However, the picture is not that rosy from the perspective of European businesses in general. The European Chamber of Commerce – the official voice of European businesses in China – annually publishes a 400-page Position Paper. The 2020/2021 version covers the current trends among main industries, and gives more than 800 recommendations for the Chinese government on how to improve the business environment for European companies. You can download the position paper HERE. According to the ECC, European businesses see China moving in several directions at the same time. One half of China’s economy continues to open, is becoming increasingly fair and well regulated, and is very much seeking to gain more European investment. The other, state-driven half of the economy sees China continuing to nurse its state-owned enterprises (SOEs). This is particularly apparent in the industries promoted in the China Manufacturing 2025 plan and similar national goals. China clearly aims to be more independent, and less reliant on the international market and foreign technology in the long run.

It will be interesting to see an analysis of the plenum, the Chinese Communist Party's central committee's annual closed-door meeting, which took place this week. The discussions this year will be focused on the framework for China’s 14th five-year plan, running from 2021 through 2025, as well as their vision and goals for the next 15 years.

Although we have witnessed China becoming more and more selective when it comes to foreign technology in general, there are still open paths into the market. One of the notable ways for China to attract missing competence, talents and technology are the so-called Free Trade Zones. They offer plenty of preferential policies, such as tax reductions, faster custom clearance, low rental costs, etc. There are already 21 Free Trade Zones in China. A new plan has been issued by the Hainan provincial government to promote system integration innovation at the Boao Lecheng International Medical Tourism Pilot Zone. It is the only one of its kind in China, enjoying special preferential policies such as permission to import medical technology, medical equipment, and medicine. The zone is fast becoming one of the leading destinations for healthcare investment in China. The pilot zone is one of 11 industrial parks in the Hainan Free Trade Port. The implementation of the Hainan free trade port preferential policies such as zero tariff, low tax rate and simplified tax system is intended to attract more big international pharmaceutical companies and professionals to the pilot zone. Team Finland is offering the Finnish health care industry more information about this new area via an online/offline seminar in Hainan in the beginning of December. More information will be available at a later time, but you can already voice your interest in it at the event section.

This month's guest writer is also from the Health tech sector. Read how our member-company InXso sees the China healthcare markets.

Ulla Nurmenniemi

Executive Director, FBCB

I hope to give some insights on how the healthcare sector in China has been developing recently and how it influences the future outlook of HealtTech industry within the country.

As a short introduction, inXso ltd. is a Finnish-based company specialized in internationalization of healthcare technology and biomedical technology in between Finland, Switzerland, Japan and China.

China poses as the second-largest healthcare market in the world, measured by total healthcare spending, with one of the fastest ageing demographics worldwide. Combined with the rapid economic and digital development of the country, China is an increasingly attractive choice for many health tech companies despite the evident challenges. Many factors make the Chinese healthcare sector unique; Demographic and cultural differences are enormous within the country, which is why China is rather a multi-market area than just a single market. The urbanization has been incredibly fast, but the gap between rural and urban regions remain large despite the speedy development.

The fast-paced adaptation of innovative digital healthcare solutions is supported by government initiatives, as they are deemed as a solution to ease the pressure on overloaded healthcare services - which is created by the unevenly distributed access to healthcare between rural and urban regions.

To reduce disparities and utilization between rural and urban healthcare, the Chinese government has issued several medical reforms in past decades, the most recent being 'Healthy China 2030' from 2016. Although the reforms contain inherent challenges, the core message is that the healthcare needs to correspond to the demand for public health, which has to lead to the development of the healthcare system and capacity with the increase of health industry and scientific research. In this way, China is slowly shifting from mass production to the development of advanced R&D capabilities as well as

sophisticated medical devices in line with international standards.

On the other hand, legislation addressing the use of Big Data and AI is lax compared to many countries, and China has been investing in healthcare Big Data and AI industry. Currently, AI applications used in Chinese hospitals can be categorized based on doctor-patient interactions, diagnostic imaging and treatment, clinical decision support system and healthcare AI-based human-computer interfaces, for example. Although there are several considerations for HealthTech market entry in China, I will briefly address only the regulatory requirements that have been evolving amid healthcare sector development.

The regulations have been overhauled in recent years to adapt to international standards leading to a situation where finding the exact indications that meet the NMPA requirements can be time-consuming and quite tricky sometimes. Currently, medical devices fall under mandatory filing or registration regime regulated by the NMPA, including manufacturing, marketing, sales, and post-market surveillance and there are three medical device classifications similar to FDA (US) and several regulatory pathways that have specific considerations. We will not get deeper into regulations in this short article, but in general, it can be said that imported devices may need to be registered with a higher level of government authority than domestic devices, and application process might take several discussion rounds with NMPA.

The current trend for companies serious about China is to set up their own operations in the country, including representative offices, branch offices, or Wholly Foreign-Owned Enterprises WFOEs. HealthTech companies have realized that to succeed in China, they need to produce unique innovations with continuous upgrades so that competitors - and copycats - remain a step behind.

Hopefully, I could shed some light on this complex industry with many undercurrents despite simplifying the issues.

Finnish Business Council Beijing is part of Team Finland in China, and an outstanding platform for all Finnish businesses in China. For those companies which need more visibility, we have launched a Premium Membership. It's an upgrade from normal membership, as you can see from the table below.

For those companies in Finland, who are planning to expand their businesses to China, or are in the early stage and don't have an office in China yet, we have a distant membership. It's called Proxy Membership. A very cost-effective way to make your company known to a large audience, and get essential contacts for your future.

See all membership options HERE