Bull Market for Bear Bile Leads to China IPO: Adam Minter
On Feb. 1, with little fanfare, the China Securities Regulatory Commission released a list of 217 companies seeking approval to hold initial public offerings in the coming months. It included manufacturers, property developers and, if you looked hard enough, a firm primarily engaged in the business of selling bile extracted from the gallbladders of live bears.
Bear bile has been used in traditional Chinese medicine for centuries to treat a range of ailments including pain, fever and inflammation, the treatment of gall stones and vision problems. But farming bears for their bile is an unconscionably cruel act, long derided by activists in and outside of China.
While China’s stock analysts and business journalists largely ignored the list of companies seeking IPOs, China's animal rights activists were paying close attention. In January 2011, Guizhentang Pharmaceutical, the company in question, had applied to hold an IPO but the activists incited such public outrage over their treatment of 470 bears, that they withdrew their application. This month, the activists again highlighted the company 's animal abuse, sparking a clash between traditional Chinese values, and modern mores.
The battle lines are clear, and not completely unfamiliar to Westerners accustomed to debates over product testing on animals. On one side are the unwavering animal rights defenders, well represented by China’s burgeoning throngs of pet owners. “Humans gain bear bile but lose their consciences,” wrote Lin Zhen, a senior manager at a Chinese video sharing site, via Sina Weibo, China's most popular microblog. “Stop all the cruelties.”
On the other side are the defenders of China’s traditional pharmaceutical and culinary cultures (often, one and the same). For example, there is Lai Qinghui, a well-known blogger and moderator of the Sina portal’s "Women’s Forum," who expressed her distaste for her opponents in biting, personal terms:
While you are busy sparing no effort cracking down on the traditional Chinese medicine industry … and negating Chinese medicine in general, I'm wondering: could it be that only you have compassion for animals? Don't tell me that you’re happy to witness the stagnation of a signature national industry and allow for a monopolization by foreigners ... Is it possible that you don't know traditional Chinese medicine is a national treasure dating back thousands of years?
Alas, outside of synthetic substitutes, the Asiatic black bear is the sole source for bear bile in China and up until the mid-1980s, they were slaughtered for it.
Fortunately, or perhaps unfortunately, some enterprising North Koreans took this as a serious problem worth solving and developed a technique to “farm” bear bile in captivity. The method was crude but effective: run a tube into a bear's gall bladder and extract when necessary. In the 1990s, the Chinese government banned this method and then stood by as the industry replaced it with a so-called “painless” method: surgically cut a channel into a bear’s gut and access it when the bile is ready to be harvested. It is, in effect, a permanent wound maintained for the purpose of bodily fluid extraction.
Painless or not, and much to the horror of activists and many Chinese animal lovers, it is the method used in 68 bear farms with 6,000 to 8,000 bile-producing bears across China -- including the 470 bears at Guizhentang Pharmaceutical's farm.
For the last two weeks, graphic and disturbing videos of bear bile extraction have circulated on the Chinese internet. What likely makes those images palatable to Guizhentang's leaders and their shareholders are the profits: According to Chinese news reports, bear bile can be worth as much RMB 4000 (or $635) per kilogram.
There are no quantifiable numbers on either the total value of the market or the number of consumers who demand it. But the Qilu Evening News, a large circulation paper in Jinan, the capital of Shandong Province, alluded to the speculatively large market for bear bile in a thoughtful editorial published Feb. 21. It read:
Guizhentang aims to go public because they realize there’s a huge consumer demand for bear bile products. People say, "where there is business, there is slaughter." Sharks must be killed if there is someone who wants to eat their fins no matter the cost. As long as somebody thinks bear bile is irreplaceable, there will be someone to milk bears with even more original and backward extraction skills …
According to China Daily, if Guizhentang manages to go public, it will use the proceeds to upgrade its farm to allow for a total of 1200 bears -- more than three times the current amount -- to extract around 4,000 kg of bile per year. That assumes a whole lot of demand for bear bile.
But even with such strong demand, Guizhentang could not, and should not, be surprised by the negative reaction to its IPO application. Since its first attempt to go public in January 2011, the number of Chinese microbloggers has multiplied; the mainstream media often follow their lead.
On Feb. 16, Fang Shuting, director of the Chinese Association for Traditional Chinese Medicine, defended Guizhentang -– with disastrous results for both parties. He told a press conference:
The process of extracting bear bile is as easy, natural and painless as turning on a tap. After the operations, the bears went outside and played happily. I think there was nothing out of the ordinary, and the bears were even quite comfortable.
The backlash was instant. Seventy-two Chinese celebrities signed a petition asking that Guizhentang’s application for an IPO be denied. Then, on Feb. 21, one of the signees, Zhou Guoping, a distinguished Chinese philosopher with more than 2 million followers on Sina Weibo, tweeted his disgust:
The president of the Association [CATCM] claimed that the bile is extracted in a manner that makes bears feel comfortable … [S]o, can we conclude that it’s humane to wound a human body and the sufferer will be in comfort?
Zhou’s tweet has been re-tweeted (or, in Weibo terms, forwarded) over 800 times. But it is by no means the consensus among celebrity Weibo users, much less netizens.
To be sure, the majority of online sentiment stands against Guizhentang. But some of the most thoughtful and cutting discussions on this subject come from the other side: individuals who point out that Western medicine, too, harvests medical products from animals.
Xin Yan, a doctor affiliated with Guang’anmen Hospital, perhaps China’s leading institution for the practice and teaching of traditional Chinese medicine, argued this on Sina Weibo:
[The drug] Heparin is extracted from the small intestines of pigs and ox's lungs, and is used to treat pulmonary thrombosis, and its manufacturer is listed on the stock market … It's against nature to milk a cow every day, but we have to develop dairy industry.
Dr. Xin’s last point -– that the manner in which humans cultivate food is equivalent to the cultivation of bear bile -– has been embraced by many netizens, but none quite with the vigor of novelist and online provocateur, Xia Shang. Echoing the angry sentiments of many who may not patronize bile farmers, but still reserve the right to use nature as they see fit, he tweeted:
I just want to say that we live in a carnivorous country which cultivates hundreds-of-millions of chicken, duck, and fish, and quite a few of us are still proud to eat delicacies from land and sea and even nationally protected animals and endangered species. But now some people are putting on an act to suggest they care for the rights of animals. Ridiculous hypocrites.
Guizhentang is no doubt sympathetic to Xia’s point-of-view, but there is little chance that they’ll hire him to respond to the increasing number of reporters questioning the company’s plans and operations. That job, according to Caijing, an independent business weekly, was recently given to one of China’s top crisis management public relations firms that wisely advised Guizhentang to avoid showing off “depressed and disabled bears.” Rather, they should focus on “all the happy young bears.”
As of Feb. 23, Guizhentang is still awaiting approval to move ahead with its IPO.
(Adam Minter is the Shanghai correspondent for the World View blog. The opinions expressed are his own.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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Adam Minter at email@example.com