Written by: Yunlong Wang, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The medical device market ushered in a golden age globally. The demand for high-end medical devices in the Chinese market is also rapidly increasing. Whether it is government policy encouragement and guidance, or capital promotion and stimulation, these provide rare opportunities for European medical device companies to enter the Chinese market. So, how is the market actually changing and how can European Medical Device companies take advantage of this?
How is the market changing?
Many people remember medical devices produced by Chinese manufacturers as items produced at a low cost and at large volumes. This is rapidly changing, and China is producing more and more medical device products of higher quality today.
As indicated by Yangni Liu, an author at Equal Ocean, the proportion of people being over 65 years old in China reached 12,5% in 2019. Moreover, there has been an increased spread and normalization of chronic decease throughout the country. The demand for qualitative medical devices has, therefore, increased, and products such as household medical equipment are in strong need.
What also is worth mentioning is that the Medical Devices market is growing a lot faster than the average market growth in the country – for several years, the amount of money that the Medical Devices industry has accounted for in healthcare expenses has increased by approximately 20% each year, according to Quasar. Liu also explains how the market achieved CNY 10.36 billion in 2018, and that amount is expected to increase to CNY 12.5 billion now in 2020. Simultaneously, the Chinese government is increasingly investing in healthcare expenditures, and the policies are clearly promoting a need for more medical devices and further development within the category.
Regulatory changes ease the transition.
For foreign companies that a few years back wanted to either cooperate with or enter the Chinese Medical Devices market, several obstacles made this difficult. For instance, intellectual property laws restrained local manufacturers from working with multinational companies, and devices that were produced in China could not easily be marketed abroad. However, according to the East-West Bank, regulations have changed since 2018. European MedTech companies can now import innovative devices into China without getting certificate approvals. Thus, making the process to put devices for sale in China much smoother for international manufacturers. However, MedTech companies will need a deep understanding of the Chinese market to succeed with their pricing and, therefore, be careful under the new system.
The effect of Covid-19 on the market.
Living in a time of a worldwide pandemic has also triggered the need for the market to accelerate its growth pace. It has resulted in a sharp increase in demand for both low-value and high-value medical devices all over the world, and it will probably continue to grow after the pandemic, although not at an equally high pace. Especially for China, this has meant that the Medical Devices market has had to quickly mature and is now about to step into the golden 10 years.
How can European companies take advantage of the market?
China’s market is expected by some analysts to soon become the world’s largest, which means huge opportunities for companies that manage to quickly adapt to this change. Also, since the demand for medical equipment is big, there is definitely room for European companies to transition into China and contribute with innovative devices into the market. A benefit of the Chinese manufacturing supply chain for local producers is that it is quite robust and offers highly qualitative and cost-effective raw materials and efficiency among manufacturers.
There are thus many opportunities for European companies in the Chinese Medical Devices market. However, they will, in the future, need to manufacture locally in China and produce higher-quality medical devices to overcome their Chinese counterparts and reach success.
With a growing demand for innovative medical equipment and new beneficial regulations on the Chinese Medical Devices market, there is now a unique opportunity for European companies to enter this hugely profitable market. The push from China's policies to expand the market also indicates that there will be more capital focusing on this industry in the following years. Therefore, it is time for foreign companies to consider the opportunities to enlarge their footprint by manufacturing medical devices locally in China, as the market continues to grow.
Sources: Equalocean, Quasar-med, and Eastwestbank
Yunlong Wang, Executive Contributor, Brainz Magazine
Yunlong Wang is apart from being the CEO & Founder of Vikcess Business Group, a VC, Writer, and Startup Coach. His main focus is on how the innovation tech changes the business and our world. He devotes most of his time to innovation management, achievement transformation to adapt to new markets, technology transfer to apply in a wide range of industries, and startup acceleration with capital support. He is playing the role of a bridge, as Vikcess does, which connects Europe and China, to pursuit communication, collaboration, opportunities, and the future.