Is it time for foreign medical service providers to enter China?

In the past two years, foreign capital actually has shifted the focus of China's interest in the health care system, into drugs and equipment from the equipment healthcare service providers. In China, private hospitals, emergency care, rehabilitation care, elderly care and family health care are attracting foreign private capital, and the results can be mixed. This is not to say that multinational companies in the medical or medical device sector are falling out of China, but medical service providers are beginning to test the water to see if their service model has a place in the country's large and fragmented healthcare economy.

For these companies, entering China will become a particularly difficult strategic deployment. There are at least two obvious reasons for this: First, there are very few medical service providers with rich international experience in expanding their business models in other countries; second, China’s government reimbursement system is insufficiently funded to stimulate overseas private The company has a strong incentive to assess opportunities in the Chinese market.

However, there are two reasons why this can be made possible. First of all, the Chinese government has formed a broad understanding of the need to introduce private investment at home and abroad in the field of health care. Second, in solving difficult problems such as difficult medical treatment and expensive medical treatment, through the introduction of public-private partnership models in certain areas, And in other areas, simply handing it over to the private economy, it may explore a useful way to break. China has taken important steps in foreign direct investment catalogues and regulatory mechanisms to allow foreign investment to participate more in the medical services industry and hold a larger share of service providers.

But as any experienced company executive understands, even if a company has the ability to deploy a strategy, that doesn't mean it should be done. Globalization has been shown to have a major impact on the development landscape in other industries. In this environment, for healthcare providers, testing the Chinese market will create opportunities for them to participate in the global trend, so it is extremely attractive. Human.

For health care providers and investors eager to enter China, the best strategy to enter the market must be based on a solid foundation, that is, a well-planned strategic plan rather than opportunistic. Paying attention to strategic planning does not necessarily mean dragging the entire process a long time, but it must also leave room for regulatory analysis, market competition assessment, and a framework for identifying and evaluating potential partners. Since China's healthcare economy is in urgent need of a series of reforms and invested a lot of capital, once a service provider starts to explore the Chinese market, it will receive many cooperation programs from the public and private sectors in succession. Keeping a fresh mind in the face of these discussions becomes even more important.

In summary, if a medical service provider wants to develop an appropriate China strategy, its executive team should focus on how to avoid six common mistakes before deciding to enter the Chinese market. They have become a stumbling block for most Western healthcare providers to enter China, in large part because the tempting Chinese market potential will quickly stun the policymakers when thinking rationally about expansion opportunities. The six common mistakes are:

Competitors have already developed in China, so I must also enter China. Ok... but are they making a profit? Are they satisfied with their investment? Have they lost other low-risk opportunities in the local market? Will their decision to expand their business into China negatively impact their existing business, jeopardizing their ability to execute other low-risk expansion opportunities?

1.3 billion consumers? I am already drunk! Yes, China has 1.3 billion potential consumers (and, macroscopically, health care products and services can indeed be considered one of the national markets). However, when the market is segmented according to demographics, ability to pay and willingness, how big will this market be? Before answering this question, we first ask the market to conduct a “down-to-earth” analysis to understand the general resistance of Chinese households to service consumption, especially health care services.

Full of mind is the "China" market, not the "Beijing" or "Shanghai" market. Operators and investors should carefully explore the "China" market. The Chinese market is extremely fragmented, and it likes to be short-sighted and biased. The regulatory authorities also like to intervene. Good intentions at the central level are not necessarily enforced when they are communicated to local governments (and will even be opposed to the central government), which is particularly evident in the health care arena. You may be able to quickly open the market and grow in a city far from Beijing, instead of using Beijing as a starting point, which underscores the fact that, given how to imagine, success in Beijing does not mean success in all of China.

Do not understand what type of partner is needed. Foreign investors entering China will face a lot of choices when looking for partners. If the time is longer, it is likely that there will be a variety of cooperation plans in front of us. The key is to be a savvy shopper and know what you need? Find out which ones are needed by the market, which ones are best at them, which ones are allowed by the regulators, and which ones are not yet being indexed, and find the right intersections. Until then, only then should you consider what type of partner you need.

I did not realize how quickly China would become the core of the whole discussion. Even for the most experienced management team, China will have an irresistible appeal. You can't stop this from happening; however, you can design around how to limit its impact on your current day-to-day operations. Whether it is from the perspective of capital or talent, China is a vast ocean and will quickly “dilute” a company. The key is to objectively assess what conditions are needed to ensure rapid and efficient entry into China and to minimize disruption to its core business.

Establish business based on pre-estimated costs and time. Be very cautious when faced with "cheap" market entry methods. Not only do “cheap” solutions end up costly, but they often put companies in a trap in various ways, such as signing a poorly-coordinated cooperation agreement, applying for a restricted foreign-owned business license, and inadvertently breaking trade secrets. Or the core concept of operation is leaked to partners. It is necessary to realistically understand the various accidents that will increase costs, complexity and time throughout the process, and honestly inform stakeholders.

Given the dramatic changes that have taken place in the Western healthcare system, such as the Affordable Care Act, and the UK National Health Service (NHS) Clinical Medical Services Commission, Western companies must carefully evaluate the various offerings offered by China. Opportunity, thinking with a clear mind on how to manage your home business, and to explore a path that will enter China and accompany the new development of China's healthcare system in the future. Yes, the opportunities for healthcare providers in China have enormous potential, but the risks are equally huge. And regardless of these challenges, the most important thing is to ensure that the most lofty goals are based on objective understanding of the conditions needed to succeed in China.

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