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China Briefings

Reports on China issued by Samsung Economic Research Institute

Growth of Multinational Companies in the Medical Equipment Market

Growth of Multinational Companies in the Medical Equipment Market

Samsung Economic Research Institute Beijing Office

July 15, 2011

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With a surge in the demand for medical equipment in China , foreign and local medical equipment firms are waging a heated competition in China ' s medical equipment market to capitalize on its huge growth potential. Multinational companies have built a strong presence in China ' s high-end medical equipment market. But tougher government supervision, China ' s changing business environment and local companies ' rapid growth have emerged as new challenges.

According to the “ SWOT ” ( Strengths, Weakness, Opportunities, Threats) analysis, multinational companies have the upper hand in terms of technology, brand and global experience but their price competitiveness and after-sales service leave much to be desired. As a consequence, in rural areas, local companies have become the dominant force.

With price competitiveness and government support for R&D, local companies have built a strong presence in rural areas and low-end market. Furthermore, m any years of doing business has led to the accumulation of wide-ranging sales and service networks at local companies. Together with M&As and market segmentation strategies, local companies have gained the lead in the supply of medical equipment suppliers in China .

Thus, multinational companies have to adjust their product lines in accordance with market demands and localize large portions of their businesses in China to lower cost prices. Collaboration with local companies is also important, since it will give multinationals the opportunity to utilize local companies' well-organized distribution channels.

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