Chinese medical-device makers are expanding into overseas markets with increasingly high-end products, driven by price advantages and a fierce domestic market, although risks from tariffs may cloud their prospects.
Customs data showed that in the growing sector of China’s medical product exports, high-end devices, such as surgical robots and artificial joints, are gradually gaining share from lower-end products, including syringes, needles and gauze.
Exports of devices in class III – the highest-risk and most strictly regulated category – reached US$3.9 billion in the first seven months of the year, representing 32.37 per cent of the total, up from 28.6 per cent in 2018.
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Meanwhile, exports within the low-risk class I medical device category, which includes syringes, needles and gauze, made up 25.27 per cent of the total export share from January to July, down from 30.55 per cent in 2018.
Overall, China shipped US$12.1 billion worth of medical devices across 49 items in the first seven months of the year, representing an increase of 2.36 per cent year on year.
Much like China’s new energy firms, medical device manufacturers are increasingly seeking growth abroad due to their affordable prices and intense competition at home.
“We have to expand to overseas markets to remain profitable as the competition in the domestic market is way too fierce,” said an employee surnamed Jiang at an advanced medical device company in Shenzhen, who declined to disclose his full name due to the sensitivity of the information.
Chinese medical companies have struggled to maintain profitability domestically, with the overall operating income of 124 medical device companies having dropped by 26.68 per cent year on year last year, according to Chinese financial data provider Choice.
Companies that continue to see revenue growth, though, have typically expanded their overseas revenues and increased their share of overseas markets, according to a report by Chinese financial media TMTPost in June.
“Our company has seen a significant surge in overseas business since 2023, especially in Europe, Latin America, Southeast Asia and Turkey,” Jiang added.
“Many Chinese products match the quality of the EU or US ones, but are 20 to 30 per cent cheaper, which is why over half of our company’s orders last year came from developing markets seeking more affordable options.”
Alexander Brown, an analyst with the Mercator Institute for China Studies (Merics), said the increasing share of class III device exports highlighted the advancing capabilities of Chinese MedTech firms in producing more advanced products, driven by their desire to generate profit and cheaper pricing.
“Their expansion into low- and middle-income economies, such as in Latin America and Asia, will benefit from governments there prioritising low costs over other factors,” Brown said.
The United States remains the largest destination for China’s overall medical device exports, accounting for 18.47 per cent from January to July, with 21 per cent in the advanced class III device category, according to customs data.
During the same period, 14.24 per cent of China’s medical devices were shipped to the European Union (EU), while 8.2 per cent were shipped to the Association of Southeast Asian Nations.
China’s expansion in the global medical device industry has gained momentum, and since 2021, it has made up two-thirds of Chinese healthcare investments in Europe.
The healthcare industry has also emerged as the second-largest sector for Chinese investment in Europe, trailing only behind electric vehicle-related foreign direct investment, according to a report by Rhodium Group in June.
China’s global market share of medical technology products rose 3 per cent by value in 2000 to 12.4 per cent in 2021, according to a report by Merics in November.
Meanwhile, the US share fell from 36.5 per cent to 22.5 per cent during the same period, the report added.
China also took 11 per cent of global exports in terms of advanced diagnostic imaging products, according to Merics, indicating significant state subsidies towards the industry.
Geopolitics, though, present a major risk for Chinese medical companies seeking to expand internationally, and firms are likely to see growing pushback in advanced economies such as the US and the EU, Merics’ Brown added.
“The substantial financial support provided to indigenous Chinese firms poses a serious challenge to foreign MedTech firms,” he said.
“This means some foreign governments, eager to safeguard the long-term competitiveness of their domestic MedTech companies, have begun to take countermeasures.”
Chinese medical manufacturers have already begun to encounter more trade barriers, with the EU initiating an investigation into China’s medical device purchases in April, citing concerns over unequal market access.
And in May, the US announced tariffs on over 100 Chinese products, including medical equipment like respirators and masks.
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