Traditional medicine prices are elixir for sellers

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Cui has a daughter and two sons, each of whom have been operating their own traditional-medicine business for years. The quick profits this year have attracted a third generation of the family to join in. Cui's 18-year-old grandson, who took his college entrance exam this summer, changed his plans three months ago to learn the medicine trade with his grandfather.

"Trading medicine is seen as the best way to earn a living in Bozhou," Cui said, "It can bring you quick profits. Most college graduates earn roughly 2,000 yuan a month. I can see little point in sending him to college if he can learn to run the business as well as I do."

Cui said that he is thinking about buying a 100,000 yuan car to reward his grandson for his hard work this year.

Another major factor in the price increases is that growers are leaving the business because of the long wait for a return on their investment. For radices paeoniae alba, grown mostly in Anhui province, the cultivation period is four to five years. Many farmers are unwilling to wait that long and have turned to other crops.

"Each mu (0.066 hectares) of radices paeoniae alba needs an investment of about 1,000 yuan," said Zheng Zhiwen, who works for a Bozhou-based website that focuses on the price of common herbal medicines. "And it takes five years for growers to see their investment start to pay back."

For years, before SARS started in 2003, radices paeoniae alba cost about 3 yuan a kg. This year, limited production drove the price to around 20 yuan a kg.

Price fluctuations have drawn crowds of area residents to the trade center almost daily. Thousands of traders squeeze into stands on the center's second floor each morning. There they show samples of their medicines and loudly haggle with buyers - the crowds make shouting necessary. The deals they reach are usually for large amounts of medicines.

The soaring prices of herbal medicine are also affecting overseas markets. Xiehecheng, a factory in Bozhou that processes herbal medicines, is the largest exporter in Anhui province.

A factory sales staff member said the export price of radices paeoniae alba, their major export product, rose from $3 to $6.2 a kg. But he said overseas demand has remained steady and yielded good profits this year.

But Xing thinks that the rising prices are likely to affect the business outlook at some point.

Cui has two more tons of Japanese Pagoda Tree Flower-bud he is holding onto as he waits for another price surge, which he expects in mid 2011.

"This is like scalping," he said, "Some people I know earned 1 or 2 billion yuan this year. But they might be the ones who will lose billions of yuan next year. Still, I believe in the potential of herbal medicine."

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