Qizheng Tibetan Medicine: Practicing Long-Term Value Investing in the Capital Market

　　As one of the pillar industries of the Tibet Autonomous Region, Tibetan medicine plays an important role in the region's economic and social development. Tibet Qizheng Tibetan Medicine Co., Ltd., a leading modern Tibetan medicine enterprise, has achieved numerous firsts in this field. The company was founded in 1995 and went public in 2009. As of last year, it had generated sales revenue of 950 million yuan and net profit of 238 million yuan, and has cumulatively paid 1.082 billion yuan in taxes in the Tibet region.

　　“Modern inheritors of millennia-old Tibetan medicine” is the core philosophy behind Qizheng Tibetan Medicine’s 20-year development. Under the leadership of Lei Jufang, founder and chairperson of Qizheng Tibetan Medicine, the company has consistently and consciously upheld corporate social responsibility, placing great emphasis on exploring the value of biodiversity and committing itself to the sustainable development and conservation of resources in Tibetan areas. The company also prioritizes ethnic unity, respects and embraces local cultures... and has made numerous valuable explorations in helping small and medium-sized enterprises in China fulfill their social responsibilities and achieve long-term value investment in the capital markets.

　　This year marks the 50th anniversary of the establishment of the Tibet Autonomous Region, as well as the 20th anniversary of Qizheng Tibetan Medicine. In mid-August, our reporter accompanied a group of expert representatives from the research team working on the “Standards for Disclosure of Social Responsibility Reports by Chinese Listed Companies” to Linzhi, Tibet—the birthplace of Qizheng Tibetan Medicine. Through on-site visits and discussions, we gained an in-depth understanding of the company’s steady development, innovation efforts, and social responsibility practices.

　　Innovation: The Sustained Driving Force for Attracting Capital Markets

　　Feng Ping, the company’s vice president, personally witnessed the entire process leading up to Qizheng Tibetan Medicine’s IPO on the Shenzhen Stock Exchange in 2009. She explained that over the six years since its listing, Qizheng Tibetan Medicine’s stock price has risen from its initial offering price of 11.81 yuan per share to a peak of 51 yuan per share, thus paving a viable path for small and medium-sized enterprises in ethnic minority regions to achieve value-based investment in the capital market.

　　According to the latest semi-annual report, the company achieved operating revenue of 451 million yuan; net profit attributable to shareholders of the listed company, excluding non-recurring items, was 141 million yuan, an increase of 43.9% year-on-year. The growth rate of net profit excluding non-recurring items exceeded market expectations.

　　The capital market sees tremendous potential for Qizheng Tibetan Medicine’s continued growth in the future because Qizheng Tibetan Medicine continuously innovates across three key areas: technology, R&D, and marketing.

　　Traditional Tibetan medicine suffers from four major persistent problems: variations in pill weight, excessive moisture content,超标 bacterial levels, and poor disintegration. As a key high-tech enterprise under the National Torch Program, Qizheng Tibetan Medicine continuously pursues innovation in dosage forms, R&D, technology, quality standards, and manufacturing processes. For instance, it was the first to introduce the advanced technology of low-temperature vacuum freeze-drying into Tibetan medicine production, thereby maximizing the preservation of the active ingredients in medicinal herbs. Moreover, its automated core-making technology and film-coating technology have transformed the traditional appearance and characteristics of Tibetan medicine pills, ensuring that the prepared pills exhibit high dissolution rates of active ingredients, short disintegration times, smooth pill surfaces, and weight variations that meet stringent requirements.

　　During the interview, Lei Jufang recalled that Qizheng Tibetan Medicine’s flagship product, “Xiaotong Tie” (Pain-Relieving Patch), initially showed exceptionally strong pain-relieving effects upon its development. However, its dosage form was inconvenient—after being applied to national athletes, the medicinal liquid would simply drip straight down their arms. “I thought to myself, ‘This just won’t do! It’s simply not a viable solution!’” Having graduated from Xi’an Jiaotong University and previously worked at the Institute of Modern Physics in Lanzhou, Chinese Academy of Sciences, “Engineer Lei” began brainstorming ways to improve the traditional Tibetan medicine dosage forms. Leading her R&D team, she ultimately succeeded in independently developing a specialized core-and-patch integrated machine tailored specifically for the unique formulation of Xiaotong Tie. In addition, this breakthrough also marked the first-ever modernization of Tibetan medicine ointment dosage forms.

　　“Although Tibetan medicine is excellent, without one-on-one diagnostic guidance from Tibetan physicians and without experiencing its therapeutic effects firsthand, it’s extremely difficult to promote it in mainland China,” says Lei Jufang. She believes that Qizheng Tibetan Medicine should place great emphasis on—and stick to—a marketing model that leverages academic research to drive sales and uses modern medical validation to bolster its marketing efforts. This innovative approach involves conducting market trials for Tibetan medicine, helping consumers accept the products and experience their efficacy, and then carrying out further research after launch through extensive evidence-based medical studies. At the same time, the company is building its own marketing team and integrating academic marketing with brand marketing. This model differs significantly from the traditional practice of self-promotion behind closed doors. Currently, building on the success of this model, the company is gradually launching new products, such as Bai Mai Ointment and the Bai Mai Therapy.

　　In today’s world, where enterprises are pursuing diversified development, crossing industry boundaries, and embracing the ubiquitous “Internet Plus” trend, Lei Jufang has consistently remained committed to focusing on the “fundamental essentials.” “No matter how fierce market competition becomes, or how pervasive the atmosphere of impatience may be, we remain dedicated to our core business. The path toward the academic and professional advancement of Tibetan medicine is incredibly complex—and yet, we remain steadfastly focused on a field that promotes sustainable development.”

　　Responsibility: Protecting, conserving, and sustainably utilizing Tibetan medicinal herbs.

　　As is well known, the Qinghai-Tibet Plateau is one of China’s regions with a relatively fragile ecosystem. For leading modern Tibetan medicine enterprises, sustainably developing and utilizing Tibetan medicinal resources has become a long-term challenge. Over the past 20 years, Qizheng Tibetan Medicine has been engaged in wild conservation and artificial domestication of Tibetan medicinal resources from the very source, and has carried out extensive efforts to clarify and standardize the origins of these medicinal materials, thereby achieving a balanced development between resource conservation and industrial growth.

　　“In reality, cultivated Tibetan medicinal herbs simply can’t compete with their wild counterparts. Artificial cultivation is time-consuming and labor-intensive; it often takes years—or even over a decade—to finally grasp the right growing conditions. Some species have eventually succeeded, such as Duyiwei and Tibetan Iris; yet others remain in the exploration stage after more than a decade, like Rhodiola rosea. Despite these challenges, Qizheng Tibetan Medicine has been consistently engaged for many years in establishing bases for the conservation, cultivation research, and wild habitat restoration of Tibetan medicinal herbs. As of 2014, the company had over 100,000 mu of various research bases, including 3,090 mu dedicated to Tibetan medicinal herb conservation. In total, the company’s research, conservation, and breeding bases currently cultivate and raise 31 different species of Tibetan medicinal herbs.”

　　As a member of the National Committee of the Chinese People's Political Consultative Conference, Lei Jufang has a deep and enduring attachment to the conservation of Tibetan medicinal resources. Every year during the Two Sessions, she passionately calls for the protection of Tibetan medicinal herbs. “In this regard, the Nepalese government has some highly valuable experiences worth learning from—namely, conducting thorough resource surveys to establish a rational classification system and promoting green trade based on that classification.” “Only by raising awareness about the proper use of these medicinal herbs can we effectively protect them. Clearly, traditional ethnic medicine can play a vital role in boosting local economic development.”

　　It is understood that Qizheng Tibetan Medicine is currently conducting resource surveys primarily on three categories of Tibetan medicinal materials: The first category consists of Tibetan medicinal materials that serve as the primary raw materials for the company’s products; this work was completed in 2013, and a resource utilization plan has been formulated. The second category focuses on Tibetan medicinal materials with promising development potential. The third category targets endangered plant resources. At the same time, the company is optimizing its processing techniques to enhance the efficiency of medicinal material utilization.

　　The company is engaged in the protective development of local resources. In the process of sourcing Tibetan medicinal herbs from their places of origin, frontline staff provide local farmers and herders with knowledge on sustainable harvesting practices—for example, picking larger specimens while leaving smaller ones behind, maximizing the preservation of the herbs’ roots and rhizomes, and making full use of the herbs’ flowers, fruits, branches, and leaves.

　　The value of integrating ethnic culture with talent.

　　The core values of Qizheng Tibetan Medicine are “doing good and benefiting others, pursuing the right path and engaging in righteous professions.” The company places great emphasis on respecting the cultural heritage of ethnic groups and the spiritual well-being of its employees. It consistently focuses on cultivating local Tibetan talent and advocates that employees of all ethnic backgrounds should treat each other with friendliness, harmony, and mutual progress.

　　During his visit to the Linzhi Qizheng Tibetan Medicine Factory, Feng Ping introduced that more than 50% of the factory’s total workforce are people with disabilities, and some employees have even competed in the Paralympic Games. Most of the company’s duplex villas have been allocated to disabled employees who joined the factory early on. By finding employment at the company, these employees not only secure a stable income but also fulfill their life aspirations. By 2014, there were already 22 ethnic minority employees who had risen to management positions within the company.

　　The company has incorporated ethnic festivals into its welfare system and, recognizing the musical and dance talents of its minority employees, has established an arts performance team. During the Tibetan New Year, Lhasa’s Shoton Festival, Nyingchi’s Gongbu Festival, and Gannan Tibetan Autonomous Prefecture in Gansu Province’s Langshan Festival, the company provides employees with holidays and organizes related celebratory events.

　　For 20 years, Qizheng Tibetan Medicine has been deeply rooted in the Tibetan region, constantly exploring ways to establish long-term mechanisms that benefit the region and foster shared progress with Tibet. As of 2014, Qizheng Tibetan Medicine had cumulatively invested nearly 90 million yuan in various disaster relief, poverty alleviation, and public welfare initiatives. Eleven years ago, in Nanyi Township, Milin County, Linzhi, the company’s foundation donated and built the “Gongbu Manlong Yutuo Tibetan Medical School,” providing comprehensive education in traditional Tibetan medicine and fully covering students’ tuition, practical training, and living expenses. Seven years ago, the company launched the “Hundred Tibetan Medical Clinics in Tibetan Areas Project,” which has so far provided treatment to approximately 60,000 people. In 2014, due to its sustained efforts in ethnic minority regions, Qizheng Tibetan Medicine was selected as a “2013 Global Compact China Best Practice Case.”

　　“There are many temptations in society, and we need value guidance. The practices we’ve undertaken in the field of social responsibility over the past few years are just the beginning—we hope to build a sustainable, long-lasting enterprise on the plateau,” said Lei Jufang.

　　Reporting Media: China Journal of Traditional Chinese Medicine

　　Report link: http://paper.cntcm.com.cn/html/content/2015-08/27/node_2.htm