If one was to ask the average man in the street where he thought he’d get the best investment returns, almost invariably he’d say “China” and for good reason. For the past 12 years, China’s been growing at a rate above 6%, and in the past 4 years alone , it’s been closer to 12%.Compared to the rather dismal growth rate the US economy has been experiencing, it makes a lot of sense to consider the Chinese alternative.
But history is full of good intentioned ideas that shipwrecked on the way to glory. China is certainly no different. Just because a company is based in China, or has a China based market, or creates and produces in China, it doesn’t necessarily mean that company is going to be a success. History unfortunately, is full of Chinese companies that met the same rocky reef and sank. So then, what makes the difference between a company that makes US Analysts warm and fuzzy, yet crashes on the rocks, versus the Chinese company that succeeds and grows? It’s the culture acceptance.
China is a country wrapped in thousands of years of culture, and what plays well in the US or Europe, may not necessarily play so well there. Attitudes and culture form the basis for homegrown demand in China. So it goes without saying, that the single best idea one could possibly launch is a company that appeals to the wants and desires of Chinese culture, but also finds a niche on the global stage. Satisfy these two situations, and you’ve dialed in the basic ingredients for a very successful company.
China Health Resource Inc has done just that, and could very well be a tremendous investing opportunity. First, let’s discuss who they are, and what they bring to the table. Through its subsidiary, Suining Yinfa DAR Industrial Co., Ltd, China Health Resource, Inc. (CHRI) is committed to developing traditional Chinese herbal medicine and produces, processes and sells one of the major Chinese herbs, Dahurian Angelica Root. This herb is widely used by many to alleviate pain, high blood pressure, cancer and many other illnesses.
At first blush one might think that this is nothing to get very excited about, I mean we’re talking about some “herbal medicine”. But you’d be sadly mistaken. Herbal medicine has been part of the Chinese culture for thousands of years and the standard Chinese apothecary is brimming with traditional herbal cures. So ingrained in the history of China is the natural approach to healing, that its modern medicines that have to fight for “shelf space”.
So, if we look at CHRI as a well accepted Chinese company, we are already in the driver seat. But, what about the rest of the world? This is where CHRI is going to deliver the “two” in the classic “one/two” punch. A movement has been going on for some 30 plus years in the developed countries to explore the more natural homeopathic and herbal approach to curing illness, and the statistics are quite stunning. In the US, where the FDA, and AMA blanket the airwaves with the most modern of medical drug allure, herbal medicine is growing at a brisk 20%+ per annum, and in Europe, where a more natural approach to such things is, well, more natural to them, the growth rate exceeds 30%. Combined, the total dollars spent on herbal related medicines is north of 25 billion dollars per year, and growing at those incredible rates we mentioned.
It’s always been my approach that when dissecting a business to determine if it warrants a closer look, one of the most basic necessities is that there is demand and growth. The natural medicine segment of the healthcare market certainly delivers on that, and with China Health Resource we reap the benefits of the acceptance of the Chinese marketplace. This is paramount, and what will indeed separate the winners from the wannabee’s. When you look at the one billion plus possible consumers in China, the single most important question you can ask is, “will the Chinese buy it”. With herbal medicine, the answer’s already been carved in historical stone. Yes indeed they will.
There is a litany of topics that make China Health an interesting company, and we’ve only discussed one of them here. We’ve settled the “is there any demand” question quite remarkably. We haven’t even touched on their bellwether product called DAR or Dahurian Angelica Root. It is widely accepted that when boiled, and applied in various forms DAR has been shown to cure the common cold, headache, toothache and stomach-ache and is used also used in pain, high blood pressure, and even cancer treatments. We also haven’t touched on the recent blockbuster news that they have received what one could consider the equivalent to a Chinese FDA approval for manufacture and distribution of this popular medicine.
China Health Resource has a lot potential, and we’ve only addressed one avenue of it here. It’s our opinion that you should pull up a chair and take a few minutes to get acquainted with CHRI, it might be one of the best friendships you make in your investing career.
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