Taking the First Step
As with most mature markets, China is imposing increasingly rigorous regulations on medical technology, in order to provide greater protection and transparency to the public. Here we walk you through the key aspects in organising your local operations:
Each piece of medical equipment needs to be registered with the China Food & Drug Administration (CFDA), a lengthy process with average lead times of 12-24 months depending on the device’s class. Once the product license is obtained, it has a validity of only 4 years (recently increased to 5 years to offset prolonged registration times). You are required to renew the license before expiry, a process that will take a further 6 to 9 months to complete. Moreover, each product must have Chinese language manuals and labels in order to be sold in the domestic market.
Simply due to the sheer volume of regulations in this space, it is almost impossible to tackle these without professional help from a competent partner or agent, who has a thorough understanding of not only the products, but also the regulatory requirements. A strong partner will greatly facilitate the introduction of the products to the Chinese market.
A special trading license and customs certificates are required for import and sales of medical devices in China. Some agents specialize in the import of medical devices and equipment and are familiar with the optimal tariff classification groupings of the main products, accessories and spare parts. Some international companies offer technical training to their agents so they can answer custom queries with ample knowledge. Moreover, an agent with an excellent custom enterprise classification, ‘AA’ being the highest obtainable rating, can greatly facilitate import of the products. If you run an exchange and repair program within China, the same agent will be able to design a solution to re-import the products at the repair value.
Customer Service and Warehousing
Many medical technology companies have set up showrooms and repair centres in Hong Kong or China to support their business development activities, offer product training and improve customer service. These companies can consider holding local stock of their most popular items to reduce lead times, as these can be transported to their customers more readily.
There are several alternatives for warehousing within Hong Kong, Mainland China or in a bonded zone in China. A Hong Kong warehouse offers the most flexibility as products, which are still in the process of registration, can be stocked here and used for product education before official approval. Products that are stocked in a Mainland China warehouse will have cleared customs already, therefore ensuring the shortest lead time to the customer. A repair centre and warehouse in a bonded zone can serve as the regional service hub for customers across Asia, including China.
Working with Distributors and Dealers
For international companies, it is essential to run proper and careful due diligence on local dealerships before enrolling them and granting them any credit terms. The due diligence process should cover the distributor’s or dealer’s track record including general business practices, custom compliance and payment history. Some of the dealers may not have own import licenses and will use agents for import and domestic sales adding another layer to the supply chain.
The medical device industry in China is an increasingly competitive market and dealers often offer multiple brands. As many hospitals procure their instruments via a bidding process, we encourage medical technology companies to forge close partnerships with their dealers and offer them best possible local support to increase the chances of winning the bid.
With practical experience in advising and supporting medical technology companies, Fiducia can help you grow in this promising yet challenging market. Email us at email@example.com for more information.