Xiuzheng Pharmaceutical Group launched its first Hunan investment project. It expanded the project from phase one to phase two and increased the investment amount from RMB400 million to RMB1.8 billion within half a year.
Such generosity is inseparable from a partner that boasts abundant resources and operates business in good faith
(Xiao Chang, Li Yan, and Yi Xin from Hunan Daily)
[Project Overview]
Xiuzheng Pharmaceutical Group (“Xiuzheng Pharmaceutical” hereinafter) is one of the top 500 private enterprises in China. The group launched a biopharmaceutical project in the Poria Cocos Science and Technology Industrial Park in Jingzhou Miao and Dong Autonomous County, Huaihua City. It is the group’s first production project in Hunan Province.
The project has a total investment of RMB1.8 billion. It is planned to build a modern industrial park integrating the quality inspection office R&D center, Chinese herbal medicine planting demonstration base and immediate processing center, TCM decoction pieces processing center, medicine manufacturing center, medicine sales center, and processing center of food that doubles as medicine, to create the regional headquarters of Xiuzheng Pharmaceutical Group in central and southern China. The project is expected to achieve sales revenue of over RMB5 billion after completion.
Groundbreaking ceremony of Xiuzheng Pharmaceutical’s Jingzhou project. （Photo credit: Jingzhou Converged Media Center）
[Investment Story]
On February 24, at the Poria Cocos Science and Technology Industrial Park in Jingzhou, Huaihua, workers were busy and machines were roaring. Xiuzheng Pharmaceutical’s first biopharmaceutical project in Hunan was under construction.
The research building and storage building of phase one are under construction, and the preparation building and extraction building have been roofed. In the future, a Chinese medicinal material industrial cluster dominated by Poria cocos will be formed here.
30 years ago, Xiuzheng Pharmaceutical was founded in Tonghua City, Jilin Province, known as the “pharmaceutical city in China”.
In 2022, Xiuzheng Pharmaceutical, already among China’s top 500 private enterprises, turned its attention to Huaihua, a mountainous city on the southwestern frontier of Hunan Province.
Xiuzheng Pharmaceutical and Huaihua are 2,600 kilometers apart, one in the north and the other in the south. How did they form partnership?
“We share the luminance of the moon despite any distance.” Speaking of the bond between the two parties, Xiu Laigui, Chairman of Xiuzheng Pharmaceutical, quoted a line written by the Tang Dynasty poet Wang Changling.
1. Sincerity was the foundation of partnership
The story began in the autumn of 2022, when Xiu Laigui came to Hangzhou to see how a project was coming along.
The hot summer had gone. Osmanthus gave out faint fragrance; golden soapberry trees rustled; fish leaped in the quiet Qiandao Lake, rippling the clear water. A flock of birds flew across the lake, bringing messages from a southern mountain city—the Huaihua investment promotion delegation was heading for Hangzhou for project negotiation.
Although Xiuzheng Pharmaceutical planned to accelerate the development of TCM industry projects across the country, Xiu Laigui admitted that at that time, he did not know much about the city, except for the Zhijiang Surrender Memorial Hall.
The two parties got straight to the point as they met.
“We hope to cooperate with you to achieve win-win development...”
“Huaihua is accelerating the development of the modern industrial system, but there is still a big gap between us and coastal cities in terms of economic aggregate...”
“Jingzhou boasts great potential for developing the Poria cocos industry but lacks technological sophistication, with many products still in the preliminary processing stage…”
Rather than talk big, Huaihua was frank about its weak links. The simplicity and honesty of the Huaihua people impressed Xiu Laigui.
During the conversation, Xiu Laigui learned that Hunan was accelerating the development of the health industry and building the entire industrial chain for the nine kinds of geo-authentic Hunan medicinal materials. Huaihua, reputed as the “hometown of Chinese medicinal materials”, is home to 2,340 varieties of Chinese medicinal materials, ranking first in Hunan Province in terms of reserves. Among them, 23 varieties were included in the Hunan Geo-authentic Medicinal Materials Catalog, accounting for 65.7% of the province’s total.
Xiuzheng Pharmaceutical has a large demand for high-quality Chinese medicinal materials such as Poria cocos. What surprised Xiu the most was that Jingzhou, known as the “hometown of Poria cocos in China”, is the largest distribution, processing and trading center of Poria cocos and boasts the most complete Poria cocos industrial chain in China. It is an ideal destination for TCM producers.
Poria cocos processing trade center.（Photo by Chen Junming）
The two parties had a pleasant conversation at the first meeting. In the following months, the Huaihua investment promotion delegation went to Tonghua, Beijing and other places many times to meet with Xiu Laigui.
Sincerity and dedication constituted the foundation of partnership.
On June 7, 2023, the two sides reached a strategic consensus. 10 days later, they signed a cooperation agreement, and Xiuzheng Pharmaceutical invested RMB400 million to build a biopharmaceutical project in Jingzhou.
At the signing ceremony of the Xiuzheng Pharmaceutical project.（Photo by Wang Can）
2. Investment increase and land transfer consolidated the foundation of partnership
The two parties had reached a consensus on cooperation, but the project site was yet to be determined.
According to Zeng Zhaoming, General Manager of Xiuzheng Pharmaceutical Group (Hunan) Pharmaceutical Co., Ltd., the initial investment amount agreed by the two parties was RMB400 million. Then, the project was continuously expanded from phase one to phase two within half a year, and the local authority transferred land twice. What are the touching stories behind them?
In 2023, Zeng Zhaoming and the Xiuzheng Pharmaceutical inspection team came to Jingzhou. The inspection team noticed a lot with an area of about 40 mu (2.67 hectares) in the central-south part of the Poria Cocos Science and Technology Industrial Park.
The lot had been expropriated and leveled. It is adjacent to the management committee of the industrial park, the Poria cocos processing and trading center, and the cold-chain warehousing and logistics center, which could achieve fast construction and quick production.
Jingzhou Poria Cocos Science and Technology Industrial Park. （Photo credit: Jingzhou Converged Media Center）
But Jingzhou was in a dilemma, since it had planned to build a Poria cocos strain factory on the plot.
The Jingzhou leadership immediately decided to transfer the land.
The local leaders visited people in charge of the strain factory with several land use plans. At the same time, the industrial park established a task force to provide one-to-one services for company registration, document handling, and project construction.
After Xiuzheng Pharmaceutical and Huaihua went into partnership, Zeng Zhaoming, the matchmaker, got a new title—General Manager of Xiuzheng Pharmaceutical Group (Hunan) Pharmaceutical Co., Ltd. However, he encountered a mixed situation as soon as he took office.
The good news was that Hunan had incorporated the health industry into the “4×4” modern industrial system, and Huaihua had designated the medicine & health industry as one of its five leading industries and one of its three characteristic industrial clusters. Given Huaihua’s potential for developing the health industry and the determination of the local government to cultivate the pharmaceutical industry, at the end of 2023, the decision-makers of Xiuzheng Pharmaceutical decided to expand the project land from 40 mu (2.67 hectares) to 300 mu (20 hectares) and increase the investment amount from RMB400 million to RMB1.8 billion.
Mayuan Chinese medicinal materials planting base in Jingzhou. Chinese medicinal materials such as Poria cocos, sealwort, radix polygonati officinalis, Bletilla striata and Eucommia ulmoides are planted on both sides of the winding road. （Photo by Tian Wenguo）
The bad news was that due to project changes, the planning, site selection and design had to be changed immediately. What troubled Zeng Zhaoming most was that a contiguous plot that he favored had been purchased by another enterprise.
After great deliberation, the Jingzhou leadership decided to transfer the land. They prepared a negotiation plan to negotiate with the enterprise involved.
In the meantime, the task force of the industrial park updated the procedures on the spot, went to the headquarters of Xiuzheng Pharmaceutical in the north to participate in the process scheme design, and completed land approval and expropriation within two months...
On July 7, 2023, Xiuzheng Pharmaceutical Group (Hunan) Pharmaceutical Co., Ltd. was incorporated.
On October 20, 2023, the biopharmaceutical project started.
3. Companionship cured nostalgia
Yu Tongshuai, a native of Tonghua, Jilin, has been in charge of project construction at Xiuzheng Pharmaceutical Group for over a decade.
On September 28, 2024, he took a southbound high-speed train to Huaihua and then to Jingzhou and took up the position as project manager of Xiuzheng Pharmaceutical Group (Hunan) Pharmaceutical Co., Ltd.
The weather was still hot and dry in early autumn in Jingzhou. The mountains were dotted with pine trees, waxberry trees and chestnut trees, lush and green. In the rice fields, green rice seedlings swayed and glowed in the wind.
The Poria cocos trading market was extremely lively. Inside, people were busy weighing fresh Poria cocos; outside, trucks from Hunan, Yunnan, Guangxi, Guizhou, Henan and other places lined up in long queues.
The bustling Poria cocos trading market. （Photo credit: Jingzhou Converged Media Center）
Although Yu Tongshuai had heard about Jingzhou’s business environment, he was still doubtful about the local government’s capabilities to serve enterprises as he arrived.
A few days after Yu settled down, he was stuck on phase one of the biopharmaceutical project that he was in charge of.
In the past, Yu Tongshuai worked in northeast China, whose territory is vast and flat. During project construction, workers mostly dig about 1.5 meters from the ground to start main construction. However, Hunan has many hilly and mountainous areas with complex geology. Conventional construction methods cannot cope with karst landforms, karst caves and other special circumstances. Reckless construction would only lead to increased construction cost and delay the construction period by at least two months.
The task force learned about the situation and directly took Yu Tongshuai to other project sites in the industrial park to seek solutions. After several conversations, Yu mastered new construction methods and relaxed.
Shortly afterwards, Yu encountered another challenge. He needed 4,000 to 5,000 cubic meters of earthwork, but he was so unfamiliar with the local environment and the people. The task force immediately coordinated with other projects under construction to help Yu Tongshuai transport the earthwork back, without increasing the project cost.
Construction site of the biopharmaceutical project of Xiuzheng Pharmaceutical Group in Jingzhou.（Photo credit: Jingzhou Converged Media Center）
At present, the preparation building and extraction building of phase one of the biopharmaceutical project have been roofed. The project is expected to start production in June this year, which can process about 2,000 tons of Chinese medicinal materials annually, thereby driving the transformation of the local Poria cocos industry from preliminary processing of agricultural products to deep processing.
Companionship benefited both work and life.
Since Yu Tongshuai was unaccustomed to Hunan cuisine, the task force asked around and found a chef good at making pasta. The team members also asked Yu to play basketball, exercise, and read with them in the Employee Activity Center in the industrial park during his spare time... From “strangers” and “contact persons” to “friends” and “brothers”, Yu Tongshuai said that he felt like home in this foreign place.
“Do you still feel doubtful as you did upon arrival?” the reporter asked. Yu laughed, “I have no doubts. I’m very satisfied!”
【Voice of Service Provider】
Utilizing abundant resources to provide excellent services
Wu Zhanshu, Director of the Management Committee of the Industrial Development Zone of Jingzhou Miao and Dong Autonomous County
Poria cocos is widely applied in the TCM industry. Jingzhou is a major producer of Poria cocos in China, and China is a major producer of Poria cocos in the world.
By utilizing the Poria cocos resources, Jingzhou develops the pharmaceutical and health industries and attracts pharmaceutical enterprises to settle here.
Our resources are not infinite, so we have been working hard to turn resource advantages into development advantages.
Focusing on upgrading the entire Poria cocos industrial chain, we have built a complete industrial system encompassing germplasm R&D, standard planting, deep processing and health products. By relying on the country’s first provincial Poria cocos deep processing industrial cluster, we have built a modern production line covering such fields as TCM decoction pieces, health food and biological preparations and developed more than 50 high value-added products such as pachymaran oral liquid and instant Poria cocos.
To build a total factor guarantee system, we have innovatively launched the “Poria cocos industrial service package”. Specifically, we implemented the approval reform of “land provision upon signing and construction upon obtaining land”, allocated 500 mu (33.33 hectares) of exclusive land for the Poria cocos industry, and pioneered the three-dimensional “fungi-forest symbiosis” development model, allowing enterprises to obtain finance by pledging the forest land management right. We established the Poria Cocos Industry Technology Research Institute and worked with Chinese Academy of Sciences and Hunan Agricultural University to build an innovation platform bringing together industries, universities, research institutes and end-users, to provide enterprises with full-process technical support from strain selection to product testing. We also established the Poria Cocos Trading Center, with a trading volume accounting for more than 70% of the country, becoming a bellwether of Poria cocos pricing in the nation.
We have customized the “three one” services for investors by implementing the full-cycle service mechanism, which involves a task force for project follow-up, a set of approval process diagrams, and a list of guaranteed factors. We have innovated the “industry service officer” system and implemented progress control over key projects to ensure construction within six months, production within one year, and plan inclusion within one year. We have pre-built supporting infrastructure including power supply, road building, communication, water supply, drainage, gas supply, heating and land leveling. We have established a platform for Poria cocos enterprises to directly express their demands and realized 24-hour response to policy consultation, three-day completion of matters subject to administrative review and approval, and on-demand allocation of production factors, so that enterprises can focus on development.
By utilizing abundant resources, we constantly provide excellent services. We believe that with the support of the government and collaboration of enterprises, the pharmaceutical and health industries will usher in a bright future!
(Translated by Professor Yu Jie)