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 This industry-country profile has been compiled by Derek Xu, Business Development Manager, Austrade Shanghai.
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(Last updated: 03 Apr 2008)
Trends and opportunities
The market
The development of a strong healthcare industry is a priority for the Chinese Government. The industry is growing strongly and in 2005, the market for healthcare equipment and supplies was valued at US$12 billion.
The Chinese Ministry of Health oversees all healthcare bodies and hospitals throughout the country. There are approximately 62,000 hospitals and more than 2.2 million physicians in China. Hospitals are largely government-owned but private hospitals and clinics are growing in number.
The lack of healthcare facilities in rural areas of China was highlighted during the SARS and avian flu outbreaks of recent years. The shortage of medical services is acute, from medical infrastructure to up-to-date equipment, from licensed doctors to educated nurses, from emergency reaction systems to prevention networks.
Considerable competition exists between hospitals in urban centres and so most hospitals are keen to improve their facilities to attract more patients. They can also set their own pricing for services, fuelling competition further. The majority of hospitals, including most rural clinics, run at a loss and tend to recoup revenue by overcharging on pharmaceuticals.
Some recent trends include:
- Introduction of healthcare insurance in 1999 replacing universal free medical care and reducing the financial burden on the government for the provision of healthcare.
- Aged population (growing at three per cent per annum) is increasing pressure on government to provide healthcare and aged care facilities.
- Strong investment and international joint ventures to cater to demands of growing middle-class citizens.
- Drug dispensaries through hospitals, not physicians, at higher costs.
- Low tariff rates (3.9 per cent from 2005) for medical device imports which is encouraging industry growth.
- Increase in ‘Western’ diseases including diabetes, obesity, eating disorders, hypertension, cerebrovascular disease, arthritis, and heart disease.
- The Beijing Olympics is forcing major upgrades to Beijing’s hospitals and clinics in preparation for the influx of thousands of foreign visitors during this event.
Medical device industry
China has the second largest medical device industry in Asia and ranks 11th in the world, valued at around US$7.5 billion. The sector is expected to grow strongly over the coming years and is estimated to exceed US$1.5 billion by 2008.
The industry is concentrated in larger cities, especially Beijing, Shanghai, Guangzhou and Tianjin.
One-third of all medical equipment is imported from the USA. Around 200 US and other foreign manufacturers have established local production facilities in China over recent years. The dominance of USA suppliers poses the major competitive threat to Australian exporters entering the Chinese market. However, as most hospitals have the discretionary power in purchasing, exporters who can demonstrate strong technical positions and value-for-money can find a good market in China.
Domestic production of medical devices continues to grow with increased foreign market activity. There are 9000 producers domestically. Typically the local industry products are less sophisticated than imports, and many companies do not manufacture to international standards and regulations. The major players in the industry include Beijing Wandong Medical Equipment, Shandong Xinhua Medical Instrument, and Weida Medical Applied Technology.
Nevertheless, foreign suppliers of medical devices in China continue to face some problems including:
- Local procurement policies
- Complex but inconsistent regulations for testing and product registration processes and a lack of standardised operating procedures amongst authorities
- Poor intellectual property protection
- Restrictions on business activities for foreign firms
Opportunities
The reduction in the tariff for medical devices into China is significantly improving the market for exporters. As hospitals upgrade their facilities and new facilities are constructed, there is growing demand for all types of medical equipment and services.
- Health IT as hospitals modernise.
- Collaboration on new research, clinical trials, or manufacturing.
- Health services and consultancies.
- Medical devices and equipment in particular disposables, ophthalmic, IV diagnostics, and technical aids.
- Breathing and gas masks.
- Specialised medical training and education.
- Healthcare infrastructure development
- Aged care equipment and services.
- Orthopaedic instruments.
- Gymnasium and sporting equipment.
- Lifestyle improvement products and services such as diet, nutrition and complementary healthcare/wellness products and services.
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