How to find distributors in China Market

Basically the nature of the very medical device a manufacturer is about to market in China (please check our other article on 'things to consider before entering China market') will be the key factor to be considered in marketing strategy. China is large in territory, and sometimes the situation may vary from province to province. One recommendable strategy is to divide the entire market into several sub-markets, then find different distributors to cover each individual sub-market.

Since the purchase of medical equipment by a hospital must go through public bidding, a strong local player may be a good partner of a device producer. Nowadays it's getting more and more difficult for a distributor to cover the entire national market, therefore a good set up of sub-markets and well selected regional distributors will assist medical device manufacturers to achieve a quick win in China market.

Hospitals in the eastern provinces are the consumers of high end medical devices/equipment, no matter it is a PET-CT or a surgery robot, or RFID tracking system for OR. One may find the same type of clients in some inland cities, where there are renown hospitals (mostly affiliated to a medical university) or top experts in a certain academic sector.

While hospitals in inland provinces must try the best to balance between demand and budget, stents and crafts definitely have market there, or MRI, but not likely for PET-CT kind of things. Anyhow, the vast territory of mid-west of China is an ideal stage for most of the devices, from Class I to Class III, provided you have the right product for the right client, with the help from the right partner.

For an imaging device manufacturer, a distributor with good back ground in the same sector could be ideal, but sometimes it is not necessarily the case. One of the important criterion is the capability to penetrate. If the distributor has good connections in his territory and is good at securing business, imaging or lab background shall not rank Nr. 1 when per-qualifying a distributor.

In China, NOT all the companies can market medical devices. Only those licensed business entities can legally sell medical devices/equipment, including imported medical devices (please check our other article on 'how to register medical devices to China SFDA').

How to register medical devices to China SFDA

After a medical device manufacturer finds a distributor in China market, the manufacturer must register the product to SFDA so that the product can enter Chinese market legally.

The manufacturer shall authorize a registration agent in China to handle all the registration processes, and nominate after-sales service party before hand. The after sales service agent can be the same as the authorized distributor (please go to our featured article 'How to find distributors in China'), or can be a third party. The manufacturer shall also issue 'Letter of Guarantee to Authenticity' to guarantee the authenticity of the documents provided to SFDA through the registration agent.

Then the manufacturer and the registration agent can work on legal documents requested by SFDA.

The application form should also be filled in and submitted together with the requested documents.

The whole registration process may cost some time, which may also involve establishment of standards and testing depending on the classification of the devices to be registered.

Invitro Diagnostic Devices Directive - IVDD 98/79/EC

IVDD 98/79/EC is the directive that regulates in-vitro diagnostic medical devices in the European market.

Please download a copy here for reference.

IVDD 98/79/EC

Things to consider before entering China market

There are around 15,000 hospitals in China, mainly public ones. Legal private hospitals shares less than 10 percent. Hospitals are classified into 3 grades, with Grade III as the most advanced and the highest academic level hospitals, followed by Grade II & Grade I hospitals. Numbers of Grade III hospitals does not exceed 5% of total hospitals, and are mainly located in the large cities in eastern provinces.

The purchasing of medical devices and equipment by hospitals is through public bidding. Grade III hospitals are the main stream end buyers of high-end imported devices & equipment, while Grade II hospitals have to balance between demand and budget.

There are many importers and distributors (please go to our featured article 'How to find distributors in China') in this industry in China, however we can hardly see that any of the players is capable to dominate the entire Chinese market geographically, no matter which product line a distributor is promoting. So if a distributor asks for exclusivity right in whole China market, we recommend you to think twice. There are some smaller players who are strong in local or regional market who might be suitable, just well follow up and management are necessary if you have two or more distributors.

The marketing strategy and choice of distributors may depend on the nature of your product. If your product and its applications are new, you may need certain time to educate the market first. References from certain healthcare institutions are also recommendable. In case you are about to launch a mature product, tier 2 or tier 3 cities in China might be good places to start with.

Register to State Food and Drug Administration (CFDA) is of course necessary (please check our featured article 'How to register medical devices to China CFDA'), the process may last for quite a time. But if you JV with or acquire a local business, it could shorten the process of market entry as well as put you into a good position in local competition.

You may also encounter competition from Chinese local producers. If you plan your business presence in China on a long term basis, and also you want to stop them from competing with you in other markets in the future, perhaps you may consider to buy your competitor out.