China＇s massive overhaul of its healthcare system and plans by Chinese medical device firms to boost their competitiveness globally are leading some Western plastics processors and industrial design companies to step up investments there.
The country＇s healthcare system is in the midst of major changes.
Government reforms, including a US $125 billion initiative to gradually create universal access to basic healthcare by 2020 and build or remodel 2,000 rural hospitals, are boosting demand, and that＇s leading to new investment from Western plastics firms like Italian filter component molder GVS Group and American tubing maker Precision Extrusion Inc.
As well, the desire of Chinese medical device makers to develop more sophisticated products that can better compete in global markets is creating opportunities for some industrial designers, such as U.K.-based firm Industrial Design Consultancy, which opened a Shanghai design studio earlier this year.
Many hurdles remain, however.
Some foreign medical plastics firms and medical industry officials interviewed at the China International Medical Equipment Fair, held April 16 to April 19 in Shenzhen, say there are significant challenges, including intellectual property, intense price competition and quality issues that make much of the China market off-limits.
Still, some overseas firms are finding niches.
Berkshire, U.K., based design firm IDC, for example, recently worked with one of China’s largest local medical device makers, Shandong Weigao Group Medical Polymer Co. Ltd., to redesign a plastic suture package to get it ready for global markets.
The six month project saw the companies improve the design so that suture thread comes out more easily and does not tangle, and also improve the look of the packaging "from being very Chinese looking to being very international," said Stephen Knowles, managing director of IDC.
"It is lots of small details of the plastic design so it can all come together," he said during an interview at CMEF, a twice yearly event, which calls itself Asia＇s largest medical device trade fair and includes exhibitors from major Western medical firms like Abbott Laboratories and GE Healthcare.
Weigao, based in Weihai, Shandong province, sought out foreign design help because it wants to better penetrate international markets, said David Lee, manager of the international trade department for the company’s suture unit, Foosin Medical Supplies Inc. Ltd.
"Many people see Chinese products as low-level, garbage products, so it is very hard for us [to get attention]," said Lee. "But this is an important step. We are changing people’s thinking of Chinese products."
He said the company analyzed existing products for weaknesses, such as protecting suture thread during transport and coming out of the packaging easily for surgeons, and said initial feedback globally from customers has been good.
It’s the first time the company’s suture unit has developed a product with both global and local markets in mind, he said.
Knowles said that growing interest from domestic Chinese medical device makers like Weigao led IDC open a six-person industrial design studio in Shanghai earlier this year, focused entirely on the medical market, he said.
Most of the clients are local Chinese firms, not multinationals, he said. Some of them want advice on going international, but others are focused on China’s very price-competitive local markets and are looking for ways to stand out there, he said.
Plastics processing firms are also making investments.
Italian filter component molder GVS Group, for example, opened a 400-employee injection molding plant, with 25 presses, in Suzhou, Jiangsu province a year ago, said Mattia Passarini, China sales manager for the Zola Predosa, Italy-based firm.
"We don’t want to compete with the Chinese local competitors," he said. "We are going inside the market with high quality. This is the direction China is going... Most of the people base everything on price but we cannot compete on price."
The firm expects to have 60 percent annual sales growth in China for the next several years, he said.
For some of the foreign plastics processors in China, however, finding business among China＇s domestic medical device makers remains difficult, with price being the biggest hurdle.
Janesville, Wis.-based Prent Corp. said most of its customers at its Shanghai thermoforming factory remain Western companies because the local market, while improving, still does not want to pay for the kind of plastic packaging his firm manufactures.
"For real local, local companies, they are still not ready based on quality," said Patrick Tan, sales account manager for Prent [Malaysia] Sdn. Bhd.
As well, U.S. medical extruder Kelcourt Plastics Inc., which has a small plant in Singapore, said the Chinese market is too price sensitive for the company.
It＇s not clear how those local Chinese firms can achieve their prices without taking shortcuts on raw material, said Kelcourt＇s Singapore-based sales manager Sebastian Sia, since raw material costs account for 80 percent of price of medical grade tubing and local competitors will sell in the market for a 50 percent discount.
Film extruder and thermofomer Sealed Air Corp. said only the largest Chinese medical firms are interested in paying for its packaging, and its customers remain mostly foreign firms.
Medical remains a small business for the company＇s Shanghai film extrusion and thermoforming operations, "but the growth [in the medical market] is over 30 percent a year, so we look at the potential," said Forrest Deng, sales development manager in China for Sealed Air＇s Nelipak products.
Figures from the U.S. government show medical device exports to China from America growing 40 percent a year.
U.S. firms are the single largest country supplier to China＇s healthcare industry, with a 30 percent share of imports, not including those sent through Hong Kong and then on to mainland China, according to Sherman Li, a trade specialist with the U.S. Commercial Service at the U.S. Consulate in Guangzhou.
U.S. medical device exports to China have grown from $1.64 billion in 2001 to $7.96 billion last year, and China＇s medical device market is projected to grow 15 percent a year, he said in an interview at the pavilion of American companies exhibiting in CMEF＇s international area.
Some of that growth comes from the Chinese government＇s policy to increase health care spending in the countryside, Li said.
Before the 2009 reforms, 80 percent of China＇s medical spending was in urban areas, with only 20 percent of its healthcare spending going to the country＇s 800 million rural residents, according to a U.S. government analysis.
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