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Medical-device makers anticipate China boom

By: Gayle S. Putrich

May 27, 2013

WALTHAM, MASS. — China remains one of the hottest topics among medical-device manufacturers and their entire supply chain, both as a potential market and a possible competitor.

At the Plastics in Medical Devices conference, held May 13-15 in Waltham, outside Boston, Michael Corkran, founder and CEO of Beachwood, Ohio-based China Centric Associates, offered advice and perspective on doing business in the world's largest emerging market. China Centric is a consulting firm that helps companies develop and execute ventures in China.

China, which operates on predetermined five-year economic plans, has already made improving the quality of and access to health care one of the country's top two priorities in its 2011-15 plan. Corkran said he expects health care to be the top priority in the economic plan that begins in 2016, as development continues to move inland from China's coast. Private, for-profit hospitals are also a major growth market in China, Corkran said, with more than 2,000 opening in the last few years, mostly in large cities.

With China focused on developing a consumer, demand-based economy in an effort to be less dependent on imports, the door is open for U.S. and other companies to go east and jump into the local market, he said, but to do business there, foreigners must have a local presence and Chinese partners. "And culturally, building the relationship is very, very important there," he said.

Corkran advises medical-device makers to enter China with a combination of opportunistic selling — responding to customer demand and signing on with local distributors — and a strategic market development plan, but most importantly, an open mind.

"The single-biggest mistake I see is attempting to transfer Western business practices to China and expecting them to work," he said. "Only in last 15 years has China been engaged in Western business practices with any real traction."

While operating from a deficit compared with Western competitors, particularly in dealing with intellectual property concepts — China established its first patent office in 1980 — China is catching up quickly.

"Two-thirds of what U.S. businesses complain about as 'piracy,' isn't," Corkran said. "If you had a good idea and chose not to protect it, it's on you. But they are working very aggressively to introduce Westernlike IP laws in China. They want protection of their own intellectual property. … They know they're not where the West is. It takes a lot to overcome 2,000 years of IP inertia."