Dongri TCM Files IPO Prospectus: Why Traditional Chinese Medicine Is Better Suited for Digital Healthcare Than Western Medicine

“The winter sun is warm. We aspire to be the winter sun, bringing warmth to patients. Hence, we named our product ‘Winter TCM’ and our company ‘Winter Warm Sun.’”

Li Zuyun, CEO and founder of Dongri TCM, told VCBeat that Dongri TCM is an internet-based app for TCM consultations and herbal medicine delivery, launched by Xiamen Dongri Nuanyang Network Technology Co., Ltd. Li firmly believes that TCM is better suited for mobile healthcare than Western medicine.

Traditional Chinese Medicine (TCM) is more suitable for mobile healthcare than Western medicine in three aspects. First, Western medicine relies heavily on medical devices for diagnosis, whereas TCM focuses on bodily regulation and the treatment of chronic diseases, without depending on device-based testing. Therefore, Western medicine primarily involves “light consultations” and cannot be separated from offline diagnosis.

Traditional Chinese Medicine (TCM) emphasizes the “Four Diagnostic Methods”: inspection, auscultation and olfaction, inquiry, and palpation. Among these, inspection, auscultation and olfaction, and inquiry can all be addressed through in-depth online consultations and interactive communication. Palpation, however, is the most frequently cited concern. Clearly, the comprehensive application of the Four Diagnostic Methods aims to enhance diagnostic accuracy and demonstrate responsibility toward patients. In reality, however, palpation is not an indispensable step in the TCM consultation process.

Li Zuyun stated, “Faced with long queues of patients and constrained by time limitations, some experienced TCM practitioners may skip in-depth interactive communication and directly make diagnostic and treatment decisions based solely on pulse diagnosis. This constitutes a shortcut that compromises thoroughness.” The *Inner Canon of the Yellow Emperor* (*Huangdi Neijing*), which lays the foundation for the four diagnostic methods of Traditional Chinese Medicine (TCM), explicitly advises against overemphasizing pulse diagnosis. “Of course, pulse taking remains one component of clinical TCM diagnosis. We are actively developing a ‘Pulse-Monitoring Wristband’ to address this issue. Currently, the wristband can provide preliminary assessments, but further time is required for clinical validation and product refinement before its official launch.” Li Zuyun noted that early data from nearly 10,000 online consultations collected by Dongfang Zhongyi during the winter season indicated that chronic disease patients’ needs were adequately met through careful inquiry, tongue diagnosis, timely follow-up visits, and sufficient interaction with physicians. Currently, the platform’s patient refund rate stands at merely 0.5%.

Second, the doctor-patient relationship at Dongri Traditional Chinese Medicine (TCM) is more harmonious. Dongri TCM adopts a model of “in-depth consultations” and “extended companionship,” where physicians communicate patiently with patients. This approach not only provides correct guidance on medication but also offers significant psychological comfort. Physicians at Dongri TCM act more like friends, fostering intimate and caring interactions with their patients.

Third, Dongri TCM implements the separation of medical services and pharmaceutical sales. Traditional TCM practices often rely on drug sales for profit, which can lead to issues such as the prescription of excessively priced medications or even the promotion of health supplements. By adopting a model where physicians charge consultation fees separately from medication costs, Dongri TCM centrally procures medicines from reputable suppliers—including Tongrentang, Pien Tze Huang, and a designated supplier of Tongrentang—to ensure product quality.

Unconditional Refund for Dissatisfaction with Doctor's Services

Since its launch on May 21, the user base of Dongri TCM has exceeded 40,000. The app has completed over 8,000 medical case consultations, including more than 4,000 paid consultations. With an average of nearly 200 paid orders per day, daily revenue has reached approximately RMB 10,000.

In winter, the TCM service model primarily relies on in-depth consultations between doctors and patients, the creation of detailed medical records, and the provision of personalized health regulation plans by TCM practitioners, accompanied by end-to-end patient tracking and post-consultation follow-ups. It abandons the traditional mobile internet healthcare business model of “pay first, consult later,” instead emphasizing a “free consultation first, pay later” approach. Patients can initially consult doctors for free via text, voice, or video. Once trust is established through communication, patients then pay for the doctor’s services, regulation plans, and guidance. Furthermore, patients may request an unconditional refund at any time during the service process. Li Zuyun told VCBeat, “Patients typically do not request refunds unless the doctor’s attitude or the prescribed regulation plan genuinely fails to help, as they generally perceive the medical consultation as valuable.”

Currently, Dongri TCM has obtained two relevant internet healthcare qualifications, allowing physicians to provide commercial services on the Dongri Doctor platform.

“Famous Doctors in Remote Mountains Remain Unknown” Represents a Massive Waste of Traditional Chinese Medicine Medical Resources.

According to data from the China Health and Family Planning Statistical Yearbook 2013, traditional Chinese medicine (TCM) medical and health institutions nationwide provided 810 million outpatient and inpatient visits in 2013, a year-on-year increase of 9.0%. Among these, TCM hospitals accounted for 490 million visits, clinical departments specializing in TCM within other medical institutions accounted for 200 million visits, and TCM outpatient departments and clinics accounted for 120 million visits.

In 2013, China’s pharmaceutical industry achieved total revenue of RMB 2.17 trillion, a year-on-year increase of 17.9%. Of this, traditional Chinese medicine (TCM) decoction pieces generated RMB 125.9 billion in revenue, up 26.9% year on year, while proprietary Chinese medicines recorded RMB 506.5 billion in revenue, a 21.1% year-on-year increase. The combined revenue of the TCM industry reached RMB 632.4 billion in 2013. Moreover, TCM extends beyond clinical care; the market for health preservation products and services holds substantial growth potential.

Beyond its immense market potential, the field of Traditional Chinese Medicine (TCM) is plagued by numerous pain points for both patients and providers. Setting aside challenges such as difficulty in accessing medical care and poor patient experiences, the TCM herbal market is highly disordered, with frequent quality issues. Last year, news even broke that the compliance rate for Bupleurum (Chaihu) produced in China was zero.

For TCM practitioners, in addition to the common pain points faced by Western medicine doctors, they also suffer from lower income and less renown. It has become a common phenomenon that highly skilled practitioners have few patients. As the saying goes, “Western medicine treats the disease; Traditional Chinese Medicine treats the person.” When seeking TCM care, patients often prioritize the practitioner’s reputation; consequently, lower renown naturally leads to fewer patients and lower income.

Original Intention for Entrepreneurship

To address these pain points, Li Zuyun believes that traditional Chinese medicine (TCM) is highly suitable for digitalization and can be developed into an internet-based healthcare product. His firm decision to create the “Dongri TCM” product stems from his entrepreneurial experiences during his university years.

During his university years, Li Zuyun had already achieved success as a serial entrepreneur. Initially skeptical of Traditional Chinese Medicine (TCM), he suffered a lower back injury during one of his ventures. He spent four months seeking treatment at various hospitals in Fuzhou, both large and small, but saw no improvement in his condition. Later, a friend recommended a TCM practitioner. After just one week of treatment with this practitioner, Li made a full recovery. From that point on, his passion for TCM took root in his heart. Upon graduating in 2012, he had accumulated nearly RMB 400,000 in startup capital, which he invested in the pharmaceutical sector. “At that time, QQ Qzone was very popular. In 2012, I happened to come across a transfer notice for a traditional Chinese medicine distribution center in my friends’ updates on Qzone. I found it promising, and after two rounds of negotiations, I acquired it for RMB 150,000. This marked my entry into the TCM industry.”

“During the process of delivering traditional Chinese medicine (TCM), Li Zuyun further observed that ‘many patients come to fill prescriptions based on formulas they find online. From the perspectives of safety and market demand, I believe that merely dispensing and delivering herbs is no longer sufficient; therefore, we have hired physicians to provide on-site consultations.’”

Gradually, Li Zuyun’s herbal medicine distribution center evolved into a moderately renowned traditional Chinese medicine (TCM) clinic. The growing number of patients seeking in-person consultations and online inquiries overwhelmed its sole full-time resident physician. This situation also made Li Zuyun recognize the viability of internet-based TCM consultations.

Consequently, Li Zuyun transferred his stake in the herbal medicine distribution center last year and embarked on an entrepreneurial venture focused on a winter traditional Chinese medicine (TCM) project.

In late January 2015, due to his complete lack of understanding of mobile internet technologies and the difficulty in assembling a team, Li Zuyun outsourced product development to another team, paying a deposit of RMB 60,000. The product was named “Dongri TCM” (Winter Traditional Chinese Medicine). Later, at a dinner gathering with Xiamen-based startup teams, Li accidentally met an investor. They hit it off immediately, and Li Yang, an investor from Fortune Capital (VCBeat), provided RMB 1.5 million in personal investment. Consequently, Li abandoned the outsourcing plan and began preparing to build his own team.

In March 2015, Li Zuyun officially moved into the Baidu Developer Center in Xiamen Software Park Phase II, an office space provided free of charge to promising startups through a joint initiative by the Siming District Government of Xiamen and Baidu. “Our investors had abundant resources in Xiamen, and the city offered a favorable entrepreneurial environment, so we decisively chose to launch our startup there,” said Li Zuyun. He added that by the end of August, the PR, operations, and project teams would relocate to Beijing, while the technical team would remain in Xiamen, marking the official commencement of large-scale market operations and promotion.

In the early days of his venture, recruitment became Li Zuyun’s biggest headache. “It was particularly tough at the beginning; for an entire week, we failed to hire a single employee. Even fresh graduates seeking internships were unwilling to join our company. After considerable effort, we managed to recruit three people, but one of the technical staff quit the very next day. We had to scour the market for talent, making proactive calls via online job boards, joining large group chats with thousands of members, sending individual recruitment messages, staking out target companies to poach employees, and engaging in one-on-one conversations about dreams and ideals. Eventually, the company gradually got on track.”

The Most Challenging Aspect of Physician Management

Recruiting employees is difficult, and recruiting physicians is equally challenging; what is even more difficult is physician management and retention. “We do not blindly recruit physicians who have no time to provide online consultation services merely for the sake of data,” said Li Zuyun. Dongri TCM has currently identified approximately 135 physicians through various channels who can ensure daily online availability.

From scratch, the number of doctors has increased, but quality must also be ensured. To purify the physician team at Dongri TCM, Li Zuyun made the decisive move to dismiss two “experts.” One was a TCM practitioner who had won second prize in a national competition and possessed nearly 40 years of clinical experience. However, during patient consultations, it was discovered that this “senior TCM doctor” did not live up to his reputation, instead employing unconventional methods to achieve therapeutic effects. The other was terminated for consistently peddling health supplements during patient communications. Li Zuyun stated, “On the contrary, some TCM practitioners aged 30–40 are extremely diligent. They spend considerable time communicating with patients to understand their conditions and engage in meaningful interactions. Additionally, we have developed standardized consultation protocols and case studies on our backend platform to share high-quality, efficient consultation processes with our physicians. We have also established an emergency response mechanism: if a physician fails to respond online for an extended period, provides inadequate service, or conducts consultations in a lax manner, our physician management team will issue warnings. If the physician fails to cooperate, we will terminate our partnership with them directly.”

In addition to ensuring the quality of physicians, the platform also guarantees the quality of the medicines it delivers. Li Zuyun told VCBeat, “We have licensed TCM pharmacists involved in every photo-based medication purchase step; these are highly qualified pharmacists from top-tier (Grade 3A) hospitals. Every order must undergo review by a pharmacist before dispatch. Furthermore, we have blocked most toxic traditional Chinese medicine (TCM) ingredients, focusing primarily on those that are both food and medicine, with chronic disease management as our main entry point.” Additionally, to facilitate patient compliance, partner pharmacies such as Tongrentang process medications into powders, pills, or pastes, or provide pre-decocted liquid forms, thereby avoiding the inconvenience associated with preparing traditional decoctions.

Currently, the Dongri TCM platform has been online for just over two months, with the highest monthly income for a single doctor exceeding 8,000 yuan.

Team Background

Since its establishment, the company has attracted a total of 24 members to join successively, including 11 technical personnel.

Co-founder Li Yang is the company’s angel investor. A rising star in internet investments at Fortune Capital (Dacheng Venture Capital), he has led investments in TMT projects such as Yoho! Youhuo, Nanxun Kedao CRM, Taqu Touch, Yhouse Yuehui, and Haokang Online Housekeeping. He served for two years in the PLA Unit 75130, where he was awarded the Third-Class Merit twice. He holds both bachelor’s and master’s degrees from Xiamen University and later studied and taught in Japan, boasting a rich and diverse professional background.

Co-founder Zhu Ruiliang is the former Technical Director of Fujian Fuxun Technology, with five years of development experience and two years of project management experience. He previously spent two years engaged in the research and development of smart health hardware, including smart blood pressure monitors and glucose meters, which successfully completed crowdfunding campaigns on JD.com. He currently serves as the company’s Technical Director, overseeing product technology R&D and management.

Chen Yihong, Operations Director, was originally a co-founder of the domestic travel brand Xinxin Impression and graduated from Xiamen University. As a serial entrepreneur with a track record of success, she has spearheaded the planning and launch of multiple outbound tourism product series for Xiamen, which have achieved strong sales at Xiamen University and on Gulangyu Island.

The team is currently raising a pre-A round of financing, aiming to secure RMB 15 million in investment.

If you are interested in investing in this project, please contact the VCBeat team.

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