Is China’s healthcare market open to foreign investment?

When investing in China’s healthcare market, one of the first considerations should be whether the specific sector they want to enter allows foreign investment.

Despite China’s continuous liberalisation of its healthcare industry to allow foreign participation by removing items from the Special Administrative Measures (Negative List) for Foreign Investment Access (hereafter referred to as the “FI Negative List”) and adding items to the Catalogue of Encouraged Industries for Foreign Investment (hereafter referred to as the “FI Encouraged Catalogue”), there are still certain sectors that remain off-limits or restricted to foreign investment.

Medical institutions

On 8 September 2024, the Ministry of Commerce (MOFCOM) published a circular on its official website announcing the expansion of pilot programs for opening up the medical sector. This circular permits wholly foreign-owned hospitals in selected cities. The Chinese government has emphasised that China will “further relax foreign investment access, completely removing restrictions on foreign investment in the manufacturing sector and accelerating the opening of the telecommunications, education, and healthcare service sectors”.

Following the initial announcement, on 29 November 2024, the National Health Commission (NHC), together with three other government departments, released a detailed work plan for wholly foreign-owned hospitals in nine cities: Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the entire island of Hainan.

In practice, even prior to recent adjustments to the regulations, some foreign investors had managed to break through these restrictions on foreign ownership ratio or even gain complete control over domestic medical institutions through historical investment, domestic reinvestment, VIE arrangement, or custody agreement. However, they may face obstacles when changing or renewing their operational qualifications, such as the Practicing License of Medical Institutions. Furthermore, in the case of subsequent shareholding changes, regulatory authorities may review the actual foreign shareholding ratio based on the “look-through approach” (穿透式审查, meaning tracing to the ultimate shareholder by looking through the multiple layers of shareholding structure based on the current effective law at that time), which may require foreign investors to reduce their ownership. Therefore, foreign investors should exercise caution when planning their investment structure.

Human stem cells and genetic technology

The aforementioned MOFCOM circular from September 2024 also lifted bans on foreign-invested enterprises (FIEs) engaging in cell and gene therapy (CGT) in selected free trade zones (FTZs).

Foreign investors are encouraged to invest in the manufacturing of high-throughput gene sequencing systems, according to the latest FI Encouraged Catalogue. Foreign investors are also generally not restricted from engaging in the import and export, production, sales, and research and development of genetic testing equipment.

On the other hand, in accordance with the Regulations of the People’s Republic of China on the Administration of Human Genetic Resources, foreign investors can cooperate with domestic institutions in scientific research related to stem cell and/or genetic diagnosis and treatment, provided that certain requirements are met, and regulatory approvals are obtained. They can also grant licenses to domestic institutions for the technological development and sale of genetic diagnostics and/or stem cell products owned by them.

Although there are established pathways for foreign investment in the sector, foreign investors may still encounter challenges. For instance, it can be challenging to clearly distinguish between the development of genetic testing equipment and the research and development of genetic testing technology in practice. Consequently, some activities of genetic testing equipment research and development enterprises may be classified as the application of genetic diagnosis and treatment technology, thereby prohibiting foreign investment. To avoid such complications, foreign investors are advised to communicate with relevant authorities in advance.

Traditional Chinese medicine

Foreign investors are prohibited from investing in the application of steaming, frying, moxibustion, calcination, and other processing techniques of traditional Chinese medicine (TCM) decoction pieces, as well as the production of confidential prescription products of proprietary Chinese medicines. However, such restrictions do not exist in China’s 21 free trade zones.

Beyond these three sectors – medical institutions, human stem cell and genetic diagnosis and treatment technology, and TCM – other healthcare sectors are mostly open to foreign investment in China.

In fact, foreign investment is actively encouraged in many healthcare areas, such as the manufacturing of new compound drugs or drugs with active ingredients, researching and developing (R&D) and manufacturing of cell therapy drugs (excluding areas where foreign investment is prohibited), manufacturing of dental implant systems for implant repair in patients with bone loss, postpartum maternal and child services in maternity centres, and rehabilitation institutes for autistic children, to name a few. Foreign investors with expertise and a strong presence in a particular area should confirm whether their business falls within these encouraged sectors to benefit from corresponding investment facilitations and receive preferential land and tax incentives.

Approval and licensing

The healthcare sector has always been subject to stringent regulations as the quality of medical services and healthcare products directly impact the safety and wellbeing of individuals. Recent efforts have been made to simplify and streamline administrative procedures in the healthcare industry, as part of medical reforms aimed at encouraging social capital, including foreign investment, to participate in providing diversified healthcare services. However, relevant market players still need to obtain various qualifications and fulfil registration and approval procedures to demonstrate their technical capabilities and ensure compliance with regulations.

Pharmaceuticals

In the pharmaceutical area, depending on their specific business scope and business type, different certifications and qualifications are required:

For businesses engaging in pharmaceutical R&D, they will need to obtain a Good Laboratory Practices for Nonclinical Drug Research (GLP) certificate issued by the National Medical Products Administration (NMPA) for doing preclinical trial; a record-filing with local health bureau for the use of pathogenic microbiology and an approval from local department of science and technology for use of experimental animals in laboratories; a Radiation Safety Permit from local environmental protection bureau if the drug R&D process involving radiative materials; and import-export related licensing and approvals if the drug R&D involves in imported raw materials.

For businesses engaging in pharmaceutical manufacturing, they will need to apply for a Drug Manufacturing License from provincial NMPA and then comply with the Good Manufacturing Practices (GMP) standards. They also need to obtain a Work Safety License for the production activities, and relevant import-export licenses if needed.

For businesses engaging in drug supplying and trading, they will need to apply for a Drug Trading License and comply with the pharmaceutical Good Supply Practice (GSP) standards.

Medical devices

Medical devices in China are subject to classified management: medical devices are divided into three classes based on the level of risk they present to patients or users. Class I is the lowest risk class and is subject to record-filing management, which is comparatively easier, and Class II and Class III are the higher risk classes and are subject to product registration management, which involves a longer and more rigorous process.

Upon registration, the business will obtain a Medical Device Registration Certificate for relevant Class II and Class III medical devices. Also, businesses will need to file a record with local NMPAs for trading Class II medical devices while they need to obtain an approval for trading Class III medical devices.

Medical institutions

As for setting up medical institutions, foreign investors will need to obtain an Approval for the Establishment of Medical Institutions and a Practicing License of Medical Institutions from local health authorities.

Medical institutions will additionally need to obtain multiple licenses based on their business scope, such as the license for radiological diagnosis and treatment, license for maternal and infant health technical service institutions, license for occupational health examination and diagnosis institutions, and license for purchase and use of narcotic drugs and category I psychotropic drugs.

However, under the “many-in-one” reform, most of these post-establishment licenses, except the Large Medical Equipment Configuration License, have been integrated into the Practicing License of Medical Institutions. That is to say, upon getting approval for relevant applications, the authority in charge will affix relevant information on the Practicing License of Medical Institutions, rather than issuing separate licenses.

Crackdown on corruption in the healthcare sector

Businesses operating in the healthcare industry should also pay attention to anti-corruption management, as China sees corruption in the medical fields as one of the main factors that undermine the reliability and efficiency of the country’s medical system. The government has taken a strong stance against anti-competitive behaviours and corruption in the medical field, leading to increased scrutiny and low tolerance for such actions.

In August 2020, the Central Supervision Commission (CSC) issued a notice emphasizing the importance of strict anti-corruption investigations in the medical field. In October of the same year, the CSC issued another statement calling for the investigation of power-money transactions, the establishment of a list of dishonest individuals, and the cutting off of the benefit chain of medical bribery.

Companies in the healthcare sector are thus at a higher risk of being implicated in commercial bribery and subject to administrative or even criminal penalties. Therefore, it is crucial for relevant enterprises to include anti-corruption measures as an essential part of their overall compliance system. They should also continuously monitor the authenticity, rationality, and verifiability of their employees’ behaviour in subsequent marketing processes.

Key takeaways

China’s healthcare sector is highly regulated and competitive and is among the most promising markets in the global healthcare sector. To succeed in this market, foreign investors must be proactive and agile, planning strategically, acting quickly, and working diligently.

In addition to the considerations mentioned above, foreign investors should stay abreast of the latest policies, not only those related to the administration and compliance of the healthcare sector, but also those outlining the government’s industry priorities. They should adjust their strategy and operations accordingly.

Furthermore, innovation is a key advantage for foreign investors, especially those with expertise in a particular area, but smaller in size. It is wise to capitalise on their creativity by customising their products to meet the needs of the Chinese market and addressing existing challenges. They should also develop a comprehensive intellectual property strategy early on to maintain their competitive edge.

Finally, foreign investors who are unfamiliar with the Chinese market are advised to partner with local companies and hire professional agencies to facilitate market entry and compliance management. However, they should conduct due diligence to verify the reliability and qualifications of potential local partners and professional agencies.

This article was originally published by China Briefing from Dezan Shira and Associates with the title ‘Key Considerations for Entering China’s Healthcare Market’

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Against a backdrop of China’s rapid economic growth, sharp increases in funding, improvements in medical outcomes and evolving demographics, the Chinese healthcare and pharmaceuticals markets have seen rapid advances over the past decade.

Learn more about UK-China collaboration in healthcare and biosciences at the UK-China Business Forum 2024 on 20 March. Click here to register

China’s healthcare market is now the second-largest in the world. Total revenue was estimated to be around RMB 10 trillion (approx. £1.09 trillion) in 2021, and the “Healthy China 2030” initiative, one of the government’s main blueprints for developing the healthcare industry, has set out an aim for the market to reach RMB 16 trillion (approx. £1.75 trillion) by 2030.

This growth, along with China’s sophisticated digital infrastructure, has laid a fertile ground for innovation in healthcare and life sciences.

The UK has a unique health and life sciences ecosystem, and its track record of scientific breakthroughs serves as a driving force for the next generation of life-changing treatments, technologies and services. Recent developments in China’s healthcare sector, including newly published regulations in central procurement and public hospital reform, have made the international business environment even more competitive for international businesses operating in healthcare and the life sciences. Despite growing competition internationally, the UK maintains a competitive position in China’s healthcare cooperation agenda.

The challenges facing the healthcare sector in China provide many potential opportunities for UK organisations. For example, China’s rapidly ageing population will need to be supported by innovative pharmaceutical and biotech solutions, as well as robotics and AI. Sales of home healthcare devices for older adults have already shown an increase during Singles’ Day in recent years, as have sales of dietary supplements and cosmetics with ‘anti-ageing’ properties. Indeed, many experts recommend that the best solutions to the problems of ageing are found much earlier in life, creating a need for innovative products that prevent chronic illness caused by environmental and lifestyle issues.

It is for this reason that, over the past decade, UK-China collaboration in healthcare has received unprecedented support from both governments, as well as leading companies in the industry. For example, in 2017, GlaxoSmithKline (GSK) and the British Council launched the UK-China Health and Economy Partnership, a higher education programme to promote knowledge sharing and research innovation in health economics between leading British and Chinese experts and institutions.

During the UK-China Business Forum 2024, a panel of experts will discuss how UK businesses are innovating and partnering in the Chinese market and how competition is driving healthcare forward in one of the world’s most dynamic economies. The panel includes Mark Hedley, Deputy Head of Investment Promotion at InvestHK; Sue Welburn, Vice Principal of Global Access & Professor of Medical & Veterinary Molecular Epidemiology at the University of Edinburgh; and Elinor Greenhouse, Senior Adviser, Tech and Innovation at the China-Britain Business Council (moderator). Click here to register.

Photo by National Cancer Institute on Unsplash

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“It’s hard to not be impressed by the progress that has been made in China over the last few years,” he said in April.

Some Western governments have been publicly decrying the threat of “economic coercion” from China, with countries including the US scrutinising Chinese investment into its biotech centre. However, for AstraZeneca, the geopolitics of the situation is secondary to the market potential.

“When you are a global company like AstraZeneca you have always to cope with geopolitical risk and you have to try to manage that without getting too involved,” Michel Demaré, the company’s new chair, told the Financial Times. As long as there were no legal or sanctions issues, he added, “you just try to take care of your patients and try to reach the most patients you can”.

AstraZeneca is the largest overseas pharmaceutical company by sales volume in China. A large, ageing population with chronic illnesses due to environmental and lifestyle issues ensures that China is a target market for many drug makers. AstraZeneca, however, is also interested in the scientific expertise in China and the financial support available. “The innovation power has changed,” Demaré told the FT. “It is no more ‘copy, paste’. They really have the power to innovate and put all the money in. There’s a lot of start-ups and we are a part of that.”

In 2021, AstraZeneca opened a major R&D centre in Shanghai and launched a health tech incubator in Wuxi the year before that. And last month, it signed a partnership worth up to US$ 600 million (£484.5 million) with Shanghai-based LaNova Medicines for the global licence for a potential cancer drug.

“When you are a global company like AstraZeneca you have always to cope with geopolitical risk and you have to try to manage that without getting too involved”

Since Soriot took over the company a decade ago, AstraZeneca has continued to invest in research and development in China and seen its success grow. Global executive vice-president Leon Wang, who joined in 2013, has also been credited for his innovative approach and has overseen the building of thousands of centres within hospitals to deliver AstraZeneca’s Pulmicort, a drug for asthma and chronic obstructive pulmonary disease.

Soriot said that AstraZeneca’s presence in China enables it to “tap into this innovation and help those companies develop and commercialise their products globally”.

AstraZeneca is not seen as a purely foreign company in China because of the sheer number of acquisitions and partnerships with local companies, and they create incubators that support local start-ups.

The Chinese approval process for getting new medicines onto shelves has reduced significantly in recent years, and the regulatory changes regarding insurance coverage have also helped pharmaceutical companies find success in China. Moreover, AstraZeneca’s ability to operate with freedom in China without restrictions from head office has enabled it to act in many ways like a local company. And without the distraction of geopolitics, AstraZeneca is going from strength to strength.

The post Why AstraZeneca is betting on innovation in China appeared first on Focus - China Britain Business Council.

In this fifth instalment, Haleon talks to FOCUS about China’s consumer health industry and how our health as individuals can’t be separated from the future health of the planet.

Tell us how and when Haleon entered the China market…

While Haleon is still a young company, our history in China dates back 35 years. Our products have served hundreds of millions of Chinese consumers for over three decades. With a unique purpose of delivering better everyday health with humanity, our brands are trusted by consumers and recommended by healthcare professionals. 

What major successes and growth have you had during this time?

We have established a broad product portfolio covering oral health, pain relief, respiratory health, skin health and vitamins, minerals and supplements. Over the past three decades, our category-leading brands, such as Caltrate, Centrum, Sensodyne, Polident, Contac, Fenbid, Voltaren and Bactroban, have been trusted by millions of Chinese consumers. We have three manufacturing sites in China serving both the Chinese and international markets, as well as a global R&D centre based in Suzhou.

Haleon achieved a 9% global organic revenue growth in 2022, with a healthy balance of both price and positive volume/mix. In China, our brands such as Caltrate and Voltaren continued to see strong growth with mid-to-high single-digit growth. At the same time, Haleon’s e-commerce business in China grew significantly, by 40%.

We not only pursue business success, but also strive to practice corporate social responsibility in multiple dimensions, including environmental protection and health inclusivity. Our Suzhou plant achieved carbon neutral status for the year 2021, becoming the first carbon neutral company in China’s consumer health industry. Moreover, we have launched several social responsibility programs dedicated to making every day health more inclusive, more achievable and sustainable, such as the Bone Health in China campaign launched since 2012, focusing on osteoporosis prevention and treatment.

Haleon’s Suzhou plant

What are your thoughts and reflections on the Chinese market today?

China is one of the most important markets for Haleon. We see China evolving quickly with rising demand for quality, and combinations of new trends such as e-commerce, sustainability, diversity and demographic changes that will provide multinational companies with tremendous space for further development. 

We recognise that to run business well, we need to understand the local market well. For example, compared with other markets, China has some unique consumer behaviours; omni channel shoppers and new and emerging social commerce platforms are growing extremely rapidly, for example. Digital health and technology are also demonstrating increasingly strong growth.

How has CBBC supported you during this time?

Since its establishment, CBBC has positioned itself on the centre stage of UK-China bilateral trade and investment. It strives to shape a more favourable environment for British companies doing business in China, including Haleon. 

CBBC’s close links to the UK and Chinese governments at each level, as well as its track-record of facilitating constructive engagements with influential stakeholders, have benefitted its member companies. 

In addition, CBBC also takes advantage of its expertise and insights to provide services to us vis-à-vis market advice, policy analysis, access advocacy from their unique perspectives. In a nutshell, Haleon has benefited from CBBC’s service in supporting our commercial success here in China. 

What are your ambitions and plans for the future in China? 

China is one of the most important markets for Haleon, and our consumer health business has been deeply rooted in the Chinese market for decades. 

Moving forward, we will continue to leverage our strengths of trusted science, deep human understanding and digitalisation to drive innovation and embrace the Chinese market based on China’s local needs and better empower Chinese consumers’ everyday health.

Haleon recognises that our own health and the health of our planet are inextricably connected and therefore has made a commitment to sustainability by reducing carbon emissions, making our packaging more sustainable and circular, sourcing, using and disposing of our ingredients responsibly, and reducing water and waste usage in manufacturing. We aim to reduce our net Scope 1 and 2 carbon emissions by 100% and our Scope 3 carbon emissions from source to sale by 42% by 2030; and will develop solutions for all product packaging to be recycle-ready by 2025.

What do you think China will look like in another 50 years?

We are very excited and confident about the future of the Chinese market. From our perspective, as the Chinese market opens up to further high levels, Chinese consumers’ demands for everyday health will increase, becoming more sophisticated and diversified.

In addition, with the achievement of the Healthy China 2030 and Double Carbon goals, China is poised for great success in improving healthcare accessibility and green transformation in the near future.

Haleon looks forward to continuing to contribute to the development of China over the next 50 years. We will also leverage Haleon’s unique strengths to play a key role in the fast-growing field of consumer health and better serve the daily health of the Chinese people.

The post In Conversation with Haleon appeared first on Focus - China Britain Business Council.

The size of the Chinese healthcare industry is second only to the US, reaching a value of RMB 7.82 trillion in 2019. British medical device manufacturers have traditionally taken a cautious approach to the China market due to IP concerns, competition risks and fear about language and cultural barriers. But the market opportunity is huge for those who strategically structure their approach, instead of treating the market like another non-core area and delegating all activities to their distributor.

This article introduces the key steps manufacturers should take to help their medical device get approved by the China regulator by being seen as safe and effective for China sales.

Step 1: Determine the approval pathway for your device for China

There are three broad pathways to get your medical device approved for sale into China:

1. Standard approval process with the National Medical Products Administration (NMPA)
2. Fast-track (also known as “green channel”) approval pathways
3. Alternative pathways via sales to special areas within Greater China – the Greater Bay Area or Hainan Island Pilot Zone – that may enable easier registration via subsequent standard or fast-track approval processes.

The three main approval pathways to register a medical device in China

The vast majority of imported medical devices will seek to apply via the standard pathway to NMPA in Beijing. To do this, products should first have home country approval. For higher-risk devices (class II or III – see below for more information about classification), approval in China will probably require a detailed clinical evaluation report to be prepared or a clinical trial in China to be undertaken.

For “fast-track” pathways, only the newly introduced “Innovative” approval pathway allows devices without home country approvals to submit for China approval. Success in such applications requires a China patent, as well as evidence that the product is a first of its kind for application into China.

Other fast-track (also known as “green-channel”) approval pathways in China include priority review or emergency approval applications. Emergency approvals are reserved for special situations like the Covid-19 pandemic, and specific categories or types of devices will be announced by the NMPA as eligible for application. Once approved for emergency use, subsequent renewals will require the standard full documentation similar to standard applications.

The alternative pathways of the Hainan Pilot Zone and the Greater Bay Area are frameworks enabling companies with home country approvals to sell in limited circumstances. This can aid the collection of real-world data on China populations, which can reduce eventual China clinical trial requirements for subsequent NMPA standard or “fast-track” applications.

Step 2: Classify the device into the appropriate risk class and establish whether China clinical trials are required

Your medical device will need to be registered in your home market before you can apply for China marketing approval, subject to the exceptions explained above.

The risk classification in your home country jurisdiction will often be similar to China’s three risk classes, with class I being the lowest risk and class III being the highest risk (although not necessarily equivalent). According to the NMPA, the degree of risk is assessed based on “the intended purpose, structural characteristics, pattern of use, status of use as well as whether the device is body contacting.” China tends to be more conservative than other countries and so risk classification can be up-classified depending on the type of device.

There is an extensive risk classification catalogue which is sufficient to determine the appropriate class for most medical devices, but according to your author’s experience, in roughly 5% of cases it is necessary to apply directly to the regulator for a determination.

How to classify a medical device in China

If your product is a class I medical device then it will go through a simple filing process in China. If it is a class II or class III product, then it must go through a registration process which means there is a review of the product documentation by the NMPA prior to marketing approvals.

Class II and III device applications will need to be exempt from clinical trials, rely on predicate device data or be supported by clinical trial data (see Figure 3 for whether a clinical trial may be required).

For companies that are unclear about whether China clinical trials are required, Cisema recommends preparing a feasibility study of the pathways and data available.

Step 3: Understanding the key steps for filing and registration

The filing process for class I is relatively straightforward and consists of a dossier preparation stage followed by submission to NMPA. This is represented in Figure 4 below. The total timeline is usually around 2-4 months.

Filing process for class I submissions in China

For class II and III medical devices, the registration process is longer and more rigorous. First, there is the documentation stage, including drafting of the product technical requirements (PTR), which is a key technical protocol outlining the local testing specifications and relevant China standards. Then follows local testing of product samples in China – a mandatory requirement – following by clinical evaluation drafting or clinical trials, before submission of the dossier to NMPA for review and approval.

In certain cases, a class II or III product may be expressly exempt from clinical trials in China. In such cases, a simplified clinical evaluation report or even no CER at all will be required.

Timeline of China registration of class II & III medical devices

Step 4: Select your local China representative

In parallel with the registration process, manufacturers will need to carefully consider the identity of their local authorised representative – more accurately known as the NMPA Legal Agent. Like the EU and US, applicants must be represented by a local China entity for the purposes of submission and approval in China.

Importing manufacturers have three options: distributor, local subsidiary or service provider. The distributor option is often the default, but manufacturers should be cautious of potential IP risks (a lot of production information needs to be provided to the NMPA Legal Agent as part of the application process – and the dossier must be submitted by the agent) as well as for flexibility and regulatory expertise following marketing approvals. The NMPA Legal Agent will be involved in the first import of the product for each new distributor named, so flexibility will be limited for such a huge market if there is one master distributor who in effect needs to approve the others.

Also, NMPA has increasingly moved to a whole of lifetime perspective rather than point-of-time approvals. This means there will continue to be ongoing updates and requirements during the product’s lifetime even after marketing approvals are obtained. A typical list of your NMPA Legal Agent’s services should cover adverse events and recall management, labelling and regulatory mandatory updates, standards updates, periodic reporting and more.

Unless manufacturers want to make a substantial investment in their own subsidiary in China, a better option is to nominate an independent service provider who has deep regulatory expertise and fewer conflicts of interest.

In summary, UK manufacturers should think strategically about their China medical device registrations but not be swayed by hearsay or general fears. Registration of your device in China is realistic and achievable with the right approach and investment. Only then can China’s vast market potential be realised.

The post How to get your medical device approved for sale in China appeared first on Focus - China Britain Business Council.

If there’s one thing that’s become abundantly clear in recent months, it’s that COVID-19 has significantly accelerated existing trends. The online sector has seen a huge boost in the right direction, for example. If you had to think of one more sector that could have benefited significantly from a global pandemic, you’d be right to think of the health industry. This leads us on to trend #1:

Plant-based food

China’s alternative meat market is growing fast as Chinese consumers pursue healthier diets. Even prior to the pandemic in 2019, consulting company Euromonitor predicted that China’s alternative meat market would be worth nearly $12 billion by 2023. Increasing numbers of big companies are latching onto this trend and tapping into the growing plant-based meat market: Beyond Meat and Starbucks have already launched plant-based food in China in 2020, and even KFC, a brand with meat in its name – talk about everyone getting on board!

And it’s not just Western brands, Chinese companies also want to enter this growing market. Xuerong, a leading fungus supplier in China, has announced that it will invest 14 million RMB into Vesta Food Lab, a Beijing-based food technology company dedicated to producing plant-based meat. One of the hottest Chinese noodle brands, Ramen Talk, recently launched a meat-free meat sauce. It sold 20,000 packages within a minute of its release on Tmall.

Emancipated female styles

As Chinese women become increasingly independent, so-called emancipated female styles have started to boom. Known in China as ‘sexually frigid’ fashion, young people have repurposed the term as a fashion statement that means they favour neutral, simple, and comfortable clothing styles. Chinese women are used to being described as ‘cute, pretty, gorgeous, sweet and quiet’ but many want to challenge this by adopting a gender-neutral style. This has nothing to do with sexual orientation, but is rather a way for them to define their own style and show their personal fashion tastes.

The movement represents a sense of liberation and a way for girls to express themselves with confidence. It has also shown the power of society in changing aesthetic standards. Brands such as COS are best positioned to take advantage of this trend.

Audio content

Since 2016, audio content in the form of podcasts, audiobooks and audio live streams has been growing rapidly in China. In fact, the value of the Chinese audiobook market is expected to hit a staggering 8.2 billion RMB in 2020 (iiMedia) with a jaw dropping 900 million users by 2023, according to iResearch.

During the pandemic, audio platforms Ximalaya FM, Qingting FM and Lizhi FM launched special channels related to Covid-19 so that users could listen to the latest news, advice and stories about medical staff.

Audio content is especially popular among commuters and students, and Ximalaya FM even launched a column for its younger audience who were all ears for Covid-19 messages recorded by their favourite celebrities. Recently, Tesla partnered with Ximalaya FM to provide access to it in its newest cars.

Subsidised shopping

In order to boost consumption and help China’s economy recover post-pandemic, e-commerce platforms and the Chinese government introduced vouchers for Chinese consumers and businesses. The government worked with Alipay and WeChat among others to inject billions of RMB back into various industries, including the travel and tourism industry, FMCG, automotive, fashion, and property. E-commerce platforms including Taobao, Pinduoduo and travel agency Fliggy also launched similar schemes.

‘10 billion subsidies’ has become a popular click-bait term to attract consumers by highlighting the extent of discounts available. Does this mean brands can’t win if they don’t offer discounts?

Domestic Chinese brands

While the demand for local brands had been growing in recent years, it was the Covid-19 travel and import restrictions that really propelled them to the top of Chinese consumers’ shopping lists. Not only has the quality of Chinese brands improved drastically in the last few years, but international trade tensions have played a part in the booming trend. The latter is not just driven by businesses and politicians, but also by Chinese consumers themselves. By purchasing domestic brands, they’re showing their national pride and are well aware that they are leveraging their consumption power to benefit their country.

Most recently, in light of the US’s potential WeChat ban, many consumers declared that they would show their loyalty to China by purchasing Huawei or another domestic mobile phone brands instead of an iPhone. E-commerce platform JD’s latest data also shows that 490 out of 572 high profile brands, which surpassed 100 million RMB in transaction volume from January to April 2020, were domestic.

Hop on board

The trend train is moving fast, so whether it’s the chance to partner with a domestic Chinese brand, offer vouchers, think of a way to turn your perfume into a podcast, take the stitches out of your figure-hugging dress, or support the veggie movement, there are plenty of opportunities for foreign brands to hop on and get creative. These trends look set to stay for a while.

Dao Insights publish the newest news, case studies and opinion articles on all things China. Take a look on their website and sign up to their bite-sized weekly newsletter.

The post Five consumer trends to watch in China in 2020 appeared first on Focus - China Britain Business Council.

Could you provide some background into your and CBBC’s experience within the baby food category?

Mei Chu: I currently lead CBBC’s consumer goods and creative industries in Shanghai and specialise in cross-category business collaborations to support UK companies in their China market development. Part of what we do at CBBC includes helping baby food brands from the UK develop their new sales channels in China. We support them on consumer insights and provide assistance on their in-market campaigns.

Prior to CBBC, I was the new product development lead at Nestlé and was the cross-border E-commerce team leader of its largest baby food brand in the China market.

What are some key differences between the Mother & Baby industry in China compared to that of Western countries? What about specifically in the baby food category?

MC: The Mother & Baby industry in China has its own unique culture. Mothers in China often seek out social platforms specifically for new mothers, where they can join communities. In these communities, the mothers can discuss their parenting experiences, obtain parenting advice and knowledge, or receive product recommendations. Recommendations or product reviews from their peers can be extremely important factors that mothers consider when making a purchasing decision. Because of this, these social platforms, such as Babytree or Mamabang, or other vertical platforms, such as Beibei or Mia, are very important for the Mother & Baby industry in China.

When it comes to the baby food category, the entire concept of how to feed or nourish babies is quite different when comparing Western countries to China, especially due to differences in culture, habits and general consumer backgrounds. In recent years, I would say that the way Chinese mothers are feeding their babies has been influenced by Western habits.

We can observe this by looking into the category trends. For instance, 20 years ago, the older generations of parents adhered more to the belief that self-made mushed rice is best for feeding babies. However, when looking at the current generation of Chinese mothers, we can see that they are more accepting of feeding their babies rice cereal products developed by brands. As a result, these mothers tend to be very loyal to the brand from which they buy their rice cereal products. Part of the reason for this change in approach to infant nutrition is also due to changes in lifestyle between past and current generations of parents, and the convenience of purchasing rice cereal products, rather than making their own rice-mush.

What would you say is a major developing trend in the baby food market?

MC: Many brands have started to expand their marketing focus beyond rice cereal, which has traditionally taken up the majority of sales. Brands are increasing investments in other baby food subcategories, for example, fruit puree and snacks. In more recent years, brands have begun to educate Chinese mothers on fruit puree products, going against the traditional belief that fresh fruits are better than ready-to-eat purees. Brand education, combined with the changing lifestyles of parents, has seen an increased need for more efficient and convenient methods of feeding young children. As a result, the newest generation of mothers are more accepting of feeding their children ready-to-eat purees, such as those sold by Ella’s Kitchen or Little Freddie.

Brand education, combined with the changing lifestyles of parents, has seen an increased need for more efficient and convenient methods of feeding young children

Because of the changes in feeding concepts and lifestyle, aside from rice cereal, consumers are showing a rise in demand for other baby food subcategories such as purees, baby snacks, and edible teethers.

What are some new product developments that have emerged in recent years in the baby food industry?

MC: Many brands are focusing on very specific sub-sectors of the baby food market. Brands are launching products that have specific features or functions. For instance, Nestlé launched their ‘low sensitivity + gentle protection’ product line, which is aimed at babies that may be sensitive to different types of more harsh ingredients. Some local brands have launched baby food products that they market as having been specifically developed for babies that were delivered through C-sections or born with low-birth-weights.

Another trend that has been a huge hit is A2 milk, which is a type of cow’s milk that has lower amounts of the A1 form of beta-casein protein and is claimed to better suit babies’ more sensitive guts. After the a2 Milk Company launched A2 milk into the market, other brands followed suit. Illuma launched its own version of milk products with the A2 claim, alongside Nestlé Nan. However, when it comes down to it, A2 milk is a very small sub-sector of the larger baby food market in China.

Goat milk is another subcategory that has seen some growth both through cross-border e-commerce and among local brands.

Have you seen a difference between how domestic and foreign infant nutrition brands approach the infant nutrition market in China?

MC: In the infant nutrition industry, local brands have quite a strong presence. Not only because they’re supported by the Chinese government, but also because they frequently position and market themselves as local brands that know and better understand the nutritional needs of local babies. One example is the brand Feihe, which frequently uses the claim ‘designed for Chinese babies’.

Local brands have quite a strong presence. Not only because they’re supported by the Chinese government, but because they position themselves as brands that better understand the nutritional needs of local babies.

On the other hand, imported foreign brands will often focus on two factors in their marketing. The first is the high quality of their products – these brands will emphasise their product origins and how their products have passed the strict standards of their country of origin. The second is the ‘premium’ status of the foreign brands. The tone and visuals used in the brands’ marketing efforts and campaigns will be focused on positioning the brand in the more ‘premium’ and higher priced market.

What insights can you share about what’s given key competitors in the baby food market an edge over the rest?

MC: As an example of a successful brand in the China market, Little Freddie started by focusing on one product type, puree. Puree is a category that generally has less customer loyalty. This is different to infant nutrition, where mothers do not like changing the brand after they start to use the brand’s products. Generally speaking, puree is considered a supplementary snack for Chinese babies, so it has low barriers of entry, even as it has low customer loyalty. Little Freddie was able to penetrate the market through its puree product lines, building up brand recognition in the China market. Only after becoming established, did Little Freddie begin to expand its product lines beyond purees, investing in baby snacks or rice cereals.

Do you have any suggestions for new brands coming into the China Baby Food market?

MC: For brands that are just entering the baby food category, one suggestion is to focus on recruiting one type of consumer or mother that suits the brand positioning and products, then continually provide brand education and recruit new mothers within that consumer segment.

As from the Little Freddie example, brands can find success by initially launching products in one subcategory, rather than launching multiple product lines at once. Doing so will allow the brand to focus its investment and penetrate the market, ensuring that the one product line succeeds before expanding into other subcategories.

Every year, new mothers are entering the market, so the most crucial aspect of this industry is for brands to start engaging with the mothers early on in their pregnancy, in order to influence them at the start of their preparation stage for a new baby. Continually recruiting and educating new consumers/mothers is always key in this industry.

The post Insights on the baby food category in China appeared first on Focus - China Britain Business Council.

The Covid-19 outbreak that spread around China at the start of the year – and the subsequent lockdown that kept people away from overcrowded hospitals – shifted the traditional Chinese notion of what healthcare is.

Unable to get to hospitals and be seen by doctors in person, patients of all ages turned to their smartphones in a bid to get the healthcare help they needed. Traditionally, patients in China have preferred to see a doctor face to face, ideally in a hospital setting. This is partly because they are aware many doctors outside of hospital environments don’t have many qualifications – most don’t even have a bachelors degree – but also because, according to traditional Chinese medicine, a doctor needs to be able to take the pulse of a patient before they can properly diagnose them.

Until recently, telemedicine was only a fledgeling industry. Even in tech-savvy America, a study showed that 82% of consumers did not use such services prior to the outbreak. In China, numbers were similarly low. The virus changed all that overnight. Both the public’s desire for medical consultation and the government’s need to offload the healthcare burden created a perfect scenario for this fringe offering to jump right into the mainstream.

One of the major players in this new market is JD Health – a subsidiary of the e-commerce platform JD.com. Not long ago, they were unknown to all but a small number of healthcare professionals and private patients. Earlier this summer, 1.6 million people tuned in to a livestream talk by one of the platform’s top cardiologists.

According to traditional Chinese medicine, a doctor needs to be able to take the pulse of a patient before they can properly diagnose them.

The platform’s consultations have risen tenfold since the outbreak, the company’s CEO, Xin Lijun, claimed. Xin told the Economist that he believes the outbreak moved the telemedicine market forward by five years.

But that doesn’t mean it wasn’t already expanding rapidly. Ping An Good Doctor, run by the major insurer Ping An, said that it already had 300 million registered users in September 2019 – months before ‘Covid’ was even a word people knew.

However, most of these 300 million users were registered to simply book appointments with specialists in hospitals rather than being there to engage in online appointments. Many more of the estimated 1,000 registered telemedicine apps also limit their service to just booking appointments or delivery of medicines.

The online healthcare market is now expected to be worth 200 billion RMB, according to Beijing consultancy Analysys. A significant growth on that 158 billion RMB that was expected pre-Covid.

China’s healthcare system reimburses patients for the drugs they buy from doctors. However, pre-Covid, the national health insurance scheme didn’t make reimbursements for drugs bought online or through telemedicine apps in all but the rarest cases. Online doctors were also not permitted to write prescriptions, only re-issue repeat prescriptions. The government has been cautious about how much authority online doctors can have, in a still under-regulated digital environment, where fake medicines and even fake doctors are not unheard of. Even as recently as 2017, a government policy paper recommended that online hospitals be shut down.

Even as recently as 2017, a government policy paper recommended that online hospitals be shut down.

However, in 2019, the government started to lift the bans on online hospitals, allowing some sales of prescription drugs. By February 2020, China’s Ministry of Health had said internet-based hospitals could fully diagnose and treat patients, and were actively encouraging the public to receive online consultations. Reimbursements as per the national health insurance schemes were also introduced in many major cities including Shanghai and Wuhan. The floodgates were opening.

Many of China’s major tech companies have been quick to fill the void. JD.com’s JD Health, Alibaba’s Ali Health and Tencent’s WeDoctor dominate the landscape and have attracted new users through free consultations and online clinics. In a further bid to gain good will (and sign ups), Ping An’s Good Doctor dispatched free masks, and Dingxiang Doctor’s real-time heat tracker tracked Covid-19 patients across China and attracted 2.5 billion views. The big companies are spending well to attract new audiences and make their mark on the sector. Bringing in new customers – especially the older communities who would not usually turn to their smartphones when sick – will likely prove lucrative in the long run.

“Historically, automation tends to happen when economic difficulties coincide with maturing technologies,” says AI expert Kai Fu Lee. “Companies feel they need to cut costs by slashing jobs and trying out new technologies. And once a company has replaced an employee with a robot and proven its efficacy, it is unlikely to go back.”

Not only will it reduce hospital wait times and increase convenience – especially for rural patients – but telemedicine will also lead to an increase in trust in local doctors who play a GP type role. Experts expect that half of those who have downloaded and used a telemedicine apps during Covid will continue to use them after the outbreak is over.

A major take up of telemedicine could also lead to lower medicine costs  as more middlemen are removed from the supply chain and the big buyers such as Ali Health and Ping An Good Doctor can buy in bulk. This, in turn, might reduce private insurance costs or provide a new offering of e-medicine insurances. The potential for this lucrative sector has seen the stock prices of companies skyrocket. Ping An Healthcare and Ali Health’s share prices are up by 33% and 74%, respectively.

There are still issues around doctors lacking qualifications and the fact that it is harder to diagnose patients without seeing them in person. Providing quality controlled medicines and ensuring there is a suitable infrastructure in place to deliver them safely is key. Regulations need to be imposed by the government to allow reimbursements for telemedicine users. However, as the popularity and trust in telemedicine increases, this will start to fall into place. Government support and regulations to ensure safety are imperative. But when implemented, it will take a huge strain off the ailing hospitals and their under-resourced staff.

Both the CDC and WHO are advocating for a wider use of telemedicine, and for early winners in this market place the scope for growth – just like the diseases it was popularised to stop – will not be limited by national borders.

Watch CBBC‘s recent webinar with Cisema to learn more about telemedicine or contact CBBC‘s healthcare leads jamie.shaw@cbbc.org or wendy.wang@cbbc.org.cn for more information. 

The post The rise of telemedicine in China appeared first on Focus - China Britain Business Council.

I am sick. What do I do?

Public insurance and steps toward universal healthcare

Approximately 95% of China’s population is covered by a public insurance programme. These are made up of voluntary public insurance and mandatory public insurances.

Urban Employee Basic Medical Insurance is financed mainly from employee and employer payroll taxes, with minimal government funding. Participation is mandatory for workers in urban areas. In 2018, 316.8 million had employee-based insurance.

Urban-Rural Resident Basic Medical Insurance covers rural residents in addition to urban, self-employed individuals, children, students, elderly adults, and others. The insurance is voluntary at the household level.

In 2018, 897.4 million people were covered under one of these two insurance schemes. The Urban-Rural Resident Basic Medical Insurance is financed through annual fixed premiums, meaning individual premium contributions are minimal, and government subsidies for insurance premiums make up the majority of insurer revenues. In regions where the economy is less developed, the central government provides a much larger share of the subsidies than provincial and prefectural governments do. In more-developed provinces, most subsidies are locally provided (mainly by provincial governments).

Permanent foreign residents living in China are entitled to the same coverage benefits as citizens. However undocumented immigrants and visitors are not covered by publicly financed health insurance.

So what exactly is covered by public health insurance?

The benefits package in each case is defined by local governments, and therefore varies from province to province, and from city to city. But publicly-financed basic medical insurance typically covers:

• inpatient hospital care
• primary and specialist care
• prescription drugs
• mental health care
• physical therapy
• emergency care
• Traditional Chinese Medicine

A few dental services (such as tooth extraction, but not cleaning) and optometry services are also covered, but most are paid out-of-pocket. Home care and hospice care are often not included either. Durable medical equipment, such as wheelchairs and hearing aids, is also often not covered.

Preventive services, such as immunisation and disease screening, are included in a separate public-health benefit package funded by the central and local governments; every resident is entitled to these without copayments or deductibles.

Maternity care is covered by a separate insurance programme but is currently being merged into the basic medical insurance plan.

Cost-sharing, co-payments and reimbursements

Inpatient and outpatient care, including prescription drugs, are subject to different deductibles, co-payments, and reimbursement ceilings depending on the insurance plan, region, type of hospital (community, secondary, or tertiary), and other factors:

• Co-payments for outpatient physician visits are often small (RMB 5–10), although physicians with professor titles have much higher co-payments.
• Prescription drug co-payments vary: in 2018 in Beijing, this was between 50% and 80% of the cost of the drug, depending on the hospital type.
• Co-payments for inpatient admissions are much higher than for outpatient services.

There are no annual caps on out-of-pocket spending. In 2018, out-of-pocket spending per capita was RMB 1,186 (£132) – representing about 28% of total health expenditures. A fairly high percentage of out-of-pocket spending goes on prescription drugs.

The public insurance programmes only reimburse patients up to a certain ceiling, above which residents must cover all out-of-pocket costs. Reimbursement ceilings are significantly lower for outpatient care than for inpatient care. For example, in 2018, the outpatient care ceiling was RMB 3,000 (£332) for Beijing residents with Urban-Rural Resident Basic Medical Insurance. In comparison, the ceiling for inpatient care was RMB 200,000 (£22,167). Annual deductibles have to be met before reimbursements, and different annual deductibles may apply for outpatient and inpatient care.

Preventive services, such as cancer screenings and flu vaccinations, are covered by a separate public health programme. Children and the elderly have no co-payments for these services, but other residents have to pay 100% of these services out-of-pocket.

People can use out-of-network health services (even across provinces), but these have higher co-payments.

Safety nets

For individuals who are not able to afford individual premiums for publicly-financed health insurance, or cannot cover out-of-pocket spending, a medical financial assistance programme – funded by local governments and social donations – serves as a safety net in both urban and rural areas.

The medical financial assistance programme prioritises catastrophic care expenses, with some coverage of emergency department costs and other expenses. Funds are used mainly to pay for individual deductibles, co-payments, and medical spending exceeding annual benefit caps, as well as individual premiums for publicly financed health insurance.

In 2018, 76.7 million people (approximately 5.5% of the population) received such assistance for health insurance enrolment, and 53.6 million people (3.8% of the population) received funds for direct health expenses.

How healthcare is provided

Primary care

Primary care is delivered primarily by:

• Village doctors and community health workers in rural clinics
• General practitioners (GPs) or family doctors in rural township and urban community hospitals
• Medical professionals (doctors and nurses) in secondary and tertiary hospitals.

In 2018, there were just 506,003 public primary care facilities and 437,636 private village clinics across China. Village doctors, who are not licensed GPs, can work only in village clinics. In 2018, there were 907,098 village doctors and health workers. Village clinics in rural areas receive technical support from township hospitals.

Patients are generally encouraged by local governments to seek care in village clinics, township hospitals or community hospitals, because cost-sharing is lower at these than at secondary or tertiary hospitals. However, residents can choose to see a GP in an upper-level hospital if they wish. Signing up with a GP in advance is not required, and referrals are generally not necessary to see outpatient specialists. There are few localities that use GPs as gatekeepers.

In 2018, China had 308,740 licensed and assistant GPs, representing 8.6% of all licensed physicians and assistant physicians. Unlike village doctors and health workers in the village clinics, GPs rarely work in solo or group practices; most are employed by hospitals and work with nurses and non-physician clinicians, who are also hospital employees.

Fees

Primary care in government-funded health institutions are regulated by local health authorities and the Bureaus of Commodity Prices. Primary care doctors in public hospitals and clinics cannot bill above the fee schedule. To encourage nongovernmental investment in health care, China began allowing non-public clinics and hospitals to charge above the fee schedule in 2014.

Village doctors and health workers in village clinics earn income through reimbursements for clinical services and public health services such as immunisations and chronic disease screening; and government subsidies are also available. Incomes vary substantially by region. GPs working at hospitals receive a base salary along with activity-based payments, such as patient registration fees. With fee-for-service still the dominant payment mechanism for hospitals (see below), hospital-based physicians have strong financial incentives to induce demand. It is estimated that wages constitute only one-quarter of physician incomes; the rest is thought to be derived from practice activities. No official income statistics are reported for doctors.

With fee-for-service still the dominant payment mechanism for hospitals (see below), hospital-based physicians have strong financial incentives to induce demand.

In 2018, 42% of outpatient expenses and 28% of inpatient expenses, on average, were for prescription drugs provided to patients in hospitals.

Hospitals: 

Hospitals can be public or private, non-profit or for-profit. Most township hospitals and community hospitals are public, but both public and private secondary and tertiary hospitals exist in urban areas.

Rural township hospitals and urban community hospitals are often regarded as primary care facilities, more like village clinics than actual hospitals.

In 2018, there were approximately 12,000 public hospitals and 21,000 private hospitals (excluding township hospitals and community hospitals), of which about 20,500 were non-profit and 12,600 were for-profit.

Hospitals are paid through a combination of out-of-pocket payments, health insurance compensation, and, in the case of public hospitals, government subsidies. These subsidies represented 8.5% of total revenue in 2018.

Mental health services

Both outpatient and inpatient mental health services are covered by both public health insurance programs (Urban Employee Basic Medical Insurance and Urban-Rural Resident Basic Medical Insurance). In 2018, there were 42 million mental health patient visits to special psychiatric hospitals; and on average, one psychiatrist treated 4.7 patients per day.

Long-term care and social support

Long-term care and social support are not a part of China’s public health insurance schemes. In accordance with Chinese tradition, long-term care is provided mainly by family members at home. There are very few formal long-term care providers, although private providers (some of them international entities) are entering the market, with services aimed at middle-class and wealthy families. Family caregivers are not entitled to financial support or tax benefits, and long-term care insurance is virtually non-existent; expenses for care in the few existing long-term care facilities are paid almost entirely out-of-pocket.

In accordance with Chinese tradition, long-term care is provided mainly by family members at home.

Governments encourage the integration of long-term care with other health care services, particularly those funded by private investment. There were 3.8 million beds available for elderly and disabled people in 2016.

Some hospice care is available, but it is normally not covered by health insurance.

Private health insurance

Purchased primarily by higher-income individuals and by employers for their workers, private insurance can be used to cover deductibles, co-payments, and other cost-sharing, as well as to provide coverage for expensive services not paid for by public insurance.

The total value of private health insurance premiums grew by 28.9% per year between 2010 and 2015. In 2015, private health insurance premiums accounted for 5.9% of total health expenditure. The Chinese government is encouraging development of the private insurance market, and some foreign insurance companies have recently entered the market as well.

Main government bodies

The National Health Commission is the main national health agency in China. The commission formulates national health policies; coordinates and advances medical and healthcare reform; and supervises and administers public health, medical care, health emergency responses, and family planning services. The State Administration of Traditional Chinese Medicine is affiliated with the agency also.

The State Medical Insurance Administration oversees the basic medical insurance programmes, catastrophic medical insurance, a maternity insurance programme, the pricing of pharmaceutical products and health services, and a medical financial assistance programme.

The National People’s Congress is responsible for health legislation. However, major health policies and reforms may be initiated by the State Council and the Central Committee of the Communist Party, and these are regarded as law.

The National Development and Reform Commission oversees health infrastructure plans and competition among health care providers.

The Ministry of Finance provides funding for government health subsidies, health insurance contributions, and health system infrastructure.

The newly created State Market Regulatory Administration includes the China Drug Administration, which is responsible for drug approvals and licenses.

The China Center for Disease Control and Prevention, although not a government agency, is administrated by the National Health Commission.

The Chinese Academy of Medical Science, under the National Health Commission, is the national centre for health research.

Spending

In 2018, China spent approximately 6.6% of GDP on health care, which amounts to RMB 5,912 billion (USD 1,665 billion). Twenty-eight percent was financed by the central and local governments, 44%  was financed by publicly funded health insurance, private health insurance, or social health donations, and 28% was paid out-of-pocket.

This report was commissioned and first published by the Commonwealth Fund. More information can be found at its website To learn more about China’s healthcare system contact CBBC‘s healthcare lead wendy.wang@cbbc.org.cn for more information.

If you are a British company in the healthcare industry, call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can help you find the perfect partner to support your growth in China. 

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China’s healthcare system is complex. As we can see from our recent article produced by the Commonwealth fund, the quality of care people receive depends on a patient’s type of job, region of residence, and income bracket. It is a far cry from the universal healthcare many European patients have come to take for granted, and nearer to the employment-based insurance programmes common in America.

Trying to keep nearly a billion and half people healthy is not easy. Especially with an ageing population and a limited amount of funding. China’s healthcare spending is 6.57% of GDP (in 2018) compared with the UK’s at 9.6%. In 2018 China spent £470 per person, compared with £2,989 in the UK in 2017.

The majority of residents are covered by one of the public insurance programmes, which are either paid for by employers and employee contributions or in the case of rural residents or the elderly and unemployed, paid by local governments with voluntary contributions.

However, relatively low caps on treatments and co-payments on medicines mean that patients are still paying for a sizeable chunk of care themselves in out of pocket expenses. Although this has fallen from about 60% in 2003 to around 30% today it can still be crippling for many.

“Public insurance now covers about 92% of the population, but urban and rural resident schemes are still not very generous and so many people still have significant out of pocket payments,” says Jane Duckett of Glasgow University who has been researching China’s reaction to the healthcare crisis.

For the terminally ill or those involved in serious accidents, that may mean that only the independently wealthy are able to afford life-saving treatment. Many Chinese residents with cancer choose to avoid treatment as the costs would not only mean spending all their savings but leaving their children in major debt.

Many patients with chronic illnesses chose to avoid the costs of care so as not to financially burden their families

The growing middle class is increasingly investing in private healthcare, in a bid to cover the costs that exceed the government-imposed reimbursement caps offered as part of their public health insurance, and to pay the difference in co-payments. The number of private hospitals is also on the rise as middle-class patients bypass the state system entirely.

The government is also pushing Traditional Chinese Medicine (TCM) as a low-cost alternative to expensive, imported and patented western drugs. However, there are many dangers in promoting medicine that has little regulation when it comes to quality and dosage, and even less research into whether the benefits outweigh the risks. Although research is being undertaken, TCM is certainly not a viable alternative to tried and tested western medicine for all but the most minor of ailments.

The recent Covid pandemic has shown that China’s healthcare system is robust enough to deal with a major outbreak. However, just as in other parts of the world, people were told to stay away from hospitals unless they had an emergency, which may have led to the number of cases and deaths being under-reported and those with non-Covid related illnesses not getting the care they needed.  

China’s love of infrastructure and hardware has led to investment being ploughed into large urban hospitals rather than rural healthcare facilities and the training of medical workers.

China claims to have 2.6 doctors for every 1,000 people, but according to the WHO, half of those doctors don’t have a bachelors degree, and in rural areas, the number of qualified doctors is as low as 10-15%. There is also a shortage of nurses, with just one nurse per doctor in China compared to three in the UK.

Primary care clinics, such as GPs – that are supposed to handle minor ailments and release the burden on hospitals ­– are almost non-existent in China. Those that exist are underfunded and not as well trusted as hospitals. A mere 5% of doctors in China act as GPs, meaning those with any kind of sickness turn up at the doors of a hospital.

This year’s pandemic will lead to major changes in China’s healthcare system. The central government will likely invest more in healthcare and continue its pro-TCM campaign. Private insurance companies that previously had a relatively low uptake will see a growth in demand. And there will be a rise in telemedicine. Whether the telemedicine boom that has been visible in the first half of this year will continue apace is yet to be seen. Telemedicine in China has many top-down restrictions on what can be diagnosed and by whom, and which medicines can be prescribed. From the bottom-up there are also challenges, as culturally, Chinese patients expect to have their pulse and temperature taken by a doctor (often versed in TCM) before they will trust them.

China needs to invest more money in healthcare, yes, but it needs to invest in soft rather than hard skills. This means more grassroots investment into primary care. Training of nurses and doctors to keep all except emergency and seriously ill patients clear of the hospitals. Traditional Chinese medicine could well be used as a complementary addition to western medicine, but without major research and regulation, it cannot be a truly effective alternative. Tele-medicine and online diagnosis will go a long way towards easing the burden on overstretched doctors in busy hospitals, but legislation needs to ensure doctors are qualified in order to foster trust among their patients, and regulation needs to be eased to permit them to prescribe medicines safely and more effectively.

For more information about China’s healthcare system contact jamie.shaw@cbbc.org or Wendy.Wang@cbbc.org.cn

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