GE capitalizes on diversity in China

China's quest to update its public healthcare facilities is creating investment opportunities throughout the medical imaging industry. The country's vast size, coupled with gross differences in living standards for rural and city dwellers, means that vendors can expect interest across a varied product portfolio.

The diversity of the Chinese healthcare market translates into sales opportunities in each segment of GE Healthcare's portfolio, be it x-ray systems, CT or MR scanners, ultrasound units, patient monitoring equipment, or diagnostic pharmaceuticals, according to Gene Saragnese, GE's vice president and general manager for global functional and CT business. China's rapid economic growth is generating business potential in an ever-increasing portion of the country.

"There is a huge and growing demand for healthcare in China," Saragnese said. "This demand used to be concentrated on the coasts, but it is now moving inland. As economic conditions continue to improve, the Chinese government is trying to deliver better and better healthcare."

Tackling the diverse medical imaging needs of China's population is by no means a unique marketing challenge. Expectations and demands for healthcare technology vary widely within many other countries and regions too. What characterizes China, however, is a sharp distinction in technological investment in its coastal cities and inland rural settlements.

"In the industrialized regions of seaboard China, people are moving from single-slice CT to multislice and volume CT. But as you go farther into the provinces, you might find that people are getting their very first CT scanner," Saragnese said.

GE first started to develop healthcare business in China in 1979. In 1991, it set up a joint venture in Beijing, GE Hangwei Medical System, to develop and manufacture CT and MRI equipment. This was followed by the formation of two wholly owned companies, GE Hualan Medical Instrument in Beijing and GE Healthcare China in Wuxi, focusing on x-ray and ultrasound products.

Joint ventures provided a useful way to enter the Chinese marketplace at a time when GE Healthcare was developing its business knowledge there, Saragnese said. The company has subsequently amassed a large number of its own contacts within government agencies.

"If GE Healthcare were to develop a new business in China today, I'm not sure that a joint venture would be the right approach," Saragnese said. "It is different today compared with the situation almost 20 years ago. China has matured, as has GE."

GE Healthcare consolidated its business interests in Beijing in 2003, with the opening of a multifunctional industrial park integrating engineering development and design, production, sales, service, procurement, R&D, customer training, and product display. Investment in the park totals $40 million.

Between 10% and 20% of GE Healthcare's production output comes from China. Two-thirds of what is made in Beijing and Wuxi will go to Chinese hospitals and clinics. A proportion of these sales will be equipment designed specifically for Chinese end users. GE Healthcare's DXR PS 800 and TH 600 x-ray systems, for instance, are not marketed outside China.

Many other modalities originating in China are shipped to customers worldwide. Wuxi has become GE Healthcare's prime site for the production of medium- and high-end black-and-white and color ultrasound systems. Too much emphasis on single-market systems means that opportunities are lost, Saragnese said. GE Healthcare consequently aims to make its products as global as possible.

"There are developing markets and performance segments and premium segments all around the world," he said. "If you are able to make a product that is, say, very good for the value segment in China, it is likely to be a very effective product for India, too."

Factors used to determine which parts of GE Healthcare's portfolio are manufactured where include the size and location of likely markets, transportation costs, and availability of necessary engineering experience. Decisions are subject to change, as new market opportunities arise. For instance, GE Healthcare's 0.2T MR scanner is now manufactured in China for worldwide distribution, despite originally being developed in Japan.

"We have made our move in China, we will continue to invest, and we will continue to grow the business there just as we do everywhere else around the world," Saragnese said.