Core Summary
For decades, European medical device (medtech) companies viewed China as a "market of tomorrow"—nice to mention in annual reports but not a top priority. Today, they’re rethinking everything: China is no longer just a market. It’s the world’s second-largest medtech market (growing 6% yearly), a hotbed of fast-improving local competitors, a "gym" that forces firms to get better to stay global, and a place where localization is no longer optional. The biggest question now: If we can’t compete in China, can we compete anywhere else?
1. China’s Market Is Too Big to Ignore (But It’s Getting Harder to Win)
China’s medtech market is huge—second only to the U.S.—and growing because its population is aging (more people need medical devices like MRI machines or heart stents) and healthcare spending is rising. But here’s the catch: the most profitable products are exactly the ones China wants to make locally.
The government uses Volume-Based Procurement (VBP)—think of it as bulk buying for hospitals where price is the main factor. If your product is imported from Europe, it’s way more expensive than local alternatives, so you lose the tender. Even niche products aren’t safe: once they become profitable, local firms jump in, close tech gaps, and drive prices down. Ignoring China isn’t an option anymore—you have to figure out how to play here.
2. Localization Is No Longer a Choice (It’s the Key to Access)
China’s government wants its own medtech industry to lead. Policies like the 14th and 15th Five-Year Plans push hospitals to buy domestic products. The EU has complained this is unfair, but China retaliated with restrictions on European suppliers.
For European firms, this means: if you want to sell to Chinese hospitals (the biggest buyers), you have to localize. Localization can be:
- Making products in China (e.g., Siemens Healthineers has a Shenzhen factory with 80% local parts, so it can compete in VBP tenders).
- Partnering with local companies for manufacturing or distribution.
- Licensing your tech to Chinese firms.
No localization = no access to most of the market.
3. China Is Your "Corporate Gym"—Stay Fit or Fall Behind
Chinese medtech firms like Mindray are now global players: they make 3,000+ devices, sell to 190 countries, and aim to be top 10 globally by 2030. They invest more in R&D than many European firms and can develop products super fast (one European company said a Chinese partner built a whole product faster than they could change their packaging!).
If you don’t operate in China, you miss out on seeing what these competitors are doing. One day, they might show up in Europe and undercut you—just like Chinese EVs did. BMW’s CEO put it best: China is a gym. If you don’t work out there, you get out of shape. For medtech, this means: compete in China to stay competitive globally.
4. Choose the Right Structure (And Plan for Exits!)
Many European firms use WFOEs (wholly foreign-owned enterprises) in China—they give full control but aren’t enough if you’re just importing products (you’re still seen as an importer). For smaller firms, partnerships (joint ventures or strategic alliances) are a way to get local access, but you need to:
- Decide who controls the business and ensures compliance.
- Protect your IP (China’s IP laws are stronger than many think, but you need to structure deals carefully).
- Plan for exits upfront: don’t wait until things go bad—agree on exit terms at the start.
A hybrid model works well: keep your WFOE as a base, then partner with local firms for specific products or markets. This gives you control and flexibility.
5. Geopolitics Are Making Things Tricky (Inside vs Outside China)
Geopolitical tensions are splitting the market into "inside" and "outside" China. The EU found that 53% of Chinese public tenders now ban imported devices (up from 36% in 2022). If you’re only exporting to China, you’ll miss out on most of the market.
The private hospital market is still open to imports, but it’s smaller. So European firms have to choose: do they invest in local operations (to get access to public tenders) or stay outside (and limit their growth)?
The bottom line: The China strategy you used 10 years ago won’t work in 2026. You need to adapt to the new reality—China is now a critical part of your global success.
Final Takeaway: For European medtech firms, China isn’t just a market anymore. It’s a place to grow, learn, and stay competitive. Ignore it, and you risk falling behind globally. Adapt, and you can turn challenges into opportunities.