Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification

Case Solution

Paul W. Beamish, George Peng
Ivey Publishing ()

In 2003, 3M contacted Yunnan Baiyao Group Co., Ltd. to discuss possible cooperation opportunities in the field of transdermal pharmaceuticals. Yunnan Baiyao (YB) was a well-known brand in China for its unique traditional herbal medicines. In recent years, the company has implemented a series of corporate reforms and product / market diversification strategies to respond to changes in China’s pharmaceutical industry and global competition. In 2003, YB was already a group company with vertical integration and product diversification with the aim of becoming an international player. The proposed cooperation with 3M was attractive to YB, not only as an opportunity to diversify domestic products, but also to diversify them internationally. YB had tried to internationalize its products and in 2002 an overseas department was created specifically for this purpose. On the other hand, YB had also considered another option, namely expanding its brand to include toothpaste and other health products. YB had to make decisions about which of the two options to follow and whether it was possible to follow both.

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