This document discusses China's pharmaceutical production and consumption ideologies. It notes that China prefers to produce and consume generic pharmaceuticals due to certain economic and social conditions in the country. Specifically, China produced 62% of its pharmaceuticals as generics in 2003, declining to 37% by 2008, but generic drug production remains important. The consumption of generics is also promoted in China due to their more affordable prices compared to branded drugs. How to do business in China is also briefly outlined, noting the importance of relationships and prevailing over competition in the domestic market.

1. CHINA: PHARMACEUTICAL PRODUCTION AND CONSUMPTION
IDEOLOGIES
JUAN SEBASTIAN BETANCUR MONSALVE
ANDRÉS FELIPE RAMÍREZ GARCIA
CATALINA CASTRILLÓN VALDERRAMA
UNIVERSIDAD CATOLICA POPULAR DEL RISARALDA
FACULTAD DE CIENCIAS ECONOMICAS Y ADMINISTRATIVAS
NEGOCIOS INTERNACIONALES
PEREIRA
2010

2. CHINA
The wave of free movement of goods, capital and production factors among
countries has greatly impacted the world. The apparent distances have been
shortened, the acquisition of more and new goods and services is becoming
increasingly clear, the production companies are done in less time and other
amazing processes occur are the result of a world that does not stop, a world that
never sleeps, a world that is globalized.
China has not been indifferent to the global effects because it has become a
country with an open and attractive economic in the international market, and it has
also demonstrated the great advantages that other countries can get in order to
invest in the country. Moreover, globalization has not only economic development
but also social and because it has improved the stability and quality of life of
Chinese society.
Then, taking into account the above to place greater emphasis on the study of this
future world power is very important to review general aspects of the said country,
starting with the description of geographic, demographic and economic
development.
China has been characterized as one of the oldest civilizations in the world, also
for being the largest country in East Asia and the world's most populous.
China has a land area about 9,571,300 km ², it is located in east Asia, and its
neighboring areas are: Mongolia and Russia to the north, Russia and North Korea,
to the northeastern, the Yellow Sea and the Sea East China to the east, the South
China Sea, Vietnam, Laos, Myanmar (Burma), India, Bhutan and Nepal to the

3. south, Pakistan, and Tajikistan to the west, and Kyrgyzstan and Kazakhstan to the
northwest. Also, it is necessary to mention that China has more than 2,900
offshore islands in the South China Sea, and Hainan is the biggest one. (Retrieved
on September 28 of 2010 from the webpage
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html)
The country is divided into 23 provinces, 5 autonomous regions, 4 municipalities
directly under the Central and 2 special administrative regions. (Retrieved on
September 28 of 2010 from the webpage http://search.china.org.cn) Following that,
China’s capital Beijing is ranked as the center of the political, cultural and
intellectual development of China, as well, it is known as the main industrial and
commercial metropolis, another important city is Shanghai because it is the largest
city, and other major cities include Hangzhou Xian Kunming and Chengdu.
Furthermore, China has a variety of temperature and rainfall zones, including
continental monsoon areas. In winter most areas become cold and dry, in summer
hot and rainy. In this country mild weather prevails, there are also semi-desert
regions in the western interior and a small area of the southeastern tropical
climate.
CULTURE
Chinese culture is so diverse and unique, yet harmoniously blended, and presents
itself an invaluable asset to the world. So, it is important to mention some
characteristic of the Chinese culture, such as the aesthetics, values and attitudes
modals and customs, language, Chinese characters, ethnic groups, and the
religion
Aesthetics
The Good taste is considered important by a culture: the numbers, music, color
and arts in China, it is therefore characterized in:
Significant colors: Green, Red, Yellow, White, Purple, Greenish blue.
Meaning of Numbers: Chinese people believe that the numbers have positive or
negative meanings that influence their daily lives. For example, they believe that
number four (4) is a negative number, and number two (2), six (6), eight (8) and
nine (9) as lucky numbers.
China's music is classified as:
Traditional: this is used to express human feelings.

4. Contemporary: it is influenced by Western culture. In this are part of genres like
pop, electronic, rock and heavy metal.
Values and attitudes:
In China values are ideas, beliefs and customs which the people are subject
emotionally. For example, the society always looks for a good respect, education,
obedience, family loyalty, patience, kindness and generosity. Also, the attitudes for
the Chinese are feelings and tendencies evaluations whether positive or negative
individuals have on objects and concepts. For instance, they do not express their
feelings in public, and they never say "no" or "I do not know."
Modals and customs:
The Chinese people consider that it is necessary to have good modals when a
person is greeting another. For example, they use Slight nod, handshake
and they said that it is impolite to kiss and hug.
Chinese Festivals & Events: Chinese culture in a wide variety of festivities that
highlight the importance of traditions and customs of the country, besides, most of
the celebrations have significant national recognition, and some of the main
festivities and multiple-day holidays are as follows: Spring Festival, Lantern
festival, Dragon Boat Festival, Mid-Autumn Festival, Chinese New Year, in January
or February; International Labor Day, which is the first week of May; and finally,
National Day, which is celebrated during the first week of October.
Languages:
There is confusion about the categorization of linguistic groups as languages or
dialects, but it is generally accepted that there are five main groups of dialects in
the Chinese language group. These are Mandarin, Wu, Min, Yue and Hakka.
Mandarin is the official language for both mainland China (known as Pu-Tong-Hua)
and for Taiwan (known as Guo Yu), despite major political differences between the
two countries. It is also one of the four official languages of Singapore (known as
Yu Hua). The Wu is spoken along the lower Yangtze River and its tributaries. The
Shanghainese is a well-known variety wu. And, the yue is mainly spoken in the
province of Guangdong. (Retrieved on September 28 of 2010
http://www.alsintl.com/spanish/chinese.htm)
Chinese characters
The Chinese characters have had many variants and styles throughout Chinese
history. Tens of thousands of ancient written documents are still extant, from oracle
bones to Qing edicts. This literary emphasis affected the general perception of

5. cultural refinement in China, e.g. the view that calligraphy was a higher art form
than painting or drama. Manuscripts of the Classics and religious texts (mainly
Confucian, Taoist, and Buddhist) were handwritten by ink brush.
Ethnic groups:
As a large united multi-national state, China is composed of 56 ethnic groups.
Among them Han Chinese account for 91.59% of the overall Chinese population
and the other 55 make up the remaining 8.41% according to the Fifth National
Population Census of 2000. As the combined population of these other ethnic
groups is far fewer than that of the Han, they form the 55 ethnic minorities of
China.
These numerous ethnic groups share China's vast lands but at the same time
many live in their individual communities. The relationships between the different
ethnic groups have been formed over many years.
The ethnic groups in China are classified in the following way: Han Chinese 91.5%,
Zhuang, Manchu, Hui, Miao, Uighur, Tujia, Yi, Mongol, Tibetan, Buyi, Dong, Yao,
Korean, and other nationalities 8.5% (2000 census). (Retrieved on September 28
of 2010 http://www.travelchinaguide.com/intro/nationality/)
Religion:
Chinese religion is not an organized, unified system of beliefs and practices. It
has no leadership, no headquarters, no founder, and no denominations. Instead,
"Chinese religion" is a general term used to describe the complex interaction of
different religious and philosophical traditions that have been especially influential
in China.
Although other religious traditions have been influential in China, Chinese religion
is primarily composed of four main traditions: Chinese folk religion, Confucianism,
Taoism and Buddhism. The religious outlook of most Chinese people consists of

6. some combination of beliefs and practices from these four traditions. It is very rare
for only one to be practiced to the exclusion of the others.
Buddhism, Taoism, and Confucianism, each of which is a significant part of
Chinese religion, are treated in their own sections on Religion Facts. This section
focuses especially on Chinese folk or indigenous religion, but reference is also
made to the other traditions. (Retrieved on September 28 of 2010
http://www.religionfacts.com/chinese_religion/index.htm/)
GOVERNMENT
Table 1. Principal government facts
PRINCIPAL GOVERNMENT AND PARTY OFFICIALS
President Hu Jintao
Vice President Xi Jinping
Premier, State Wen Jiabao
Council
State Councilors Liu Yandong, Liang Guanglie, Ma Kai, Meng Jianzhu, Dai Bingguo
Secretary General Hua Jianmin
Ambassador to U.S. Zhou Wenzhong
Ambassador to UN Wang Guangya
Type: Communist party-led state.
Constitution: December 4, 1982.
Independence Unification under the Qin (Ch'in) Dynasty 221 BC; Qing (Ch'ing or
Manchu) Dynasty replaced by a republic on February 12, 1912;
People's Republic established October 1, 1949.
Branches Executive--president, vice president, State Council, premier.
Legislative--unicameral National People's Congress. Judicial--
Supreme People's Court.
Administrative 23 provinces (the P.R.C. considers Taiwan to be its 23rd province); 5
divisions autonomous regions, including Tibet; 4 municipalities directly under
the State Council.
Political parties Chinese Communist Party, 70.8 million members; 8 minor parties
under Communist Party supervision.
Legal system based on civil law system; derived from Soviet and continental civil
code legal principles; legislature retains power to interpret statutes;
constitution ambiguous on judicial review of legislation; has not
accepted compulsory ICJ jurisdiction
Source: http://www.traveldocs.com/cn/govern.htm

7. All power within the government of the People's Republic of China is divided
among three bodies: the Communist Party of China, the state, and the People's
Liberation Army (PLA).
The primary organs of state power are the National People's Congress (NPC), the
President, and the State Council.
At the same time there has been a move for having party and state offices to be
separated at levels other than the central government. It is unheard of for a sub-
national executive to also be party secretary. This frequently causes conflict
between the chief executive and the party secretary, and this conflict is widely seen
as intentional to prevent either from becoming too powerful.
The Chinese Government has always been subordinate to the Chinese Communist
Party (CCP); its role is to implement party policies. The primary organs of state
power are the National People's Congress (NPC), the President (the head of
state), and the State Council. The members of the State Council include Premier
Wen Jiabao (the head of government), a variable number of vice premiers (now
four), five state councilors (protocol equivalents of vice premiers but with narrower
portfolios), and 25 ministers, the central bank governor, and the auditor-general.
Under the Chinese constitution, the NPC is the highest organ of state power in
China. It meets annually for about two weeks to review and approve major new
policy directions, laws, the budget, and major personnel changes. These initiatives
are presented to the NPC for consideration by the State Council after previous
endorsement by the Communist Party's Central Committee. And, most national
legislation in the PRC is adopted by the Standing Committee of the National
People's Congress.
ECONOMY
Table 2. Principal economy facts
GDP (2009) $4.814 trillion (exchange rate-based).
Per capita GDP (2009) $3,678 (exchange rate-based).
GDP real growth rate 8.7%.
(2009)
GDP composition by Agriculture: 10.6%
sector Industry: 46.8%
Services: 42.6% (2009 est.)
INFLATION RATE -0.7% (2009 est.)

8. consumer prices Country comparison to the world: 14.6% (2008 est.)
Natural resources Coal, iron ore, petroleum, natural gas, mercury, tin, tungsten,
antimony, manganese, molybdenum, vanadium, magnetite,
aluminum, lead, zinc, uranium, hydropower potential (world's
largest).
Agriculture. Products--Among the world's largest producers of rice, wheat,
potatoes, corn, peanuts, tea, millet, barley; commercial crops
include cotton, other fibers, apples, oilseeds, pork and fish;
produces variety of livestock products.
Industry Types--mining and ore processing, iron, steel, aluminum, and other
metals, coal; machine building; armaments; textiles and apparel;
petroleum; cement; chemicals; fertilizers; consumer products,
including footwear, toys, and electronics; food processing;
transportation equipment, including automobiles, rail cars and
locomotives, ships, and aircraft; telecommunications equipment,
commercial space launch vehicles, satellites.
TRADE BALANCE
Exports $1.204 trillion (2009 est.) country comparison to the world: 2
$1.435 trillion (2008 est.)
Exports electrical and other machinery, including data processing
(commodities) equipment, apparel, textiles, iron and steel, optical and medical
equipment
Exports (Partners) US 20.03%, Hong Kong 12.03%, Japan 8.32%, South Korea 4.55%,
Germany 4.27% (2009)
Imports $954.3 billion (2009 est.) country comparison to the world: 4
$1.074 trillion (2008 est.)
Imports electrical and other machinery, oil and mineral fuels, optical and
(commodities) medical equipment, metal ores, plastics, organic chemicals
Imports (partners) Japan 12.27%, Hong Kong 10.06%, South Korea 9.04%, US 7.66%,
Taiwan 6.84%, Germany 5.54% (2009)
Source: http://www.state.gov/r/pa/ei/bgn/18902.htm

9. HOW TO DO BUSINESS IN CHINA
It is not surprising at all when many foreign investors complained when they do
business in China. Many wondered why their years of experience in the business
world could not be applied in China immediately. Doing business is about building
mutual trust and benefit amidst establishing relationship with people. If you do not
understand your counterpart well, it will be quite difficult to establish good
cooperation with him/her.
Understanding factors such as China’s history, humanity and culture will be the key
to investors’ success in China. As Western thinking and China’s traditional values
do differ, encountering the culture differences is therefore inevitable, thus a better
understanding of the cultural differences is necessary when doing business in
China:
1. Learn how to handle Guangxi (relationship): A special feature of doing
business in China will be that Guangxi (relationship) in China will have to include
relationship with the government body, investors, partners and even relationship
with your own staff.
2. How to prevail over competition: China, at the moment, can be said to be a
big, open market, and the ability to prevail over competition is a very important
issue today. Investors should fully realize and maximize one's advantages. Some
investors are afraid that the China’s imitation products will hurt the sale of their
products. Even though this symptom is worrying, however in a free and competitive
market, it will always be one that has the superior quality that will not be afraid of
competition and will prevail eventually. China market is constantly undergoing
standardization, and the China.
3. Route for Investment: There are three options to take when make investments
in China, mainly: wholly foreign-owned enterprise, Chinese-foreign cooperative
enterprise and Sino-foreign joint venture.
(Retrieved on September 27 of 2010, http://www.china-
window.com/china_business/doing_business_in_china/index.shtml)

10. CHINA: PHARMACEUTICAL PRODUCTION AND CONSUMPTION
IDEOLOGIES
China prefers to produce and consume generic pharmaceuticals because there are
economic and social conditions that promote the production and consumption of
these pharmaceuticals. Some of these mayor conditions are:
- In 2003 China produced about 62% of its production of pharmaceutical generics,
by 2008 this production declined to 37%, however the production of generic drugs
continues to be an important part of the pharmaceutical sector.
- China has become the second largest recipient of foreign direct investment in the
world and the fastest growing, part of this foreign direct investment has been aimed
at the pharmaceutical industry because pharmaceutical production is cheaper due
to low-cost labor force, low-cost purchasing of raw materials and inputs, and a
flexible non-restrictive policy on pharmaceutical production issues.
- China has got a large population near to 1.200 million people, most of them low-
income wagged, so there is a mayor need among the population to access to low-
cost pharmaceuticals, which are most of the time generic pharmaceuticals.
- The economic participation of the Chinese pharmaceutical industry in Asia,
constituted only a small portion of the market, however with the emergence of
AH1N1 influenza disease, the Chinese pharmaceutical industry took a more active
role in the Asian pharmaceutical market, because this was in charge of promoting
the greater part of medicine production of generic pharmaceuticals to alleviate this
disease among the population, in addition the Chinese pharmaceutical industry
also acquired significant economic importance it started the production and
development of vaccine against HIV/AIDS on its first phase.
- The Chinese central government, as well as the authorities of various provinces
has encouraged mergers of domestic companies in the sector, especially small
companies to provide them with better tools to develop opportunities within the
market.
- Chinese researchers are ready to support any research and development project,
they have skills and discipline to do so. Chinese suppliers can support industry
efforts to seek cost reductions, it will be a matter of survival, and the Chinese
partners may accompany any expansion project in the pharmaceutical sector.
The Chinese government have made great efforts in recent years to support and
strengthen its pharmaceutical industry, they have implemented strategies such as
amalgamate small local pharmaceutical manufacturing companies to create new
larger industries, encouraged the creation of joint-venture of Small Chinese

11. pharmaceutical companies to large multinationals in the same industry and it has
created more equality on its legal system toward foreign companies.
China is nowadays the seventh largest pharmaceutical market in the world which is
constantly growing and expanding, so if China continues this trend with other
emerging countries, the Chinese pharmaceutical industry will be the largest market
in consumption and production generic pharmaceuticals by 2020 overtaking the
United States.

12. REFERENCES
- Source: El mercadeo de farmacéuticos Chinos
http://www.extrazona.com/mfch2020.pdf, retrieved on September 24 of 2010
- Source: El sector farmacéutico en el siglo XXI: tendencias en las economías
emergentes
http://www.pwc.com/es_MX/mx/publicaciones/archivo/Canifarma-Dra-
Ondategui.pdf, retrieved on September 27 of 2010
- Source: Organización mundial de la salud
http://apps.who.int/medicinedocs/pdf/s2250s/s2250s.pdf, retrieved on
September 27 of 2010
- Source: El Futuro de los Mercados Farmacéuticos Emergentes – Pharmerging
http://bitacorafarmaceutica.wordpress.com/2009/08/04/el-futuro-de-los-
mercados-farmaceuticos-emergentes-pharmerging/, retrieved on September 27
of 2010
- Source: Doing business in China
http://www.china-
window.com/china_business/doing_business_in_china/index.shtml, retrieved
on September 27 of 2010
- Source: U.S. department of state
http://www.state.gov/r/pa/ei/bgn/18902.htm, retrieved on September 27 of 2010
- Source: Travel document systems
http://www.traveldocs.com/cn/govern.htm, retrieved on September 28 of 2010
- Source: Religion facts
http://www.religionfacts.com/chinese_religion/index.htm/, retrieved on
September 28 of 2010
- Source: Travel china guide
http://www.travelchinaguide.com/intro/nationality/, retrieved on September 28 of
2010
- Source: CIA “Central intelligence agency”
https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html,
retrieved on September 28 of 2010