Chinese Dental Market to Boom

As one of the results of the self-consciousness of pursuing healthier life among Chinese people, more and more people start to pay attention to their dental health. This leads to a boom in the dental market.

There are now 60.000 dental clinics in China, among which more and more are commercialized. Thanks to the extraordinary huge patient pool, the market is believed to expand rapidly in the coming years, thus a lot of investors follow closely after the lucrative market opportunities.

The market size of dental devices in 2015 is ca. 135 billion RMB, as statistics shown. It is reportedly to reach 400 billion RMB by 2020. Some IT companies are also involved into the industry, by offering services like tele-medicine, online payment system, online insurance reimbursement system, patient file, data mining and etc.

Medical device companies will be allowed to sell online in China

The market size of medical devices is ca. 36b Euro in China in 2014, among which 2,25b Euro were sold online. However, medical devices could only be sold through licensed online pharmacies, because online medical device stores are prohibited in China so far. Hence many Chinese medical device marketers acquire online pharmacies in order to walk around the hurdle. 

Things will change in 2015, CFDA will issue licenses to qualified medical device marketers, to enable them to open online stores aiming at medical devices. Device makers and marketers are inspired by the new policy, who predict strong uplift of sales achievement in the coming years.

2014 Q1 Export & Import of Artificial Joints by China

In Q1 2014, Chinese manufacturers exported artificial joints to EU valuing $20,4 million, which represents 91,06% of total export of artificial joints. EU is the largest buyer of artificial joints produced in China.


There are 22 artificial joint manufacturers in China, located in Jiangsu, Beijing, Shanghai, Shaanxi, Tianjin, Hebei, Fujian and Henan. Belgium is the Nr. 1 target market, who imported $16 million from China. While the YOY export to Germany increased 147.16%.

At the mean time China is also an importer of artificial joints, who imported total value of $36 million of artificial joints from EU in Q1 2014, $35,7 million from USA.

Polymer Material Medical Devices Demand Increased in China

The size of Chinese medical device market is expected to reach 340 billion RMB by 2015, moving at a speed of an average yearly compound increasing rate of 23%.

Among tens of thousands of medical devices available in the market, demand to those devices made from polymer material keeps expanding year after year. The polymer material devices designed and manufactured to be small in size, implantable and multipurpose are estimated to be having a yearly increasing rate of 6% until 2018.

Shanghai Customs Region Imported RMB4.6b Medical Equipment in Q1 2014

In Q1 2014, Shanghai customs region imported medical devices and equipment valuing RMB 4.62 billion, resulting in an increase of 7,8% on YoY basis. Among the total import, RMB 1,7 billion was imported from USA (+6,1%), RMB 1,3 billion from EU (-6,2%), and RMB 0,7 billion from Japan (+6%). Import from USA, EU and Japan represents 81% of total import.

In Chinese hospitals, 100% of artificial hip or knee joints, 100% of pace makers and 90% of CT machines are imported. In Q1 2014, around RMB 0,56 billion of endoscopes were imported to Shanghai customs Region.

CFDA Exempted 140 Class II Devices from Clinical Trial

China Food and Drug Administration (CFDA) issued notice exempting 140 Class II medical devices from submitting clinical trial when device producers apply for market entry from CFDA. This is already the second batch of clinical trial exemption.

For a Class II device maker outside China, perhaps JV with a local Chinese producer is one the best options if one looks for a long term reward in the Chinese market, depending on the nature of the product itself.

New Opportunities in Chinese Health Care Market

On 28 September 2013, the State Council of China issued ‘Several Opinions of the State Council on Speeding up the Development of Healthcare Services’, which was soon brought under the spotlight of the industry.

This document expressed a reform plan which will be guided by the authorities but driven by the market, focusing not only on medical care sector, but also health care sector.

The target of the development of Chinese healthcare services will result in a market size of 8.000 billion RMB with below major targets:

1. Drastic improvement in capability of medical care. This will rely on a balanced system in which the stake holders are non-profit & profit hospitals, public and non-public hospitals, medical treatment, rehabilitation and caring services.
2. Significant improvement in levels of health care management and standards of services. Traditional Chinese health care, caring of aged people, healthcare consultation, sports medical and health care touring services will be encouraged.
3. Improvement in health insurance mechanism. Commercial healthcare insurance should play a more important role in the entire healthcare insurance mechanism.
4. Expansion of supporting clusters of healthcare services. This refers to third party lab centers, third party imaging centers, R & D and manufacturing of (new) drugs, (new) medical and in-vitro devices, rehabilitation devices, healthcare products and fitness equipment.

To achieve the ambitious targets, the government will allow different forms of capitals to enter the market, treat facilities run by private capitals equally to public owned entities. 50%-100% of administrative fees will also be waived by the authorities.

This top-down reform offers tremendous opportunities to huge number of enterprises in the medical & health care industry, especially those prepared early birds.

Outsourcing Medical Devices Production to China

There are over 5,000 medical device manufacturers in China, mainly producing Class I, Class IIa & Class IIb devices, as well as certain categories of IVD product. Class III players are few though the number keeps increasing. To outsource the production of Class I / II devices or IVD to a qualified OEM manufacturer in China could be a cost saving solution to many of the EU device manufacturers.

All the Chinese medical device manufacturers must be registered to and licenses by SFDA, therefore it is very easy to check if the Chinese enterprise who is willing to work with you is a real producer or simply a trader.

We would recommend EU medical device manufacturers who outsource the production to China, that the perusal of technical files is a crucial and essential step before you reach any agreement with the OEM supplier. Otherwise it could lead to the result of failure to obtaining CE marks for the devices in EU.

If you have the time and money, a third party audit to the OEM supplier in China is recommendable.

Or perhaps the deployment of a neutral buying agent shall be considered, to make sure that quality procedures are properly followed up. The agent shall not just pay regular visits to the OEM’s facility, but should also bear the knowledge of ISO 13485 & CE requirements in mind.

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.

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.