China summons plenty of opportunities for Israeli MedTech companies.
The potential in the Chinese healthcare world is huge for companies in different stages of development – as long as they bring added value to it.
This article summarizes the opportunities as well as the challenges and risks that need to be considered when entering the Chinese Healthcare Market, as well as strategies for a productive and profitable entrance.
Why should medical companies consider entering the Chinese market? How to do it and what should be considered?
The medical sector is a booming industry in China, and it is expected to keep growing. The main reasons for that are an increased prevalence of chronic diseases due to China’s aging population, as well as China's increasing medical expenditure per capita. There is a quest in China for new technologies to improve citizens' quality of life. Some of the niches with special demand in China are: In-Vitro Diagnostics (IVD), orthopedics, implants, and Imaging and Computer-Aided Diagnostic Equipment.
Israel's reputation in China is of an innovative nation, a source of knowledge and Hi-Tech solutions. Indeed, there is a huge and growing number of Israeli companies advancing medical technology. These companies are in a great position to meet the growing needs of the Chinese medical market for high-end technologies.
Regulatory and law
If your plan is to enter the Chinese market, you should be aware of the rapidly changing regulations in China. You should make a NMPA registration for your product, as well as set legal actions for IP protection. It is strongly recommended to obtain China oriented legal assistance for that. Good legal assistance should take care of suitable registrations and approvals to run your product in China, as well as setting a safe legal framework for your IP. Besides setting legal measures to protect your IP, you also should set a business strategy for this purpose. The strategies differ between the different ways of entering the Chinese market.
The following firms may help you in the regulation and law field: “Shibolet & Co. Law Firm”, “A&Z Law Firm”, “BNLS Law Firm” , and “Chamzon Law Firm”.
There are several ways to enter the medical Chinese market. Any of the ways is suitable for different business considerations, overall strategy, and the status of the firm.
Set a local operation
China's formal policy is to guide local hospitals to prioritize procurement of local medical production. The aspiration of the Chinese government is that in 2025 the local mid-to-high-end medical production will be 50% of hospitals total procurement. In 2030, it is expected to reach 95%. Considering this policy, it makes sense that if your business has long term goals in China, you better invest in localizing there.
Localizing in China will make it easier for you to reduce prices to compete in China's price sensitive market, as well as benefit marketing and customer services. Additionally, this entrance strategy is a relatively low risk for your IP. On the other hand, as it is quite costly, it isn’t suitable for companies who don’t have enough resources. Also, since localizing your business takes time, if you are in a hurry to enter the market before saturation by competitors, you are better off choosing a different method.
We recommend “PTL Group” or “Salveo Group” & “PRI Management and Consulting Ltd.” as companies who can help you to set your business in China.
我们推荐以下公司帮助你在中国开展业务：PTL 集团、Salveo集团和 PRI管理投资有限公司。
Through a law in regulation, one can quickly enter the Chinese medical market with a contract with OEM. This model of entrance is also met with the Chinese policy to prioritize local production. This way is cheaper than investing directly in local business. Nevertheless, this model is relatively risky in terms of protecting your IP. If you choose in this way, you should choose a qualified OEM and after the beginning of the production you should track the quality of the products continually. It is suitable for medical solutions which are not easy to imitate.
For finding a qualified and suitable OEM for your product, SinoSciences Ltd. services are recommended.
Purely relying on import to China also can be suitable in some cases. This strategy is suitable for firms who aim to enter the market quickly before the company's field becomes too saturated by competitors. It is suitable mostly for small companies without adequate resources to set up production in China. On the flipside, this strategy will make regulation much more difficult as it is not going hand in hand with China's policy of prioritizing local production. Additionally, as an importer it can be difficult for you to reduce product prices to compete in China's price sensitive market. If your product is something that cannot be achieved from other firms, your entrance chances are still quite high.
For finding a suitable distributor for your product, SinoSciences Ltd.
services are advised.
Partnerships for R&D
Developing med-tech products is a long-term project. The R&D is a long process requiring high financial investment. Nowadays there are plenty of mid and big size Chinese companies who are looking for partnerships with foreign MedTech companies. They are willing to invest in the R&D process financially, hoping to get new MedTech solutions into China. Partnerships with such companies can also expose the foreign firms to incentives and special opportunities with the local markets. The Chinese companies are experienced in handling the regulation in China. Partnering with them also meets the ideal of the Chinese government of local production in hospitals.
The following platforms and firms may help you to set partnerships and to raise investments: INNONATION, Ekpac and Asia Direct Partners Limited.
In sum, China brings forth plenty of opportunities for Israeli MedTech companies. The potential in the Chinese healthcare world is huge for companies in different stages of development – as long as they bring added value to it.
There are challenges and risks that need to be considered when entering the Chinese Healthcare Market, as well as different strategies for a productive and profitable entrance.
Deloitte. (2021). Chinese Medical Device Industry: How to thrive in an increasingly competitive market
The International Trade Administration, U.S. Department of Commerce. (2021). China- Country Commercial Guide- Healthcare. https://www.trade.gov/country-commercial-guides/china-healthcare
.?טליה לוין. (2021). "הישראלים מאוד חכמים":איך הפכה ישראל למעצמת סטארט אפ דווקא בסין
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