Shandong Internet Traditional Chinese Medicine (TCM) Trading Center Accelerates Digital Transformation with Focus on Quality Assurance, Grade Enhancement, and Stable Supply
Setting New Industry Standards Through Digitalization: Over the past two years, Shandong Province has integrated resources both within and outside the province to establish the Shandong Internet Traditional Chinese Medicine (TCM) Materials Trading Center. Anchored by the goals of ensuring quality, upgrading standards, and stabilizing supply for TCM, the center has continuously explored innovations to promote the digital transformation of TCM and foster the inheritance, innovation, and development of traditional Chinese medicine, yielding substantial benefits for both the industry and public welfare. Now, with the advancement of comprehensive reforms in traditional Chinese medicine, the Shandong Internet TCM Materials Trading Center has entered a new stage of development.
On July 29, the Shandong Internet Traditional Chinese Medicine (TCM) Materials Trading Center injected “new momentum” into its operations. The main initiators of the TCM Industry Consortium, on which the trading center relies—Jinan High-Tech Holding Group, WeDoctor Holdings, Jiadao Capital, and Sichuan Daidai Weiwei Agricultural Technology Co., Ltd. (hereinafter referred to as “Daidai Weiwei”)—signed a four-party agreement in Jinan. By integrating the advantages of “policy support + digital platform + capital + authentic production regions,” the parties will facilitate the upgrading and development of the Shandong Internet TCM Materials Trading Center, driving the digital transformation of the TCM industry through a “one body, two wings” strategy.
As one of the first provinces approved to establish a National Comprehensive Reform Demonstration Zone for Traditional Chinese Medicine (TCM), Shandong has been continuously exploring and innovating models in TCM industry development and quality supervision. Seizing the significant opportunities presented by the revitalization of TCM and digital transformation, Jinan is vigorously promoting the digital overhaul of TCM (material) trading processes and building a modernized circulation system to address the “chronic ailments” plaguing traditional markets.
In July 2020, the Jinan Municipal People's Government and the Shandong Provincial Healthcare Security Administration jointly facilitated the establishment of China’s first inter-provincial alliance for the procurement of traditional Chinese medicine (TCM) and TCM materials, and initiated the development of the Shandong Internet TCM (Materials) Trading Center. This initiative aims to promote inter-provincial alliance-based procurement of TCM and TCM materials, thereby ensuring quality, enhancing standards, and stabilizing supply. After more than a year of development, the Shandong Internet TCM (Materials) Trading Center leveraged its digital platform advantages to establish five core systems, including quality control and traceability. In January 2022, it launched its inaugural alliance-based procurement exercise, in which 9,547 medical institutions from 86 cities across 19 provinces nationwide participated, with a reported procurement volume exceeding RMB 10 billion.
Recently, the Jinan High-Tech Zone, representing Jinan City, signed a strategic cooperation agreement with WeDoctor. The two parties have upgraded their partnership to digitally integrate healthcare services, pharmaceuticals, and medical insurance, focusing on building two major platforms: an Internet-based comprehensive health platform and an Internet-based traditional Chinese medicine (TCM) trading platform. Subsequently, the Shandong Internet Traditional Chinese Medicine (Materials) Trading Center officially released the “Quality Specification and Grading Standards for TCM Materials” and the construction principles for “Origin Storage Quality Assurance Warehouses” (hereinafter referred to as “Origin Warehouses”). It also launched a dedicated section for authentic regional herbs. These initiatives further strengthen and improve its quality control and traceability system, marking a new phase of development characterized by the dual-track approach of alliance procurement and market-oriented transactions.
Shandong Internet Traditional Chinese Medicine (Herbal Materials) Trading Center Establishes Five Core Systems, Including Quality Control and Traceability
Chinese herbal medicines are the source of quality for traditional Chinese medicine (TCM). The "Standards for Commodity Specifications and Grades of Chinese Herbal Medicines," issued by the Shandong Internet Traditional Chinese Medicine (Herbal Materials) Trading Center, adheres to the basic principles of "premium quality at premium prices, promoting authentic regional herbs, and standardized cultivation," thereby guiding the healthy and orderly development of the TCM industry. By integrating the origin warehouse model, these standards and quality control measures are implemented directly in the production areas of authentic regional herbs, establishing a comprehensive quality control and traceability system from cultivation sources to transactions. This approach effectively addresses the current challenges in quality control of traditional Chinese medicine (herbal materials).
Taking Ophiopogon japonicus as an example, the Shandong Internet Traditional Chinese Medicine (Herbal Materials) Trading Center has partnered with Daidai Weiben to establish a production-origin warehouse for Chuan Maidong (Sichuan Ophiopogon). Adhering to the Quality Specifications and Grading Standards for Traditional Chinese Medicinal Materials, the warehouse employs over 30 patented technologies, including soil improvement, to implement standardized and regulated ecological cultivation practices—such as unified cultivar selection and consistent technical protocols—thereby enhancing the quality of Chuan Maidong.
“We have pioneered innovative models such as the ‘grain–herb–vegetable’ multi-layer cropping system and the ‘pig–biogas–herb’ circular utilization model. By intercropping corn with bitter melon, the cucurbitacins released by the bitter melon effectively suppress soil-borne pests, achieving eco-friendly pest control. Additionally, biogas residue and slurry derived from pig manure are transported to the fields to serve as basal and top-dressing fertilizers during Ophiopogon japonicus cultivation,” introduced the person in charge of Daidai Weiben. Relying on standardized ecological planting practices, the use of paclobutrazol in Ophiopogon japonicus cultivation has been effectively controlled. The content of ruscogenin, the primary active chemical constituent in the produced Ophiopogon japonicus, can reach over 0.36%, which is more than three times the standard specified in the Chinese Pharmacopoeia.
A rigorous quality control and traceability system ensures the high quality and competitive pricing of medicinal materials, while also providing buyers with more diverse options. Following the launch of the Authentic Medicinal Materials Zone on the Shandong Internet Traditional Chinese Medicine (TCM) Materials Trading Center, sales of Chuan Maidong (Ophiopogon japonicus from Sichuan) exceeded 400 metric tons within just three days. Of this volume, 100 metric tons were sold as ungraded bulk goods, while 150 metric tons each were sold as Grade I and Grade II selected products. It is reported that all TCM materials listed in the center’s Authentic Medicinal Materials Zone will strictly adhere to the "Standards for Commodity Specifications and Grades of Traditional Chinese Medicinal Materials." The center is currently working to list additional varieties of TCM materials.
Shandong Internet Traditional Chinese Medicine (Herbal Materials) Trading Center – Authentic Herbs Zone
At this four-party signing ceremony, the parties clarified their strategic framework of “One Body, Two Wings” to deepen cooperation and accelerate the development of the Shandong Internet Traditional Chinese Medicine (TCM) Materials Trading Center. The “One Body” refers to the Shandong Internet TCM Materials Trading Center serving as the main entity for TCM material trading services. The “Two Wings” involve, on one hand, integrating resources from authentic medicinal herb planting bases and production regions across China upstream to ensure quality preservation and grade enhancement throughout the production and supply chain of authentic herbs and refined decoction pieces; and on the other hand, leveraging downstream resources from hospital consortia led by TCM hospitals to promote the large-scale and industrialized development of TCM product series and in-house preparations, thereby achieving a closed-loop layout of the TCM industry chain.
“Through the ‘One Body, Two Wings’ strategy, the Trading Center can better leverage its role in resource aggregation and digital upgrading. On one hand, it extends the center’s standard system to a wider variety of Chinese herbal medicines, guiding premium quality at premium prices; on the other hand, it gradually shifts transactions for all categories of traditional Chinese medicine (TCM) from offline to online, achieving integrated online services for quality control, trading, payment, settlement, and regulation. This establishes a fully traceable quality control system and a digital TCM service framework, promoting the inheritance, innovation, and development of TCM,” introduced the head of operations at the Shandong Internet Traditional Chinese Medicine (Herbal Materials) Trading Center.
“This four-party signing is a typical case of the integration of ‘platform economy + industrial investment + public welfare services,’ and also demonstrates WeDoctor’s leverage of its digital platform advantages to promote the digitalization of the traditional Chinese medicine (TCM) industry,” said Liao Jieyuan, Chairman and CEO of WeDoctor. “In recent years, against the backdrop of Shandong Province’s vigorous efforts to build a digitally empowered province and seize development opportunities in the TCM sector, WeDoctor has been deeply involved in the development of internet-based healthcare services and the TCM industry in Shandong and Jinan. With the participation of Jiadao Capital and Daidai Weiben, we will further drive innovative development in the TCM industry, creating broader and deeper benefits for both the industry and public welfare.”
As a key participant in this collaboration, Jiadao Capital has made extensive and in-depth investments in the broader healthcare sector in recent years, particularly in traditional Chinese medicine (TCM) materials and precision medicine, demonstrating mature capabilities in industry consolidation. “This collaboration marks a new breakthrough for Jiadao Capital in the TCM industry. We hope to leverage this partnership to strengthen and optimize Jinan’s TCM sector,” said Gong Hongjia, Chairman of Jiadao Capital. He added that, building on the platform of the Shandong Internet Traditional Chinese Medicine (Materials) Trading Center, Jiadao Capital will leverage its advantages in capital and management to jointly promote the TCM industry’s development through “upholding fundamental principles while pursuing innovative breakthroughs.”
The “Shandong Province National Traditional Chinese Medicine (TCM) Comprehensive Reform Demonstration Zone Construction Plan” specifies six “mandatory tasks” and three “distinctive initiatives” for the development of the Shandong demonstration zone. Among these, advancing inter-provincial alliance-based procurement of TCM decoction pieces and exploring the establishment of a full-process traceability system for their production and distribution are key components of the “mandatory tasks.” Leveraging the development of the Shandong Internet TCM (Herbal Materials) Trading Center, Jinan has achieved breakthrough results in its initial pilot efforts. With the continued integration of more high-quality resources, this initiative will help achieve the goals of “quality assurance, grade enhancement, and stable supply” in TCM (herbal materials) trading on a broader scale.