Mr Chan said he faces the chicken and the egg conundrum in trying to expand the business. "When you are an SME, you have limited resources with which to do things. Your hands are full taking care of existing customers' orders that you don't have enough time to look for new customers."

He sometimes stumbles across opportunities when existing partners -- as he likes to call his customers -- ask him to source specific products in China, while he in turn occasionally buys products from his partners.

"I guess you could call that an accidental diversion in our business strategy based on our customer-centric relationship with our partners," he said. "Which is partly why we have carried such a diverse line of products over the years."

Although Mr Chan says he has a solid client base in Canada, he would like to sell more in Europe. He believes the potential is there, as in France alone about 60 percent of the population regularly takes herbal tonics, mostly made from African herbs. But his efforts to expand on the continent are being held back by bureaucratic red tape.

Honey, beside its therapeutic properties, is often added to Chinese herbal preparations to remove their bitterness. Unfortunately for Mr Chan, the European Union in March 2002 banned any products from China containing honey because they say it contains unacceptable level of antibiotics.

"So we wrote and made personal representations to our partners countries" trade offices in Hong Kong, while our partners did the same, to ask them to define the standard test for the concentration level of antibiotics, if any, that is acceptable. Unfortunately, we never received any reply, despite repeated requests."

He believes the ban is not about Chinese honey supposedly containing antibiotics, but the EU's retaliation for China banning EU cosmetics because of mad cow disease.

"Everybody thinks China joining the WTO is the best thing since sliced bread. Philosophically I agree. Before, if there were any trade friction they would slap a tariff on the goods. If you are prepared to pay the tariff there was no problem. Anticipating the lowering of tariff barriers, using the honey ban, for example, EU is changing the tactics in handling the trade dispute. It is OK for a large company to weather this type of ban, but as an SME we are having pneumonia."

Because Chinese medicine and herbs are under increasingly more governmental regulation, both locally and internationally, Mr Chan said continuing to grow the business will be tough. However, he remains optimistic that despite tighter regulations and worries that more businesses will go directly into China to do business, Hong Kong traders' ability and credibility internationally will ensure China does not overtake them for some years to come.

More studies into Chinese medicine could also bring him more good news, as will growth in the number of people looking to alternative medicines.

"People are discovering that herbal products have less side effects than antibiotics, and as people are also more health conscious, they are also looking more at natural health foods," he said.

He explained that traditional Chinese medicine is more about balancing the negatives and the positives (yin and yang) in the body. So a lot of times, it is a mixture of herbs which help balance the body's natural defence mechanisms to surround a problem and move it out. Western medicine, on the other hand, takes a more confrontational approach. Doctors use antibiotics and potent drugs to destroy the bugs and viruses.

"As the Mainland showed in treatment of its SARS victims, Chinese medicine can be very effective," he said. "Science may not be able to identify how elements in Chinese herbs work, but the proof is increasingly in the eating, rather than in the lab results."