SHARES of traditional Chinese medicine distributor Eu Yan Sang International shot up today on news that it has entered a joint venture with a mainland Chinese firm to process and export herbs.

The stock rose as much 13.2 per cent - its biggest one-day increase since Feb 22 last year, before closing 6.5 cents or 9.5 per cent higher at 74.5 cents.

It was last at this closing level in November 2011.

Eu Yan Sang has formed the joint venture called EYS Neautus (Sichuan) with Sichuan Neautus Traditional Chinese Medicine, which is based in the city of Chengdu.

The companies will each hold 50 per cent of the new entity.

The first phase involves setting up a 40 million yuan ($8.1 million) plant in Sichuan province to process herbs.

A trading company in Hong Kong to manage overseas sales will also be established.