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Medical Manufacturing in China: An Awakening Dragon?

May 19, 2009
China wants to be a major player in the global medical-manufacturing market, a goal that would be accomplished sooner rather than later if the recent China International Medical Equipment Fair (CMEF) is any indication.

China wants to be a major player in the global medical-manufacturing market, a goal that will be accomplished sooner rather than later if the recent China International Medical Equipment Fair (CMEF) is any indication. Exhibitors at CMEF, which was colocated with the International Component Manufacturing & Design Show at the Schenzen Convention & Exhibition Center, included companies from around the world showcasing products and services for the medical-supply chain. Even show backers were global, with support from organizations such as the Bavaria Technology Affairs Dept., U.S. Dept. of Commerce, Spanish Institute of Foreign Trade, Korean Medical Devices Assoc., and Trillium Medical Assoc. of Canada, among others.

Many Chinese exhibitors say they are aggressively targeting Arab, Asian, European, and North and South American as well as their own local markets. And several exhibitors noted a spike in the number of international attendees this year. The 61st CMEF show was the largest event of its kind in Asia, featuring 2,100 exhibitors and attracting over 50,000 visitors.

Because companies in China are now state or individually owned, or a combination of the two, the country’s way of doing business is sometimes called “capitalism with Chinese characteristics.” It is said the country’s vision is to build modern infrastructures and improve health care in rural areas using capitalism. Once this is done, the country intends to revert to a new kind of communism.

Like many medical-device manufacturers in China, exhibitor Perlot Group was state owned (until 2000). Now privately owned, the company focuses on designing and manufacturing imaging equipment. Company President Liu Jinhu did not hesitate to admit that the main appeal of the company’s products is low price. The company considers itself a follower, not a leader, says Jinhu. “In the past, we ‘followed’ Chinese companies and turned out less-expensive versions of existing products. Now we do the same for global companies such as Siemens, GE Health, and Phillips,” he says.

“Although the company doesn’t yet sell to the U.S. market, it exhibits at U.S. trade shows such as AACC (an annual radiological show), laying the groundwork for eventually penetrating U.S. markets, as well as opening a pipeline to future business with Mexico,” says Jinhu. He also says that before 2000, the firm had no international visitors at CMEF. Now, it needs three translators to keep pace.

Carestream Health, another exhibitor, says it works with the Chinese government to develop digital technology that will help bring health care to the over 900 million people in rural China. According to the firm, which makes interoral film and digital imaging equipment, built-up areas on the coast use mostly film-based imaging equipment. The lack of roads in remote areas makes it difficult to service film systems.

The company developed its digital remote-hosted information systems in Europe, and makes and sells them in China, as well as to customers in the U.S., Europe, and Asia. CEO Kevin Hobert says the Chinese Ministry of Health played a major role in many companies’ decision to manufacture in China. The organization recently passed a multibillion dollar package to build roads which should boost health care in rural areas.

“Ten years ago, cultural differences between East and West made it hard to manufacture in China,” says Hobert. “Chinese workers had different ideas on the importance of meeting deadlines. They also had difficulty making decisions without direction. But over time, a shift took place and now there are no differences in accountability, commitment, and empowerment,” he says.

Leslie's Blog:

Yuyue, a Chinese firm that manufactures medical-diagnostic equipment, reports it has been growing for the last three to five years. Listed on an international stock exchange, the company represents a perhaps not too unusual combination of old and new. Its logo is a fish head, symbol of a “fish jumping through the dragon gate.” According to Secretary of the board at the company J. Chen, the first Chinese character of this phrase signifies “the achievement of a better state.” He says the company is going to change its name and logo soon to better target international markets.

The firm, which has been attending CMEF for 12 years, says most of this year’s booth visitors came from the U.S. “China will soon be the world’s second largest market for medical devices, after the U.S. China is aggressively pushing the global market. Our product-development times are now so fast, that medical devices have become almost like B2B consumer goods,” says Chen.

Leslie Gordon

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