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China’s Medical Device Market

The HKTDC’s Hong Kong International Medical Devices and Supplies Fair was held between 7-9 May, 2014. During the event, Ir Dr Andros Chan, Deputy Chairman of the Hong Kong Medical and Healthcare Device Industries Association (HKMHDIA), shared a number of the Association’s research findings as part of his Medical Device Channel Establishment in China – The Hong Kong’s Perspective seminar.  Below is a brief summary of his presentation. 

Photo: Speaker: Ir Dr Andros Chan, deputy chairman of HKMHDIA
Speaker: Ir Dr Andros Chan, deputy chairman of HKMHDIA

Market size

For the past 13 years, the total sales of medical device have grown continuously on the Chinese mainland, with an average annual growth rate of above 20%. In 2013, the market size of the medical device market reached Rmb212 billion, an increase of 24.7% when compared to 2012. With a rising ageing population and increasing health awareness, there is a great potential for the medical device industry on the mainland. 

Chart: 2001-2013 Market Scale of China Medical Device Industry

Industry characteristics

In China, there are a large number of medial device manufacturers and dealers, with majority of them consisting of small and medium size companies. In 2012, there were about 14,928 medical device manufacturers and 177,788 related operational enterprises (including distributors and dealers), with an average output value of about Rmb12 million. The competition in the sector is, as a result, correspondingly high.

In general, China’s medical device market is mostly (70% - 80%) dominated by foreign products or brands, particularly products from the US, Germany and Japan. In the first half of 2013, Europe was China’s largest supplier of medical diagnostic instruments, medical materials, treatment apparatus and equipment.

Regional differences

The total output value and sales of the Pearl River Delta, Yangtze River Delta and Bohai Region accounted for over 80% of the national total. According to industry sources, Southern China has taken a lead due to many of the primary agents and distributors being located there. In particular, Guangdong province accounted for a quarter of the medical device business in the Pearl River Delta.  Hong Kong companies, therefore, could look to target the mainland market through agents in Guangdong.

Distribution channels

Currently, hospitals are the largest distribution channel for medical devices on the mainland, currently accounting for 79% of the market share; followed by pharmacies (17%) and other channels (4%). It is worth nothing that e-commerce is now an authorised sales channel for medical device. At the end of Oct 2013, 177 enterprises were licensed to sell medicine and medical devices on the Internet.

There are a number of factors that affect the way hospitals and medical institutions source medical device. As well as price, they look for product quality, technical content (such as proof of innovation), nationality of the brand, international certification and the responsiveness of the service provider concerned.

In terms of pharmacies and speciality stores, which are mainly sourcing for home-use medical devices for the consumer market, they look for product quality and brand reputation. The E-commerce sales channel for medical devices is also growing rapidly on the mainland. In 2012, for instance, Jingdong Mall sold Rmb146 million worth of electronic sphygmomanometers.

Selection criteria of agents

Exhibitions and trade fairs are key channels for the mainland’s medical device agents to identify potential new products. They are also often approached by manufacturers who want to introduce new medical products. There are a number of factors that mainland agents sourcing for home-use medical device bear in mind, such as suitability for the mainland market, high technical content and multi-functionality. In order to incubate and develop new products on the mainland, medical device agents look for long-term partnership with suppliers or manufacturers.

Suggestions for Hong Kong companies

Hong Kong companies should pay attention to the following issues when targetting the mainland market. It may take a long time for Hong Kong companies to obtain relevant license/registration certificate for their medical devices.  In addition, as a new distributor on the mainland, it is difficult for Hong Kong companies to be listed on the catalogue for centralised tenders. Hong Kong companies should consider partnering with their mainland counterpart when looking to access the mainland market. With its geographical advantages, Hong Kong can act as an international communication platform between the mainland and overseas companies. On the mainland, the demand for privately-run medical institutions is rising and it is believed that professional medical service management will be the next area of growth.

Content provided by Picture: Alice Tsang
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