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.