Three Tips on Approaching the Chinese Market

by Luke Zhou | Sep 20, 2017 | Blog

Want to enter the Chinese market? Here’s what digital health companies need to consider.

The total health market in China has an estimated value of over £1 trillion this year. Within that, the digital health market is projected to experience rapid growth, from $3 billion in 2014 to $110 billion in 2020. With 1.38 billion people living in 9.6 million Km2, digital healthcare is thought to be the solution to overcoming this geographic problem. How, then, can a foreign digital health company prepare for expansion into the Chinese market? Here are three tips to consider.

1.Product: regulatory compliance & intellectual property protection

Just as in the rest of the world, health care is a strictly regulated sector in China. Therefore, a company that wants to enter into the Chinese market needs to be aware of the regulatory compliance they’ll need for approval. For example, diagnostic or treatment related software is regulated by the China Food and Drug Administration (CFDA). In some cases, when software is classified under the same category as hardware, a clinical trial may be necessary in order to obtain CDFA approval.

Digital healthcare companies that deal with the public’s or individual patient’s data also need to be aware of the requirements of the data protection regime in China.

China is a very challenging market to enter, so companies should discuss the intellectual property issues with their own attorney, prior to entering the market. Filing a patent and/or registration of a trademark should be considered a high priority.

2.Business: China strategy

To do business successfully in China, a good business strategy is a must. An in-depth analysis on the market, competition, and business model should be done prior to taking any forward action. For digital healthcare, setting up a correct pricing strategy can be challenging. Most of the time, the healthcare system will determine who will foot the bill for services provided. A good understanding of China’s healthcare system and local business model will help shape the path a company chooses as they enter the market.

Additionally, the cultural differences should factor into a company’s business strategy. Decision makers should make visiting China and becoming accustomed with the culture a priority, as the information gleaned will give valuable insight into best business practices.

3.People: partner and local team

Many big western companies, such as Google, Ebay, and Apple, have failed or are failing in China. Many of them blame the barriers setup by the central or local governments and the non-transparent business environment. However many businesses are able to adapt and thrive despite the differences with other parts of the world.

One of the most successful foreign businesses in China is the German car-maker Volkswagen and Audi. Their success is partly due to the Joint Venture (JV) format of business. Therefore, a good business partner (or investor, if you’re lucky) is the key to success in the Chinese market. Building up a local Chinese team is always good practice; they can use their network to help a foreign business attract the best resources and support that provides mutual benefits.

Summary
As the Chinese digital health market continues to grow, companies who want to break in need to execute a well-planned strategy, ensure regulatory compliance, and work to build valuable relationships with Chinese locals. It’s not an easy market to enter but, with proper planning, it can be a worthwhile venture.


Luke ZhouDr Luke Zhou, 周露, is the founder & CEO of Beyond Laboratory Ltd, and the Director of China Medical City UK Incubator. He founded Beyond Laboratory in 2014 aiming to bridge the gap between UK and China in Life Sciences, Medical and Healthcare sectors. He is also the Executive President of the Confederation Chinese Business UK (CCBUK) and Director of China Medical City-UK Incubator. Learn more about his work here.

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