Hutchison Chinese Medicine Investment Limited (HCMIL), a wholly-owned subsidiary of Hong Kong conglomerate Hutchison Whampoa, yesterday signed a contract to form a US$239-million Chinese-medicine joint venture with Beijing Tongrentang.

The Hutchison subsidiary and Tongrentang will each hold a 49-per-cent stake in the joint venture, to be named Beijing Tongrentang Hutchison Pharmaceutical Investment Company. Tongrentang will name a third-party enterprise to hold the remaining 2-per-cent stake.

The joint venture will invest in Chinese medicine and health-related projects and enterprises.

State-owned Tongrentang, with a subsidiary listed in Hong Kong, has a history dating back 334 years and is a household name for traditional Chinese medicine on the mainland.

Hutchison, whose vast holdings include supermarkets and health and beauty stores, opened a Chinese medicine shop under the "Sen" brand in London's Oxford Street shopping district last year. It said it plans more outlets as traditional Chinese remedies are gaining popularity among Western consumers.

"We hope that China's pharmaceutical business will expand further, with the expertise and experience of Tongrentang on the one hand and Hutchison Whampoa's global network on the other," said Simon To, managing director of Hutchison Whampoa's mainland operations.

The joint venture is another health-related investment by Asia's richest businessman, Li Ka-shing. The 75-year-old Li already has a health-related venture, CK Life Sciences, which raised US$370 million in an initial public offering last year.

"To Hutchison Whampoa (China), this joint venture will serve as a good opportunity for the company to further diversify its pharmaceutical and health-related business," To said.

Yin Shunhai, Tongrentang managing director, said that partnership with Hutchison would help broaden its network.

"Hutchison Whampoa is very experienced in global business development," Yin said. "Now that we have teamed up with Hutchison Whampoa, we trust that Tongrentang's business development will move forward quickly," he said.

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