The state-owned traditional Chinese medicine (TCM) giant, Yunnan Baiyao Group Co, is under a spotlight following the suspected leaking of State secrets overseas.

Despite harsh criticism from the public, industry insiders have dismissed the accusations.

The century-old Yunnan Baiyao, well known in China as a TCM first-aid remedy for bleeding, traumatic swelling and insect bites, has been widely used in China and some foreign countries.

Largely to protect the patent, the government classified key information on the product, including the formula, as a State secret in 1956. Thereafter, the company was exempt from printing the drug's ingredients on the packaging.

However, to enter the United States market the company respected local rules and regulations, reported its ingredients to the US Food and Drug Administration (FDA) and printed them on the packets for sale in the US.

Because of registration difficulties, TCM, including Yunnan Baiyao products, are marketed as diet supplements in the US. Related information, including product name, manufacturer, ingredient list and dosage, has to be reported to the FDA and made known to consumers by being printed on the packaging, experts said.

Some people in China claimed that amounted to the leaking of a State secret, citing the Law on Guarding State Secrets, the National Business Daily reported.

A Beijing TCM expert surnamed Zhang told China Daily the accusation was nonsense.

"The ingredients of the drug are actually 'an open secret' among many TCM practitioners in the country," he said.

"Also, the ingredients are not the formula and one couldn't make the medicine knowing only its ingredients," he said.

A member with the corporation's management, also surnamed Zhang, defended the publication of the ingredients because it was required in an overseas market and did not violate any Chinese law.

In some Chinese online forums, netizens complained that the company had a double standard toward domestic and foreign customers.

"All consumers have the right to know what they are buying and using to heal themselves," said Huang Jianyin, secretary-general with the World Federation of Chinese Medicine Societies.

The protective measure of State secret classification seems to be redundant, given that the products and their manufacturers are already protected under the patent law, said Zhang.

"That just deprives consumers of their right to know," he said.

Meanwhile, Yunnan Baiyao was recognized as a class-A item under protection in a regulation issued by the Ministry of Health in 1992.

In return, the company received a series of favorable policies such as the right to set the price and long-term property rights protection.

Some consumers expressed concern that the company had abused the self-pricing right by marking up their products, particularly the toothpaste, which costs about 30 yuan (US$4.51) a tube in China compared to an average price of 10 yuan.

(China Daily December 24, 2010)