Throughout Asian societies, low priority has generally been accorded to dental care. With limited financial resources and little value attached to the appearance of teeth, the vast majority of Asians have traditionally considered dental care a cosmetic luxury. However, as the Asia Pacific region experiences the world’s most dynamic economic boom in recent history, Asian consumer demands have become increasingly Western in taste, Adopting Western standards of beauty and personal care, Asians have become steadily increasing their interest in preventive and cosmetic dental care.
While procedures involving orthodontics or dental implants were previously unheard of in these countries, many Asians have begun to clamor for the best and most advanced dental equipment the West has to offer. This is a far cry from the days of Chairman Mao, who was reputed never to have brushed his teeth, believing a simple rinse of tea would do the trick. As Asians jump on the bandwagon of healthy teeth and perfect smiles, Western manufacturers of dental equipment are presented with unprecedented business opportunities.
While the Asian Pacific region as a whole has experienced extremely rapid development, this growth has been non-uniform. Significant disparities exist in the level of economic development reached in the various countries. When combined with the diversity of cultures, these differences result in a distinct dental market for each country. Manufacturers of dental equipment need to recognize these distinctions in order to determine which countries currently provide the greatest opportunities for their products. This article will review the unique aspects of three Asian markets for dental equipment: Japan, Singapore, and Hong Kong.
JAPAN: THE LARGEST DENTAL MARKET IN ASIA
With an advanced economy and the highest per capita income in Asia, Japan’s market in some ways resembles those of many Western nations. Beyond its stage of economic development, however, the similarities quickly begin to disappear and the complexity and difficulty of doing business in Japan becomes more evident.
Japan’s well-established domestic dental manufacturers hold a commanding 79.2% market share. Of the import market, US companies hold a 40% share, with various European countries, led by Germany, taking 45%. Despite the small proportion held by foreign manufacturers, the sheer size of the dental market – $781 million in 1990 – must be acknowledged. In order to tap into this, however, one must first understand the potential obstacles to market penetration.
It is critical that foreign manufacturers wishing to export to Japan are familiar with the National Health Insurance (NHI) system, which has a significant impact on the dental equipment market. Under this system, coverage is exclusively geared towards acute dental care, with 70% of these costs being covered by insurance. Compensation for preventive and cosmetic care, however, is not provided. Consequently, this limited coverage may deter individuals from seeking dental care that falls outside the compensation scheme.
Although this insurance system may seem discouraging to dental equipment manufacturers, the Japanese are placing an increasing emphasis on the appearance of their teeth. They are therefore more willing to pay for non-acute dental care out of their own pockets. Evidence of this trend is seen in the disproportionately large growth being performed in urban centers. An estimated 20% of all dental work performed is not reimbursable under NHI, and in metropolitan areas this number is estimated to be as high as 50%. Most of the newly established dental facilities are being located in metropolitan areas, such as Tokyo and Osaka, to accommodate this increase demand.
While limited NHI coverage may only mildly inhibit the demand for dental care, government regulation can sometimes create significant difficulties in importing foreign products into Japan. Obtaining government product approval and licences to import dental equipment is a complicated process. In some cases, the Ministry of Health and Welfare may require that extensive clinical trials be conducted before product approval is awarded. The entire process can take from two months for equipment using existing technology, to a year and a half for equipment incorporating new technology. In addition to the intricacies of government regulations, the Japanese business culture can make it difficult, time-consuming and expensive to set up independent operations in Japan. In most cases, it is much easier to penetrate the market via local agents or distributors.
Although the complexity of doing business in Japan may initially seem daunting, foreign manufacturers should not overlook this market – if only because of its sheer size. As the Japanese become increasingly conscientious about their teeth, sectors such as cosmetics dentistry and orthodontics stand to gain dramatically, and simultaneously boost the overall market for dental equipment.
SINGAPORE: S.E. ASIA’S HIGH-TECH DENTAL HUB
Despite a population of only three million people, Singapore provides some of the most advanced dental care in Asia. With relatively Western standards of health and beauty and the second-highest per capita income in Asia, Singapore’s demand for the best and most sophisticated dental care is strong. According to a 1990 survey conducted by the Singapore Dental Association, nearly 45% of the population visit the dentist twice a year. This concern for healthy teeth is also shown by Singapore’s high dentist-population ratio of 1:5,000.
The government of Singapore has played a significant role in the promotion of healthy teeth. Through extensive advertisements, exhibitions and classroom education, the Ministry of Health actively encourages residents to practise proper oral hygiene.
Unlike Japan, Singapore produces virtually no dental equipment domestically with competition among foreign imports strong. The Singapore government has created an environment highly conducive to bringing foreign-manufactured dental products into the island. In contrast to other countries, obtaining product approval in Singapore is a fairly simple and straightforward process. In many cases, product approvals are not even required. In addition, intellectual property rights tend to be strictly enforced and import tariffs for dental equipment are virtually non-existent.
With such high standards of dental care, Singapore has become Southeast Asia’s dentistry centre. Many residents of the neighboring countries, including Indonesia, Malaysia, Thailand and the Philippines, travel to Singapore on a regular basis to receive the best dental treatment available in the region.
Although the quality of dental care in Singapore is undeniably advanced, its market for dental products remains limited. In 1992, imports totaled only $30.45 million, with an estimated average annual real growth rate of 10%. The largest share of this market is held by Japan, followed by the U.S., Germany and Switzerland. Despite the small size of Singapore’s dental product market, foreign manufacturers should keep an eye on its developments, since these will inevitably have a positive effect on the standards of care in the region. With a significant re-export market and as the primary source of regional dental training services, Singapore will be increasingly important in raising the concern of its SE Asian neighbors for healthy and attractive teeth.
HONG KONG: GATEWAY TO CHINA
Although twice the size of Singapore, Hong Kong is still a small state with a population of 5.8 million. With no domestic dental equipment manufacturing, it supports a thriving import market totaling approximately $11 million in 1992 with a high estimated annual growth rate of 10%. There are 1,600 registered dentists in Hong Kong, with 12% working in government hospitals and 88% in private practice.
Although Hong Kong dentists are attracted to high-tech equipment, they also place a premium on compactness and price. The general trend in purchasing is to minimize costs and extend profit margins. At the same time, the physical constraints placed on dentists are considerable, as the average dental surgery is generally no more than 150-300 sq ft. A major reason for Hong Kong dentists to favor high-tech products is that such equipment attracts patients at higher fees. Japanese exports are often tailor-made for small surgeries. US products, however, have widespread popularity for their reputation of reliability and sophistication. Despite Hong Kong’s emphasis on price and size, the US enjoys a commanding 40% share of the import market. In Hong Kong most hospitals offer dental care, and with almost 90% of the hospitals run by, or affiliated to, the government, it is essential to be familiar with government regulations. Foreign dental instruments exporters must be qualified by either the Hospital Authority or the Government Supplies Department. Dental equipment guidelines are largely based upon the UK system.
Hong Kong’s most important role for the dental equipment industry is probably as a gateway to the burgeoning market of Southern China. Dental re-exports to China, via Hong Kong, were roughly $3.5 million inn 1992. Hong Kong has a particularly high rate of trade with Southern Province of Guangdong. With a population exceeding 65 million, this province alone indicates the great potential China holds. With Hong Kong’s imminent return to Chinese rule, and the surging economic growth of Southern China, Hong Kong is not only an important market of its own, but it is also the most practical route to the largely untapped southern regions of China.
ASIA’S MATURING DENTAL MARKET – READY FOR EXPANSION
The Asian marketplace offers great potential for US and European manufacturers of dental equipment. The rapidly expanding economies of the region, coupled with changing cultural mores, provide an increasingly extensive market for exporters. With greater attention being paid to dental hygiene and cosmetics, and more money to pay for these services, the overall dental industry is poised to expand significantly. In particular, equipment and products geared towards high-tech procedures, such as laser surgery, are increasing in popularity.
The new found desire for a perfect smile has led to a boom in the field of cosmetic dentistry. Furthermore, extreme wariness of AIDS in countries such as Singapore and Japan has significantly increased the demand for dental waste disposal systems and disposable products. At the moment, Asia is on the cusp of a boom in the dental equipment market. The dental market may still be gaining momentum, but late entry into such a dynamic market will be costly and difficult. With such rapid changes in the markets of these countries, as well as fierce competition within them, delayed entry directly translates into a loss of opportunity and profits.
|Dental products import market ($ millions)
Annual market growth
|Level of domestic dental product manufacture
|*dental equipment only
Source: International Trade Administration