Entry-level products continue to dominate exports, but a handful of makers are now developing in-house technologies for their OBM lines.
China manufacturers are taking advantage of the growing demand for medical devices, spurred by the rising aging population worldwide.
|The PR-ZH1 model from Shanghai Pinrui is used for painless scaling, periodontal disease treatment and endodontic work.|
The majority of suppliers in the country offer low-tech products such as medical supplies, small medical electronics, and simple rehabilitation equipment. These items do not require patented core technologies and complicated manufacturing processes, and are typically exported on an OEM basis.
But there is a small group of companies focusing on high-tech devices. Such businesses usually have strong R&D capability, a medical background and substantial capital investment. They are able to develop in-house technologies and tap these in manufacturing X-ray machines and dental equipment. Products are often exported with suppliers' own brands.
It took these enterprises two or three years and help from professional partners to build unique technologies and construction designs, and acquire patents.
Now, these makers are enjoying healthy year-on-year growth. Unlike in other export manufacturing sectors, suppliers of high-tech medical devices do not feel the impact of rising raw material and labor costs as heavily. At approximately 20 percent, profit margins are high enough that companies can still afford to absorb additional costs. As such, they are able to keep prices relatively low and are more confident of their products' competitiveness in the global market.
Three years ago, dental equipment manufacturer Shanghai Pinrui Medical Equipment Co. Ltd exported mainly to Africa and Southeast Asia on an OEM basis. Now, its latest releases incorporate in-house technology. The company has developed three types of dental treatment tools for use in different noninvasive procedures. The implements work on a 42,000Hz frequency and have strong ultrasonic flow.
Shanghai Pingrui is said to be the only company in China offering such products and only one of two suppliers worldwide. Based in Denmark, the other maker adopts similar technology but only offers a one-year warrantee. Shanghai Pingrui's dental tools carry a two-year warranty. The company also claims its implements look and perform better.
Currently, all of Shanghai Pinrui's exports carry the in-house PRME brand. Overseas sales are estimated to increase at least 30 percent per annum for the next few years.
The R&D team at Nanning Passion Medical Equipment Co. Ltd includes several doctors with years of clinical experience. The company exports multifunction hospital equipment under its own Passion brand. Among its latest releases are adjustable dialysis chairs with a digital weighing scale, ICU beds with infrared light and CPU electronic systems for recording a patient's physical data.
China-made medical devices, particularly entry-level products, are generally exported to developing countries. But as the aesthetics and quality of higher-value units continue to improve, demand from the EU and the US has also started to pick up. More companies are exhibiting at relevant trade fairs as well, generating increased interest from such nations. As a result, many tier 1 enterprises are now starting to apply for CE and FDA certification.
Data from the China Association for Medical Devices Industry show the US is the country's largest importer in the line, contributing $903 million to Q3 2009 exports. Japan is the second-largest market, purchasing $453 million worth in the same period, with Germany's $191 million procurement placing it at third.
Statistics from the China Chamber of Commerce for Import & Export of Medicines & Health Products, meanwhile, indicate H1 2010 exports were valued at $6.6 billion, up 27 percent year on year.
Production of medical devices is spread across the provinces of Zhejiang, Guangdong and Shandong, and in Shanghai. There are an estimated 2,450 manufacturers in Zhejiang, many of which are based in the cities of Hangzhou, Ningbo and Wenzhou. They produce medical and consumer materials, disposable syringes, and blood pressure monitors.
Jiangsu is home to about 1,700 suppliers located mainly in Suzhou, Nanjing, Changzhou and Wuxi. These companies are often one-stop shops for various medical products. Elite Medical (Nanjing) Co. Ltd, for instance, has more than 200 different products, including urinary, respiratory and diagnosis systems.
In Guangdong, factories are based mainly in two cities. Shenzhen has roughly 1,200 makers of medical diagnostic imaging devices, preventive medical devices, electronic medical products and intervention therapy devices. Guangzhou is home to approximately 1,000 manufacturers and 2,000 traders.
Likewise, Shanghai has about 1,000 factories and 5,000 trading companies.
Suppliers in Weihei, Shandong, manufacture mostly low-end medical and consumer materials.
Note: This article "Production of high-tech medical devices on the rise in China" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.
All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
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