CMChinaMNC

Published by ChinaMNC · Shuangjianglahuzuwazubulangzudaizu

Yunnan’s 15th Five-Year Plan for Medicinal Herbs: What Foreign Founders Need to Know

Yunnan’s new plan for medicinal herb industry targets quality and processing upgrades, with implications for foreign founders in China’s TCM sector. Key takeaways on entity setup, licensing, and compliance.

Yunnan’s Medicinal Herb Plan: Practical Takeaways for Foreign Founders

On October 1, 2026, the Yunnan Provincial People’s Government released its “15th Five-Year Plan for the Development of the Traditional Chinese Medicine (TCM) Material Industry” (source: Yunnan Provincial Government website). The plan sets targets for 2030, including a reduction of 1.608 million mu (approx. 107,200 hectares) in cultivated area and an increase of 50 billion yuan in comprehensive output value. For foreign founders looking to enter China’s TCM sector, this plan signals opportunities in high-quality cultivation, processing, and innovation. Below we summarize the key points and explain what they mean for your China company registration and operations.

1. Optimized Variety Layout: What to Grow?

Based on the 156 varieties listed in the “Yunnan Dao-di Medicinal Materials Catalogue (2024 Edition),” the plan prioritizes three categories:

What this means for your China company: If you plan to engage in cultivation or sourcing, focus on these prioritized varieties. Your business scope should clearly list “cultivation of Chinese medicinal materials” or related activities. Foreign investment in agricultural cultivation may be subject to restrictions; check the Negative List for Foreign Investment Access. Typically, a wholly foreign-owned enterprise (WFOE) can engage in processing and trade, while cultivation may require a joint venture with a Chinese partner.

2. Accelerated Standardization: How to Grow?

The plan aims to build 200 GAP (Good Agricultural Practice) bases for medicinal materials, with full coverage of Sanqi GAP bases in Wenshan, and orderly development of GAP bases for under-forest varieties such as Fuling, Sharen, Caoguo, and Huangbo. It also seeks to create national-level high-standard raw material production bases.

What this means for your China company: GAP certification is voluntary but increasingly demanded by buyers. If you set up a company to manage or invest in GAP bases, you’ll need to comply with GAP standards and may apply for certification. Your entity structure could be a WFOE for management services or a joint venture for direct operations. Ensure your business license includes “technical services for the cultivation of Chinese medicinal materials” or similar.

3. Under-Forest Cultivation: Where to Grow?

Focusing on Dao-di herbs like Sanqi, Tianma, Fuling, Sharen, Huangjing, and Huangbo, the plan promotes under-forest cultivation and ecological planting, expanding such bases to over 6 million mu.

What this means for your China company: Under-forest cultivation often requires land use rights. Foreign entities cannot directly own land in China; they must lease from collectives or individuals. When registering your company, include “forest management” or “under-forest economy” in the business scope if applicable. Consult local forestry authorities for permits.

4. Primary Processing: What to Do After Harvest?

The plan supports establishing primary processing lines in Dao-di production areas and high-standard bases, linking GAP base materials with fresh-cut processing, and upgrading products from raw materials to semi-industrial inputs.

What this means for your China company: Primary processing is a manufacturing activity. Your WFOE can engage in “primary processing of agricultural products” (which is encouraged) but may need an environmental impact assessment and fire safety approvals. If processing involves medicinal materials, additional permits from the provincial drug administration may be required.

5. High-Value-Added Products: How to Increase Revenue?

Support is given to enterprises building modern deep-processing production lines, developing high-value-added products, and forming a series of Yunnan medicine health products. The plan also promotes R&D and industrialization of health products such as daily chemicals, cosmetics, and functional wellness products.

What this means for your China company: Deep processing and health product manufacturing are open to foreign investment. However, cosmetics and health food production require specific licenses: cosmetics production license from the National Medical Products Administration (NMPA), and health food registration or filing. Your business scope should include “production of cosmetics” or “production of health food.” Capital requirements vary; no minimum capital for most WFOEs, but licensing may require sufficient funds.

6. Preventing “Blind Expansion”: How to Stabilize the Market?

The plan focuses on market-based adjustment for bulk varieties susceptible to price fluctuations (e.g., Sanqi, Danggui, Chonglou) and rare varieties, to smooth market volatility. It will build an information monitoring and early-warning system to prevent risks such as “blind expansion” and “low prices hurting farmers.”

What this means for your China company: If you trade in these varieties, stay informed through official monitoring systems. Your company should comply with price laws and avoid hoarding or speculation. No specific registration impact, but good compliance practices help.

7. Food-Medicine Homology Development: How Else to Use Herbs?

The plan includes developing standards for food-medicine homologous raw materials and production specifications, completing cross-border registration of 5–10 new products, and planning a “Yunnan Medicine Food-Medicine Homology Culture Festival.”

What this means for your China company: Food-medicine homology products are regulated as food. If you produce such products, you need a food production license (SC license). Cross-border registration of new products may involve testing and approval by customs and health authorities. Your entity should have “food production” and “food sales” in its business scope.

8. “Yunnan Medicine Brain”: How to Be Smarter?

The plan implements an AI innovation application project called “Yunnan Medicine Brain,” building an intelligent application system covering the entire lifecycle of medicinal materials, and promoting multi-level, multi-scenario intelligent solutions.

What this means for your China company: If you are in agri-tech or AI for agriculture, opportunities may arise. Foreign-invested enterprises can engage in software development and technical services. Ensure your business scope includes “software development” and “technical consulting.” No special restrictions for most AI services, but data compliance (e.g., Cybersecurity Law, Data Security Law) applies.

Conclusion

Yunnan’s plan emphasizes quality, standardization, and innovation in the medicinal herb industry. For foreign founders, the key steps are: choose the right entity (WFOE or JV), define a precise business scope, obtain necessary licenses (e.g., GAP, cosmetics, food), and comply with land use and environmental regulations. Always consult local authorities for the latest requirements.

This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.

For assistance with company registration and operations in China, contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.

Talk to us

WhatsApp / WeChat: +86 153 1898 8535

General information only, not legal or tax advice.