Constant economy growth and financial improvement in China have raised its citizens’ awareness around health-care and well-being topics. Health issues are of great concern due to pollution, tight schedules, life pressures… The expenditure in healthcare products and services that Chinese consumers are willing to spend are ever-growing. With incomes increasing gradually over the years, they tend to demand more latest medical treatment and services. Therefore, new opportunities are created for foreign pharmaceutical and medical device companies which are able to supply high tech products that local producers cannot. This article provides an overview of the medical device market in China as well as recommends marketing strategies with the focus on digital marketing.
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CHINA’S MEDICAL EQUIPMENT MARKET 2019: BIG BUT SPIKY
CHINA NOW HAS THE SECOND LARGEST MEDICAL EQUIPMENT MARKET IN THE WORLD
Growing market size
China’s demand for Medical Equipment has grown at a fast pace in the past decade. In the next decade, both production and demand will continue to grow. The Chinese economy maintains a high-speed growth which has been stimulated by the consecutive increases of industrial output, import & export, consumer consumption and capital investment for over two decades. In 2016, the medical device market reached US$53.62 billion, an increase of 20.1 percent compared to 2015, much higher than the 7%-8% global growth rate. 72.7% of this growth is fueled by hospital procurement. The Chinese medical device market is fostered by the increasing demand for high-tech medical device imports to treat chronic and age-related disease. Also, China’s 13th Five-Year Plan prioritizes health and innovation, which will improve prospects for foreign medical device manufacturers.
Enormous potential for growth
In 2016, China’s total health expenditure was US$663 billion, and accounted for 6 percent of China’s GDP, which is a far lower percentage than countries like the U.S. (17 percent), Germany (11 percent), Canada (10 percent), and Japan (10 percent). Health expenditure is expected to increase to between 6.5-7 percent by 2020. Globally, the medical device market is approximately 42 percent the size of the pharmaceuticals market. In China, however, the percentage is much lower at approximately 14 percent. The world’s biggest medical device makers have been increasing sales at double-digit rates in China, the world’s most lucrative healthcare market after the US. This demonstrates the significant growth potential of the sector.
- Total healthcare spending: US$663 billion
- Healthcare expenditures total (% of GDP): 6%
- Healthcare expenditures per capita: US$420
- Expenditures on healthcare: Government: 56% & Private: 44%
- Size of medical device market: US$53.62 billion
In addition, rising income levels, changes in diets and lifestyles, and the impact of air and water pollution have contributed to an increase in chronic conditions such as diabetes, heart disease, and cancer. According to the World Health Organization, chronic conditions account for 85% of about 10.3 million deaths per year, and constitute 70% of the total burden of disease in the country. More than 2.8 million people in China died of cancer in 2015, with lung cancer claiming the most lives. Therefore, medical equipment for chronicle diseases in particular is in great need.
Local players are gaining power
Currently, China’s medical device market has two distinct categories:
- The first of these are the domestic manufacturers who supply low to mid-range products. Over 80 percent of the domestic manufacturers belong to this category.
- The second category includes foreign-sourced, high-end products supplied by large companies like GE, J&J, Philips, and Siemens.
According to the Annual Report of China’s healthcare Industry issued by China Chamber of Commerce for Import and Export of Medicines and Health Products (CCCMHPIE),
- China had approximately 16,000 domestic medical device and equipment manufacturing companies in 2017.
- The United States ranks as the #1 foreign supplier of medical devices in China, followed by Germany and Japan.
- These three countries represent the majority share of China’s imports.
- Chinese domestic medical device companies are consolidating, upgrading quality, and competing in medium-level technology niches.
With the government policy of supporting and encouraging domestic medical device innovation, some local manufacturers are growing stronger and competing with foreign suppliers. In addition, the government’s “Made in China 2025” initiative to improve industry efficiency, product quality, and brand reputation will further spur the development of domestic medical device manufactures and will increase the competiveness of Chinese medical device brands in the long term.
Eventhough Chinese medical device manufacturers dominate the domestic market, Chinese hospitals and healthcare providers prefer imported devices, especially when purchasing innovative and high-tech devices. Significant demand for foreign-made, high-end devices is also fueled by China’s aging population continues to grow, and the Chinese government pushes to improve the quality of care.
Be very careful in China’s medical device market
The volatile regulatory system in China presents a significant challenge for foreign manufacturers. Chinese regulations change rapidly and foreign manufacturers must comply with obscure requirements to enter the Chinese market.
Successful entry may even require setting up a representative office and your own trading company, so China may be out of reach for small or start-up companies with limited investment capital.
- Additionally, according to its “made in China 2025” initiative, China wants to increase the use of domestically produced devices in hospitals to 50 per cent by 2020, and 70 per cent by 2025, as it seeks to create “national champions” that can conquer export markets.
- Medtech companies from the developed world should find other ways to enter China such as finding OEM partners, licensing technology, establishing factories, etc. Chinese companies across different industries are entering into medical device sectors and are eagerly looking for Western companies to buy or forge partnerships with in order to shorten their innovation and development time to market.
- Chinese domestic companies have strong financial resources, but they lack the technology. That’s where the opportunity lies for outside companies looking to grow in China. Despite all obstacles, the market’s size overrides most concerns: about 1.4 billion people and growing.
Niche opportunities in China’s market
The best-selling prospects in the medical device sector include:
- In vitro diagnostic equipment and reagents: clinical and diagnostic analysis equipment, diagnostic reagents, medical test and basic equipment instruments, and point of care testing (POCT).
- Implantable and intervention materials and artificial organs: Interventional materials, implantable artificial organs, contact artificial organs, stent, implantable materials, and artificial organ assisting equipment.
Therapeutic products: Tri-dimensional ultrasonic-focused therapeutic systems, body rotary gamma knife, simulator, linear accelerator, laser diagnostic and surgical equipment, nuclide treatment equipment, physical and rehabilitation equipment.
- Medical diagnostic and imaging equipment: black & white and colored supersonic diagnostic units, sleeping monitor, digital X-ray system, MRI, CT, DR, and ultrasound equipment.
- Surgical and emergency appliances: anesthesia ventilation systems and components: high frequency surgical equipment, high frequency and voltage generators.
- Healthcare Information Technology related equipment and products: medical software, computer-aided diagnostic equipment, and hospital information systems (HIS, CIS, and HLT).
- Medical equipment parts and accessories
Be alert: China’s tech giants crowd medical equipment market
Increasing investment of tech giants in this lucrative market is expected to shape the future of the medical device market in China. Tencent launched in 2017 the AI Medical Innovation System or AIMIS (觅影 miying in Chinese), an AI-powered diagnostic medical imaging service.
- The internet giant has so far established AIMIS labs in over 10 hospitals across the country. They have also signed agreements to deploy AIMIS to close to 100 hospitals around China.
- The technology currently has accuracy rates (in Chinese) of over 90% for preliminary diagnoses of oesophagal cancer, 95% for lung sarcoidosis and 97% for diabetic retinopathy.
- Read also healthcare market in China
Tencent is also investing heavily in local and international health and medical startups offering a gamut of innovations, from wearable tech to genomics.
Huawei Device Co. Ltd. added medical devices into its business scope on March 21, according to Tianyancha, an enterprise data platform. Meanwhile, Baidu Online Network Technology (Beijing) Co. Ltd last year invested in Neusoft, a high-end medical equipment manufacturer headquartered in Shenyang in northeast China. Alibaba, which has about 500 million active users on its platforms, launched Ali Health in 2014.
The unit’s main areas of focus are online healthcare services, health management, product traceability (ensuring safe drug production, circulation, and use), and pharma e-commerce.
Tech giants are stepping into this sector with both capital and technologies, promoting aggressively the upgrading of China’s medical equipment industry.
DIGITAL: THE KEY TO ENTER INTO THE MEDIAL FACILITIES MARKET IN CHINA
The incredibly high level of internet penetration in China is influencing and governing every aspect of life and every industry including the medical device market in China. Digital marketing is your focus to expand brand awareness and trust in Chinese people’s minds and hearts.
1- Your foundation is a website in Chinese/ mobile app localized for China
The very first step for brands to be in China is to have a Chinese Website (In Simplified Chinese). Everyone checks Official Websites for information before any purchase. A well-organized and professionally designed website is important for first impression. Regardless of B2C or B2B services, websites are the hub for quality content and thoughtful information. Especially when it comes to health industry, content is an even more important factor in consumers’ decision to get in contact you with or not. A website in the Chinese language also shows your investment and commitment to Chinese customers.
Besides, having a Mobile Application can be a good strategy. Many Companies use apps to Engage with their Clients.
2- Next step is your e-reputation
What do Chinese clients buy?
- Trustful Companies,
- Trustful Solutions.
Trust is the Key in the Medical market.
How Chinese Search information. They will check forums, Questions & Answers portals, discussions on Social Media and news on official media.
- They are scared of scam and cheating companies.
- Chinese healthcare businesses have cheated Chinese people, often with disastrous aftermath.
- It is vital for any Medical Businesses to invest in your reputation and build Trust with Chinese clients.
3- Visibility & awareness online opens door to reach new clients
Search Engine is one of the most effective places to increase your presence. People look up online for medical devices and services.
30% of the total search on Baidu is related to medical keywords
- SEO can generate quality traffic at low cost; however, it requires a lot of time and a constantly optimized strategy.
- SEM is the Pay Per Click advertising. It is usually quite expensive and not allowed for Foreign Companies without Chinese business License.
Baidu of China has unique features and algorithms from Google which you are familiar with. To save time, effort and money, you should get help from professional services to achieve top ranking positions on Baidu search in the shortest time.
4- Social media is the place for customer engagement
Relationships are core to business development, you know that. In China, due to people’s addiction to social media and intensive mobile usage, social media is the place to reach out and establish new business relationship as well as maintain current ones.
It is the most used Social Networks in China. WeChat has about 900 million active monthly users with the average user spending 2.5 hours per day. Businesses evidently have to develop a strong presence on the Number one Chinese APP.
HOW TO MAXIMIZE YOUR WECHAT MARKETING?
- Create Wechat Account
- Optimize your Wechat account
- Create Push: Create Good content, mix between Newsletter and Blog Posts.
- Promotion: Promote this content on Wechat via Group Shares, influencers, and Wechat advertising.
Weibo is the second Most used Social Media in China. It is the mix between Twitter and Facebook, Weibo allows Brand Communication with short message & Pictures.
HOW TO MAXIMIZE YOUR WEIBO MARKETING?
- Create Weibo official Channel
- Create Quality post (Create attractive content)
- Promotion: advertise this content on Weibo via Event, Advertising, and KOL (key opinion leaders)
- Manage your community: reply to questions, interact with your database of followers, and other Weibo accounts.
5- Public relations: create Word of mouth via Chinese online Media
Every medical device company has to use official Media channels to Communicate with clients in China. Corporate news from Chinese publishers brings trust and credibility to brands. We use most Popular Health News & e-Magazine as well as have a relationship with many Journalists. Here are the most popular news portals in China:
- sohu health
- Health 360,
6- Influencer marketing
In China, like everywhere in this world, Influencers (or KOL key opinion Leaders) can be great help to expand the reach. KOLs in medical industry can be well-known experts, doctors, practitioners or hospitals who regularly share industry updates, product review and insight as well as product recommendations. As you may know about “guanxi” concept in China, relationship and endorsement from these KOLs would help remove trust barriers and open the gateway for your brands in China.
HOW TO CREATE INFLUENCER CAMPAIGNS?
- Identify the Top Influencers,
- Create Great Support, interesting Material
- Contact them
- Get your publication
- Reuse their testimonial in your Social Media strategy, PR and on your Website.
7- E-commerce as an emerging channel
- JD.COM FIRST
Jingdong or JD.com is the most trustful e-commerce platform in China and the number one place to find real Products. We usually advise our client in the Medical field to integrate this Platform.
HOW TO SELL ON JD.COM?
- Get credibility awareness first
- Apply to the platform
- Get approval and Build your JD store
- Manage your store
- Advertise on the platform
- Manage Customer services
- Sell and Optimize your results via Jd Ads and Special Event
TMALL OR TMALL GLOBAL
Tmall is the leading E-Commerce platform in China. It is a really a great platform for Leading Brands and leading Players.
HOW TO SELL ON TMALL?
- Have a strong Branding & E-reputation
- Apply to the platform
- Negotiate and get the Alibaba approval
- Build your Tmall store
- Manage your store, create a Products page
- Invest in Advertisement
- Set up great Customer Services, via Chat.
- Develop and Optimize your results via tmall Ads and Special Event
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