus on the African market and Portuguese Speaking Countries by using Macao as a platform, followed by the Mainland and Southeast Asian markets. Several drugs produced by Hansgrand are quite popular internationally as an integral part of the so-called Cocktail Therapy; they can all help control the virus in preventing the AIDS virus from mutating.

The ¡§Entrepreneurs Meeting for Commercial and Economic Co-operation between China and Portuguese Speaking Countries-2005¡¨ was held in Luanda, the capital of Angola, between 28 and 30 March. Mr. Liu was a member of the delegation organised by IPIM that participated in the meeting and signed a Co-operation Memorandum with local companies there, paving the way for Hansgrand to access the African market. Mr. Liu said this was a nice surprise because ¡§It never occurred to me before I arrived in Angola that we might be able to sign an agreement because I do not understand Portuguese. IPIM helped a lot with the translation, which eventually led to finalising the agreement.¡¨ The agreement stipulates that drugs exported by Hansgrand to Angola in the next three years will be distributed by local firms, meaning Hansgrand¡¦s drugs can immediately enter the Angolan market once the license is approved.

Making Full use of Cross-Border Industrial Zone
In the meantime, Hansgrand has applied for admission to the Macao Park of the Zhuhai-Macao Cross-Border Industrial Zone. The Review Board has preliminarily approved the company¡¦s investment project. Mr. Liu said, ¡§We have just signed a contract with the Board and are waiting for verification. If everything goes smoothly, we can start plant construction this year. We hope production will begin in 2006.¡¨ He also mentioned that his company is talking to other pharmaceutical and health food enterprises about the possibility of having a common architecture style in their plants within the Park so that the whole Park will have uniformity and clear image.

Hansgrand is going to take up to 4,800 square metres in the Park so the company has enough room to maximise full production of both Chinese herbs and western medicines. Hansgrand will invite professional pharmaceutical factory design companies to plan the facility in order to utilise the area more efficiently. Hansgrand now imports its raw materials from India, Europe, including Portugal and Mainland China. Mr. Liu said, ¡§We shall have a raw material processing workshop in the new plant in the Park once it is completed. In this way, we can synthesise the raw material ourselves. This can reduce our costs and increase our competitiveness.¡¨ The existing plant in Macao will then be converted into a workshop to test and develop new products. .

In addition to pharmaceuticals, Mr. Liu also plans to develop a Macao brand of distilled water. He said, ¡§Frankly, after spending three years here, I realise Macao does not have a distilled water brand of its own. It is not that Macao doesn¡¦t have the resources. Brands available on the market are mostly from the Mainland and Hong Kong.¡¨ He plans to set up ¡§PUIO Water Plant Company Ltd.¡¨, so that Macao will have its own brand of distilled water. The plans are now being implemented. He acquired production premises last September and purchased the best production equipment from Guangzhou, which can produce 9,000 bottles an hour. The PUIO Water Plant is expected to start operations in as early as three months, about the same time as the production of western medicines is scheduled to come into operation. Full of confidence in PUIO, Mr. Liu said his company would try to get the international certification of safe production so as to prove the hygiene standards of its production process.

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