The JV will see the creation of Ping An Tsumura Inc, which will be located in Shenzhen, China.
Tsumura specialises in manufacturing kampo herbal medicine, which has roots in TCM. The joint venture will focus on conducting business related to "analysis and research focusing on traditional Chinese medicines, and to traditional Chinese medicines, health foods and healthcare-related daily necessities, and other operations and markets", according to Tsumura.
To improve product quality, Ping An Insurance added that the JV will establish a quality management standard system, which will be applied to the entire process of growing the TCM herbs to its final production.
Approximately ¥17.17bn was pumped into the JV, with Tsumura investing 56% and Shanghai Pingpu Investment Co. Ltd (a subsidiary of Ping An Insurance Group) investing 44%. As Ping An Tsumura is a holding company, it cannot conduct production on its own, and will need to establish a subsidiary to facilitate this business.
The joint venture was initially scheduled to be completed by February this year. However, it was delayed due to "the time required to complete the procedures for the establishment of the joint venture locally", Tsumura explained.
Overseas companies that manufacture TCM ingredients are gaining traction in China. New Zealand firms in particular are a favourite amongst the Chinese.
As for Tsumura, it announced in February its sales target of approximately ¥170bn in China by 2027.
Ping An Insurance acquired a 10% stake in Tsumura for ¥27.3bn last year, making it the Tsumura' sbiggest shareholder.
Tsumura cited Ping An Insurance's comprehensive strength in finance and IT, as well as its large client base and sales network, as reasons for their collaboration.
Ping An Insurance is a diversified business with portfolios in banking, insurance, investment and internet finance. It landed in 10th place in Forbes' Global 2000 this year, up six places from last year.
TCM market size
China's TCM industry grew by 20% from 2016 to 2017, according to the State Administration of Traditional Chinese Medicine (SATCM). Wang Guoqiang, head of the SATCM, said the sector raked in more than RMB860bn, accounting for one third of the country's total medical industrial output.
Different regions in China have also introduced policies to ramp up the usage of TCM. Earlier this month, the Gansu provincial government announced its plans to establish TCM as an area of strategic growth.
Some of its goals include achieving 15% year-on-year revenue growth in the province's TCM and related businesses, and at least 20% year-on-year growth in the province's TCM tourism sector.