The complex production processes and long industrial chain in traditional Chinese medicine (TCM) market result in difficulty in Chinese market microstructure research. Based on the defining the logical relationships among different concepts. This paper divides TCM market into two stages as Chinese materia medica resource market and traditional Chinese Patent Medicines market. Under this foundation, we investigated the supply capacity, approaching rules and motivation system of suppliers in TCM market, analyzed the demand situation in the perspective of demand side, and evaluated the purchasing power in terms of population profile, income, and insurance. Furthermore we also analyzed the price formation mechanism in two stages of TCM market. We hope this study can make a positive and promotion effect on TCM market related research.
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