China Opens Door To Foreign Firms, Manufacturing Locally, Seeking Access To The Government Procurement Market

More and more device purchasing in China is done via government tenders and procurement.

China is now signaling it may ease rules that prohibit foreign companies from obtaining lucrative government procurement deals. That could be good news for foreign medical device manufacturers trying to crack the world’s second-largest device market.  For the past several years, the Chinese government has moved consistently in the opposite direction, increasingly favoring Chinese brand products made locally,  during local tenders.

In October, China’s finance ministry officially notified local provincial China governments that foreign device suppliers who produce their products in China must be permitted “to participate fairly in government procurement.”

The notification came after China’s bid in September to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The Partnership prohibits member governments from discriminating against goods and services from other member economies in awarding procurement contracts.

If China follows through, that would open the vast government-managed medical device market to non-Chinese companies who make products locally, barring local governments from setting conditions on the national ownership of products or the location of suppliers shareholders.

In addition, China has limited the number of imported products in many of its provinces.  In some provinces, the number of imported foreign devices allowed has been reduced by over 50%.

But some device leaders in the foreign business community in China remain skeptical that the notice represents more than posturing to increase China’s chances of inclusion in the trade deal.