More than 1,000 years ago, Korean envoys brought precious red ginseng as a tribute to Chinese emperors.

Today, South Korea's largest ginseng producer is poised to cash in on the Chinese public's increasing appetite for healthcare products.

Korean red ginseng is expected to become the latest "Korean Wave" export to hit China. The peninsular nation's movie stars, cuisine, and fashion have struck a chord with Chinese consumers in recent years.

"Our company has been producing red ginseng for more than 100 years and Cheong-Kwan-Jang is the top brand in South Korea. We hope it will also prove popular in China," says Jun Sang-Dae, president of Korea Ginseng Corp (KGC).

Jun says the South Korean company will spend a significant amount of money to promote Cheong-Kwan-Jang in the Chinese market. He refuses to reveal specific figures, but says a large portion of the marketing budget will be put into a TV endorsement deal with South Korean actress Lee Young-Ae.

Lee has become one of the most popular actresses in China for her role as Jang Geum, the heroine of the TV drama "Dae Jang Geum" (Jewel in the Palace). The 70-episode series shot to the top of the ratings chart a week after it was first shown on Hunan TV in September. It grabbed a record 3.15 per cent of the total TV audience in September, even though it was aired as late as 10pm, according to Cvsc-Sofres Media, a Sino-French media research firm. The series ended just a few weeks ago.

"Lee Young-Ae's image pretty, healthy and balanced suits our products very well. Everything we sell is healthy," Jun says.

"Dae Jang Geum was a hit on the Chinese mainland, Hong Kong and Taiwan. Many people were impressed by Lee's image as a creative cook and an accomplished doctor. The programme popularized healthy food and traditional herbs, especially ginseng."

The company believes that promoting red ginseng hot on the heels of the TV series could significantly boost Cheong-Kwan-Jang's sales in the Chinese market.

Set about 500 years ago during the Chosun Dynasty, the drama tells the story of a young girl, Jang Geum, who works as an apprentice cook in the imperial kitchen. She eventually becomes involved in the power struggles going on in the palace, only to be exiled by her enemies. She returns to the palace as a doctor after years of difficult training. She finally earns the trust of the royal family and becomes the first female doctor in Korean history to be put in charge of the emperor's health.

Lee recently shot a TV advert for Cheong-Kwan-Jang. It has been airing in Shanghai since the beginning of October. The commercial will eventually be shown in Guangzhou, in South China's Guangdong Province, and in Hangzhou, in East China's Zhejiang Province.

KGC will also sponsor a concert featuring Lee and several Chinese pop stars in Guangzhou in December. Jun says the company will hold a series of similar promotions next year throughout the country.

"Our key market is in the southern parts of China, because people there are more affluent and have a relatively longer history of adding ginseng and other herbs to their food," Jun says.

Beijing is still an important market, however, given the important role it plays in the country and its high income levels.

KGC will open its first boutique on the Chinese mainland in November. It will only sell Cheong-Kwan-Jang red ginseng products, and is to be located in Wangjing, an area in northeast Beijing. Wangjing is home to the largest Korean community in the capital.

"The boutique itself will promote our products," says Daniel Ghill, executive director of KGC's foreign business department.

"Koreans will flock to it for genuine Cheong-Kwan-Jang products. Chinese people their friends, colleagues and neighbours are very likely to follow them to buy the best Korean red ginseng," Ghill says. Increasing disposable income levels and rising life expectancy throughout China should contribute to high sales, Ghill adds.

KGC plans to open similar boutiques next year in other major Chinese cities, including Shanghai, Guangzhou and Hangzhou.

"We expect annual sales in the Chinese market to hit US$30 million next year," Jun says.

Cheong-Kwan-Jang red ginseng root has been sold in large, wholesale traditional Chinese medicine (TCM) markets in Guangdong Province.

Korean red ginseng is not competitive in that kind of market, says Wang Zhong, an analyst with China Health Care Association. "China is also a large producer of ginseng and has a big share of the wholesale markets. Korean ginseng really has no big advantage there," Wang says.

Ghill admits that the wholesale TCM market did not help boost Cheong-Kwan-Jang's image in China.

"We don't want to just be seen as a traditional Chinese medicine supplier. We are poised to become a leader in the global health care industry." Ghill adds that KGC plans to diversify its sales channels. Its products will be sold at KGC boutiques, large department stores, and chain chemists. KGC is looking for Chinese partners that can help expand the company's distribution channels in China.

Ghill says KGC is considering setting up a mainland subsidiary to gain more control over its business. The company's only foreign subsidiary, Korea Ginseng Hong Kong Ltd, is currently in charge of its international business. Hong Kong is a major international ginseng distribution centre. The root is popular in the city, but is also exported to Asian countries, as well as to Europe and the United States.

Wang says that KGC must cope well with the cultural differences between northern and southern China when it expands.

Hong Kong and the southern parts of the Chinese mainland, including Guangdong, Fujian, Jiangsu and Zhejiang provinces, have traditionally been major ginseng consumption centres.

"They know how to cook it. The Cantonese, in particular, like to make ginseng soup," Wang says."But people in the north don't know how to make ginseng chicken soup. Most of them have little knowledge of it." KGC should offer a different product portfolio in different regions to help solve this problem, Wang says.

Ghill says the company will introduce a series of Korean red ginseng healthcare products on the Chinese market for the first time. Items such as Korean red ginseng extract, powder, capsules, tea and candy, are easy and convenient to buy. KGC also plans to hold various activities in China, including ginseng seminars, to help consumers better understand the nature, function and uses of Korean red ginseng, Jun says.

"That is definitely something they have to do," Wang agrees. Wang says many Chinese people think that Korean ginseng, like the Chinese root, is "warmer," or more "yang" than American ginseng. It can sometimes cause dryness of the mouth, sore throats, or even nosebleeds if used incorrectly. It is usually taken in autumn and winter. American ginseng, on the other hand, is seen as relatively "cool," and can be taken more frequently.

Koreans believe that Korean ginseng can help the human body maintain or regain its harmonious internal balance. They eat ginseng chicken soup in the summer, which sounds strange to many Chinese people. "That is a major reason why American ginseng slices and tablets control about 20 per cent of China's health care product market," Wang says. Wang adds that this different understanding of ginseng may be an obstacle to KGC's expansion in China.

There are three main types of ginseng. "Asian ginseng" is a collective term used to refer to the Chinese and Korean varieties. American and Siberian ginseng are the other two kinds. The best Asian ginseng grows in eastern regions between 30 and 48 degrees north latitude. This area includes Northeast China's Jilin Province and the Korean Peninsula.

Today, authentic wild mountain ginseng is very difficult to find. People now cultivate it in fields.

Korean ginseng is categorized into three types, according to the processing methods used. Fresh or raw ginseng is unprocessed, with its original shape intact. White ginseng is peeled and dried in the sun. Red ginseng is steamed and dried to a brown hue, and can be kept for longer.

The Korean government has monopolized red ginseng production since the late-1800s. Only red ginseng produced in the Samjeongkwa (Ginseng Management Division) could be sold on the market.

The monopoly was lifted in 1999 and Ginseng Corp was established.

The company's sales reached 305 billion Korean won (US$290 million) last year. Seventy per cent of its products are for domestic consumption. Its export volume reached US$55 million last year. Approximately US$27 million of that total came from Hong Kong and the Chinese mainland.

(China Daily 11/07/2005 page2)