Medical China – Daxue Consulting – Market Research China https://daxueconsulting.com Strategic market research and consulting in China Thu, 30 Jul 2020 16:06:51 +0000 en-US hourly 1 https://wordpress.org/?v=5.4.2 https://daxueconsulting.com/wp-content/uploads/2012/06/favicon.png Medical China – Daxue Consulting – Market Research China https://daxueconsulting.com 32 32 Bayer in China: How the Pharma giant gained the strong approval of Chinese consumers https://daxueconsulting.com/bayer-in-china/ https://daxueconsulting.com/bayer-in-china/#respond Thu, 30 Jul 2020 17:33:00 +0000 http://daxueconsulting.com/?p=3611 Overview of Bayer and Bayer China Bayer AG is a global enterprise with core competencies in the life science fields of health care and agriculture. Bayer, headquartered in Leverkusen, Germany, is one of the most famous companies among the world’s top 500 enterprises. In 2019, the total number of Bayer’s employees was 103,824 and the […]

This article Bayer in China: How the Pharma giant gained the strong approval of Chinese consumers is the first one to appear on Daxue Consulting - Market Research China.

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Overview of Bayer and Bayer China

Bayer AG is a global enterprise with core competencies in the life science fields of health care and agriculture. Bayer, headquartered in Leverkusen, Germany, is one of the most famous companies among the world’s top 500 enterprises. In 2019, the total number of Bayer’s employees was 103,824 and the annual sales were 43.5 billion euros. Bayer’s products cover high polymer material, medical and health products, chemical industry products, and agricultural products. Bayer puts a lot of emphasis on its research and development. Its capital expenditures amounted to 2.9 billion euros, R&D expenses to 5.3 billion euros in 2019.

Bayer’s current state in China

Bayer entered the Chinese market in 1982. Bayer has operated its business in Hong Kong, Taiwan, and mainland China. Currently, China has become one of the largest markets for Bayer globally and an important driver for the growth of Bayer’s business. In 2019, Bayer’s sales in Greater China reached 3.724 billion euros. As of December 2019, Bayer has more than 9,000 employees in Greater China.

Bayer is deeply rooted in the Chinese market

China’s pharmaceutical industry

Source: Quanjing, China’s pharmaceutical industry

The Chinese market is a crucial driver of Bayer’s growth. Bayer complies with the policy and regulations of China, exploring its business in line with specific rules in China. Two examples that Bayer China firmly supports China’s regulations are as follows.

Bayer cuts price largely to win contracts with the Chinese government

In 2018, China’s government launched the centralized procurement program, in order to lower drug prices. A lot of drug companies are invited to place bids after the number of different kinds of drugs that will be needed in the public hospitals are determined by China’s health care security authorities. Under this centralized procurement program, the drug company which offers the lowest price will become the supplier of a certain drug. The Chinese government aims to reshuffle China’s pharmaceutical industry through the price war, and both foreign and domestic players have to come up with survival strategies to secure the market.

According to Chinese media, in January 2020, 77 pharmaceutical companies won contracts with the government by cutting drugs’ prices by 53% on average. Among them, Bayer made a big offer in the bidding. For example, it cut the price of its off-patent acarbose for diabetes (which affects a large part of the Chinese population) by almost 90%, and the new price is 78.5% lower than the price ceiling set by the Chinese government in December 2019.

By adopting an ultra-low-price strategy in the price war, Bayer hopes to expand its market share of some drugs like acarbose. In this way, it can secure its Chinese market and earn more profits in the future. For Bayer, the Chinese market is so important that it worth taking the large price cut to support the price war launched by the government.

Bayer fired an employee for breaking home quarantine rule during COVID-19

Bayer fired an Australian Chinese employee for breaking the coronavirus quarantine rule in China. In March 2020, a video of the woman gbreaking the home quarantine policy to go on a run went viral on the Chinese social network and drew widespread criticism from the public.

Bayer’s response reflects that it firmly follows laws and regulations in China, and supports the coronavirus rules of the Chinese government. This decision has been widely applauded by Chinese netizens and the company is considered as responsible and compliant. Hence, Bayer China has built a positive image through this crisis. 

Boosting innovation and advance digitalization

In 2016, China announced the Healthy China 2030 Blueprint. Currently, China is speeding up the initiative and improving patients’ access to medicines by increasing their affordability. “With the mission of helping China achieve health goals, Bayer China will make unremitting efforts to bring innovations faster to Chinese patients and provide more complete medical services.” Jiang Wei, executive vice president and managing director of Bayer China, said.

Bayer strengthened R&D and innovation

Under the Healthy China 2030 plan, China has promulgated policies from various aspects to increase support for the development of innovative drugs. Many pharmaceutical companies, including Bayer, are seizing opportunities and making full use of policy support to accelerate the approval of various new drugs in China.

Since 2017, Bayer has brought 14 innovative drugs to China. As an important part of the “China Innovation Strategy”, Bayer is continuously accelerating the introduction of more innovative products into China through the China R&D Center. The China R&D center, established by Bayer Health Consumer in Qidong, Jiangsu, is also actively carrying out category innovation, and enhancing the technical support and protection level of existing listed products.

At the same time, Bayer establishes long-term strategic cooperation with China’s top scientific research institutes including Tsinghua University and Peking University and strives to apply more cooperation results to the in clinical practice. Also, Bayer China is exploring cooperation opportunities with Chinese pharmaceutical companies and biological start-ups, leveraging the complementary advantages of both parties to fully develop innovative results. For example, Bayer and CStone Pharmaceuticals collaborate to evaluate D-L1 monoclonal antibody CS1001in combination with regorafenib as a treatment for multiple cancers.

Bayer China embraces digital transformation

Bayer cooperates with VeChain

Source: creamandpartners.com, Bayer cooperates with VeChain

Bayer has seen great potential to foster digitalization in China’s pharmaceutical industry, and has sped up its digitalization.

In 2017, Bayer teaeds up with Alibaba Health (AliHealth) to provide Chinese patients with healthcare services ‘at their fingertips’. At the same time, Bayer China can follow health trends of Chinese people and better satisfy their self-care demands by leveraging the big data advantages of the Alibaba platform.

Bayer re-started the ‘Bayer G4A China’ program in 2019, a global digital health startup partnership program to select Chinese startups that have digital potential. In 2019, Bayer China forms a co-operation agreement with Yaoshibang, a domestic online B2B pharma platform, to offer a new digitized medicine and health services solution in China. During this collaboration, the parties will exploit their advantages in the fields of medicine, health, and the internet.

In 2020, Bayer announced its partnership with VeChain, a pioneering public blockchain startup, to co-establish CSecure, a blockchain-based traceability platform for drugs. This new blockchain-powered solution will allow Bayer to track clinical drugs across the supply chain digitally.

Bayer considers digitalization as its vital strategy in China’s pharmaceutical industry. Digital transformation will enable Bayer to provide patients with new drugs and personalized treatment faster, improve the efficiency of healthcare service, and ultimately better serve patients. 

Bayer’s China Vision & Mission

Bayer’s logo

Source: Bayer China’s Weibo, Bayer’s logo

With its strong marketing strategies, crisis management, and cooperation with the government, Bayer China devotes itself to provide better products and services for Chinese in the areas of health and nutrition. Bayer is a key player in helping China achieve the Healthy China 2030 plan, which makes the future outlook for the pharmaceutical brand’s development in China very promising.


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China Paradigm transcript #98: Doing business in the blossoming Chinese natural ingredients market https://daxueconsulting.com/blossoming-chinese-natural-ingredients-market/ Tue, 28 Jul 2020 06:44:51 +0000 http://daxueconsulting.com/?p=48728 Find here China Paradigm 98 and discover Gordon Dumoulin’s story in China. Our guest is the founder of  Dumoco, a company that takes part in the Chinese natural ingredients market and botanical raw materials for pharmaceutical, health, food, skincare, and cosmetics applications. Gordon Dumoulin is also the co-founder of Easton Bridge Education, an education center […]

This article China Paradigm transcript #98: Doing business in the blossoming Chinese natural ingredients market is the first one to appear on Daxue Consulting - Market Research China.

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Find here China Paradigm 98 and discover Gordon Dumoulin’s story in China. Our guest is the founder of  Dumoco, a company that takes part in the Chinese natural ingredients market and botanical raw materials for pharmaceutical, health, food, skincare, and cosmetics applications. Gordon Dumoulin is also the co-founder of Easton Bridge Education, an education center based in Beijing.

Full transcript below:

Hello everyone, welcome to China paradigm, the show powered by Daxue Consulting where we interview seasoned entrepreneurs and experienced managers in China about their business and experience in the country.

Matthieu David: Hello everyone I’m Matthieu David the founder of Daxue Consulting and its podcast China Paradigm and today I am with Gordon Dumoulin. You are the founder of three companies and one of them being food, one being education with your wife. You have been in China for more than 10 years now, more specifically in Beijing. The first company we are going to talk about is in the food business, it’s called Dumoco – if I pronounce correctly – and it’s focusing on ingredients, very rare ingredients with specific effects on health, memory, basically health – how it can affect your health and I have a lot of questions about it. This is not a small market in China when we talk about health and ingredients to eat, we always think ingredients for traditional Chinese medicine and we talk about a Chinese herbology market which is about 150 billion to 200 billion USD of which 15%-20% is exported. It is growing. In some way, there is a paradox. The sales volume is growing but the number of TCM doctors and TCM health buddies are actually decreasing when we look at the numbers. It has been decreasing until 2010 and now, since then, it’s increasing again but still not at the level it was in the 1990s. So, it’s a very interesting segment because we have interviewed a couple of people before who were in health supplements and I believe you are very close to this market (learn more about the health supplement market in China).

The second business you are contributing to – because I understand that it was initiated by your wife – is education, Easton Bridge Education. So, it is based in Beijing, providing education centers in China such as English teaching and also art, science, and so on in Beijing to – I would say those upper middle class, middle class Chinese who are living in Beijing. I will have a lot of questions about this market too later on. Thank you, Gordon, for being with us. Would you mind telling me, if you want to add anything about the introduction of your two businesses and tell us more about what you do?

Gordon Dumoulin: Yes. Thanks for inviting me. It’s a nice opportunity to talk more about China, about doing business in China, and also about understanding China more. As you introduced very well, first I’m from Holland, the beautiful city of Maastricht in the South of the Netherlands and I’m living since 2009 in Beijing. Indeed, I’ve been doing the business with Chinese natural ingredients market called Dumoco. I set up the business myself in 2009 – operational 2010 and actually that came from a more Chinese natural ingredients market course or race. I have always been in the food business when I was living in Europe and when I moved to China some people and some business relations were asking me about some specific ingredients for traditional Chinese medicine and when you start a new business you need to take all the business what you can get to start up. So, I dived into some specific Chinese natural ingredients market and then I expanded to a wider range of natural ingredients. Basically, it’s indeed like you mentioned, related to ingredients for traditional Chinese medicine, functional herbs in which they come in many ways. We can use them for herbal teas, we can extract them, we can make powders and many of those are indeed coming into supplements. So, what we do here at Dumoco, we have different ways. First of all, we have our own export of different natural ingredients to Europe, to the States, Australia and to some other countries. Secondly, we do consultancy for the Chinese herbology market, Chinese companies, Chinese herb farms, cultivations, and also processing companies to consult them in quality control, which is usually expected in Europe and the type of quality control which is expected. So, we also do consultancy works in different provinces in China. The most important in this way is – as you mentioned, it’s a very interesting segment. You specified a little the TCM and also the TCM doctors, but we should look at more widely that – especially Chinese natural ingredients. Functional, medicinal, herbal ingredients are not only used in TCM. Actually, when we go to the States, in Europe, we go to many pharmacies, even to supermarkets and to other shops where you see many kinds of supplements, for sleeping, for being active, for focusing and for many other things. Actually, these are all already related to ingredients for traditional Chinese medicine, but not only to TCM, in Europe, but we have also had – now it’s much less –, many herbal remedies and still, today learning from our grandparents and even from our parents, that take these herbs or take ginger with lemon whenever you have a cold. So, there are many relations in this aspect, and the marketing, the model of marketing in recent decades, is that, of course, many modern fashionable companies who are doing supplements, but at the end of the day it’s all about the Chinese herbology market, it’s all about tradition and the history in this (learn about the push for Chinese medicine during the Covid-19 crisis).

Matthieu David: So, something I understand now, your market is overseas right, and you represent some producers from China, you help them to get the certification, do it the right way and you export their production overseas.

Gordon Dumoulin: Yes, yes. So, there are two ways, we do consultancy for Chinese companies. We help them in – among others quality control also in some export how to do business overseas and secondly, we have our export department where we have distributors in Europe, in the States, other countries who sell our products, which we manufacture in corporation with our partners in China.

Matthieu David: I understand that some of your people you know, wanted your help to buy those products in China because you were in China. What is surprising me is you have been able to also actually get the producers as clients for consulting to understand how to manage those productions and to export. Would you mind telling us more about how this articulated? Was it from the beginning that you were advising them and supporting them in production or was it in a later stage? How did you get this knowledge and how did you do it and how a foreigner can help them to do – to produce something they are used to producing.

Gordon Dumoulin: Actually, you are a link on both sides. You benefit from both sides. First of all, when you talk about the Chinese side, how you do business in general – we all know that. Its relation, you build up relations. So, at the beginning of 2010, I took night trains – 70% of my time going from one Chinese herb farm to another (learn more about China’s agricultural strategy). Going to productions who extract botanicals or pulverize to powders and you focus these people and it’s a way of doing business in China that – we hear there are many ways – also in the media, but it’s true it’s always about the win-win corporation. You also have to think about either your supplier or your customer, how they can benefit, and how you can benefit. Because if one doesn’t benefit, the relation will not last. So then it’s a natural growth that – of course with some people, you have a better relationship than with others, but you want to help them to improve because also for my benefit, because I’m buying products from them, so I want them to improve, so I can sell better products to my clients in Europe.

On the European side of the American side – European side they feel comfortable because Gordon is in China and I can speak a little bit the same language. And for many people in Europe or outside China, China is very far away and very unfamiliar so they don’t get a comfortable feeling, so this is what I can bring to them, and transparency is a very big word in this – because we are transparent. Our customers in Europe, they know the Chinese herb farms, they know the productions. They know everything. While many other people in the States or Europe, they try to hide because China is their treasure, so they say okay we deliver products, but we don’t tell you where or how – just the product is good.

But we did it the other way around. We are transparent and we build on trust. We built trust from all sides. So, it’s more like a community where we are in one way or the other the glue and the control and also trying to improve the whole community that everybody gets better in this way – and everybody makes money of course.

Matthieu David: I see. Talking about the product. When you talk about Chinese Chinese natural ingredients market, would you mind being more specific about what it is and especially what’s the difference between having supplements, what is the difference between ingredients for traditional Chinese medicine

 – CTM – one thing I didn’t say about Chinese medicine, Chinese traditional medicine – the World Health Organisation, WHO said, they accepted Chinese traditional medicine as a medicine and in June 2019 – the very recent was last year so I believe that may change a little bit your business and the perception of your natural ingredients by the West. By overseas markets. Would you mind sharing some more about Chinese natural ingredients market and how different they are?

Gordon Dumoulin: Yes. I’m not sure if this influenced the West, but I can explain a little bit more about TCM in general, I will not go into details. TCM, in general, it’s a different philosophy at looking at health. It’s also a more preventive way of looking at health. I’ll give you some examples. For example, they – a lot of people here in Beijing – eat radish after eating and you know when I just came here I said I’m full – I don’t want to eat radish or I’m not in the mood for radish. I better have dessert or some French teas but I looked it up, a radish has specific substances which make the probiotics start working. So, digesting your food. This is the same for nuts and seeds. You see Chinese people all over China and they eat a lot of seeds especially after dinner. And this is for the same reason. Chinese dates, the tribe dates they are often eaten before dinner because it lessens your appetite, so you don’t eat too much. So, in many ways subconsciously even many Chinese people will not have the straight answer why they do that, because it’s a tradition but generally eating or food in China is much more closely related to health and this is also coming back in TCM. In TCM there are many preventive measures, now, of course, you have many medicines which hardly exist in Europe and then you really talk about medicines concentrated syrups and other things, but the link is coming to supplements because supplements in Europe they have also a prevention. You don’t get sick, you have to eat vitamins, tablets every day or you have to drink lavender tea at night because you sleep well. So, there are many ways that you prevent something to happen. This is also in TCM – the value and WHO indeed appraised the TCM as being a medicine but is a different way and I don’t think it’s fully comparable. When you go to Chinese hospitals for example, usually for acute diseases which need to kill something and so to say in your body, you take a killer and it’s usually a Western medicine and you are cured. While –when you are for example having symptoms of something, you feel uncomfortable or you are having headaches or different kinds of symptoms, people often tend to look more to Chinese medicine to see how they can reduce the symptom. Not only to the medicine but to treatments and to behavior. So, the doctors will also tell you how to behave – the same as in Western societies, run more, walk more, do more exercise, sleep early, etc.

Matthieu David: I had a question about Chinese herb farms. Finding factories in China in some way it’s linked to overseas. It’s linked to foreigners and even that – finding the right factories, understanding the factories, how to work with them – it’s not easy. A lot of people struggle with that and you have been able to connect with entities which are Chinese herb farms which are much more remote, usually, I believe don’t speak English and I don’t believe they are used that much to export. Is my analysis correct and if it is – how did you handle it?

Gordon Dumoulin: Yeah first of all it is correct. The first question is actually why people are having problems finding the right partners, the right companies, right suppliers is – first of all, you have to be there. Like I said in the beginning, at the first year I spent 70% of my time in night trains really going to the countryside, visiting many companies, visiting also many Chinese herb farms and look – many were not qualified so –

Matthieu David: How did you find those Chinese herb farms. You can get a train to go to the countryside and then what do you do? How do you prepare?

Gordon Dumoulin: Oh, first we do some research.

Matthieu David: So, research how do you do it because it seems so unclear, so remote, so local – would you mind sharing a bit more?

Gordon Dumoulin: Yeah, I mean we are not going to the local, local Chinese herb farms – we are not going to a local farm whose producing vegetables for their village, but we are going to specialized Chinese herb farms because we are looking for the Chinese natural ingredients market. I’ll give you an example – for example, ginseng root which is familiar to many Western people, the area of the ginseng root in China is in Jilin province. Actually, at the border of North Korea so the famous mountain Changbai mountain is actually the homeland of the ginseng, so you study first. To come back a little early before I went to China, I didn’t know anything about the Chinese herbology market. So, I studied day and night, learning more about ingredients for traditional Chinese medicine, also studied – actually very simple, spending time on the internet talking to people, trying to find out – okay where is this, where is that? So, it’s also about relations, you talk to somebody and they know. Okay, we have a good company that has a plantation for ginseng. So, you take the train or the plane and you fly to Jilin, and you have a look around and you are amazed every day because you learn and then you find out this whole city is all about ginseng. And it is not the only plantation, there are 120 other plantations. So, you go to study more and you go to study more.

Of course, I have also Chinese people with me, who spoke Chinese at that time, because I didn’t speak and I still don’t speak very well, but they can communicate with the local people and we can find out more relations, more companies how to find out, but it takes time and you have to be here.

Matthieu David: So, your clients in the West, would you mind describing a bit more – are the restaurants? Are they more individuals? Are they doctors who are using it for traditional medicine?

Gordon Dumoulin: No, the majority are supplement manufacturers. So, the majority are – there are even big companies who produce actually natural supplements. Then, some of them are also cosmetic companies who are producing natural skincare (learn more about natural skincare market in China). So, we cannot supply to individuals because the quantities are too small because when somebody needs one kilogram and we have to fly that over, it will be very expensive for people. That’s why we also work with distributors. We have distributors in different countries like in the Benelux, in Germany, in France, Spain and we work with them – but they usually also of course target the larger companies and like I said, most is going into supplements, syrups, tablets, capsules, products like this and I think about 10 -20% maybe into skincare (learn more about the skincare industry in China).

Matthieu David: It’s more and more interesting what I’m discovering because I have – we are used to talking to people who are doing import and export businesses, but not at all in  Chinese natural ingredients market, not at all in food from China, but more from factories and we see plenty of people in this industry. So, I believe your business is very unique and your position is very unique. I’d like to understand more about – because you said transparency is very important – your clients know where the farm is. How do you handle the transparency on pricing if they know so much about the sourcing and so on – how do you work on the pricing?

Gordon Dumoulin: We move on the pricing together with our suppliers here in China. So, they know what we are asking in Europe and we also discuss this together. We don’t have any exclusivity, so our model is – actually, we have our own brands and that’s the local brand, so the end-users at the end of the day do not know where it’s coming from. Our distributors they know. If we have a very big customer who wants to visit a plant or wants to visit a plantation – he’s most welcome. They can come but we have to deal and we have the agreement with the suppliers that they know our customers and they will not touch our customers and even – so actually we put the security and that sounds strange for many Western people – we put the trust with the Chinese suppliers as – to be honest, I haven’t been cheated in 10 years. So, if any customer from Europe – and they know for example from which factory it’s coming, or even from which plantation – they need for example ginseng for an herbal tea if they would contact the Chinese herb farms directly the first phone call is coming to us. This guy is calling and how should we handle this? So, it’s in a way a matter of trust we can put and to be honest – we don’t have any legal agreements with this, because you don’t want to go into legal anywhere, so it’s a matter of trust and it’s again about relations what I said before. You build up relations with the people, you show them trust, you show them support, mutual support from both sides and a feeling that we are here to stay and we are going to make a good relationship together and also a pleasant relation together, for the purpose that we can sell and we can have some market.

Matthieu David: I understand. I feel that you are acting like an agent for them, an agent who will actually manage their exports and their overseas relationship. Does it make sense to say so?

Gordon Dumoulin: In one way yes, in one way, yes, but even some of them are large companies. They even have their own export department, so it’s not the only one – we are not working only with small companies, we are working with some leading companies in China for plantation, for processing and even there we have our relations and we do our own business with our own branding. We have good relations and we also support them as I said in the consultancy, in improving their processes and our processes together.

Matthieu David: You are involved in another business I mentioned initially, which is education. Business called – Easton Bridge Education. To give an idea to people listening to us how big this industry is – it is said that private schools account for 35% – let’s say 1/3rd of the total number of schools in China in 2018. So, it’s massive. I believe that the number of private schools in proportion is much higher in China than in Europe for instance. 53 million students are studying in private schools in 2018. That’s also a very fragmented market and when we look at the English language learning market for 2018 globally, China represents a third of it. Like 29-30% of the total. Final thing is that education for kids is one of the segments of the market where parents want to spend. They are eager to spend. When we look at some statistics in Shanghai, so private bilingual schools on the time of education of the kid, parents who were affluent could spend 100 – 200 thousand USD – of course, that’s over many years, but that’s a sizeable amount of money that Europeans, for instance, are not spending. Most Europeans don’t spend, even the affluent ones in Europe. Would you mind telling us more about what you do in the education business in Beijing and a bit more about your clients as well? I’d like to know if what I just described corresponds to what you see.

Gordon Dumoulin: Yes, actually the education has been also born from a – in a natural way. Like you mentioned my wife – we started up Dumoco together 10 years ago. She is from Beijing and at that time she was not my wife yet and we set up the business and we were business partners. She helped me and as we all know the business at the start is a difficult one, so we were fighting for Dumoco for the extract, for the Chinese natural ingredients market, and for the export network and at one point we were – living in the outskirts of Beijing and we had an office at the time, a small office and so my wife at that time said – there are two kids here on the floor and they want to learn English from a foreigner and me was a European mindset, focused and I didn’t study for this and I don’t want to do this, I need to spend time on Dumoco, and then I came to one of my first confrontations of Chinese ways of thinking because she showed me the balance sheets and she said – you still want to pay me or not? So, that was a good one and so she – so I said actually its good. Let them come and we can teach them at the weekend. So that was actually her education. She’s an English teacher, she has an English teaching degree and her passion, her dream is her own school – her own English school (learn more about China’s language school industry).

So, we started this for two kids and we expanded, we rented an apartment here in the Tongzhou district in Beijing and fast forward we 8-9 years later we had a full program in our apartment, so we rented another apartment, ran a full program. Especially in the weekend, and also after school – with me teaching in the weekend to support her and she taught during the week and we had two other teachers and since last summer we moved – we found a corporation and an investor also with a license because we were not actually official, so we found an investor with an education license, we moved to where I’m sitting now, we moved to a new school – 400 – 500 square meters, with also more teachers and now we have about 150 – 200 students running and besides that we are doing international summer camps. So, in the past year, we have organized summer camps to Boston, to London, to Holland. Last winter, just in time before everything was closing – to Singapore. So, this is – yeah this is in a nutshell where we came today.

Matthieu David: I see – what you do is an education center based in Beijing and also education – how do you say that? Education travel?

Gordon Dumoulin: Yeah, we call it winter camps, summer camps, English summer camps, so we find corporations with schools abroad, in the US, Europe, Singapore last winter and then we send them on training there together with some – of course with some other educational culture tourism natural aspects as well.

Matthieu David: How would you describe your clients? Are they very wealthy? Are they affluent? Are they themselves parents have degrees or the opposite, they want the best for their kids because they don’t have degrees? How would you describe them? How would you qualify them?

Gordon Dumoulin: We have many different kinds of clients, of course, you need to spend – I mean they spend quite a lot of money on English courses. Usually average you spend for a 60-hour course as frat you spend about – and then you are not expensive, this is for normal smaller schools you spend between 1 -1.5 thousand USD per kid and then you are talking about group classes. When you have one to one classes you spend even more, but many of them – we are building actually also a very large social environment because most of the parents are here so we get to know them and when it’s clicking we are eating together and drinking some wine –we see that many – of course first of all people need to be able to afford, because some of them taking three classes and then they also have a piano class in the music school and they have an art class in the art school – so they are quite filling, but many of them are entrepreneurs, they have their own business in many different ways, in many different sectors. Some of them work – I would call it the upper-middle class because – no actually the whole middle class. We have some lower – we also have a girl she’s living in a village; she’s coming by bus really 45 minutes by bus, just to spend 45 minutes here and they’re really struggling for this, the parents – both are really struggling for this but the average is middle class. The upper class will have their own really higher private education because then it’s what the price counts – so I would call it you know, average middle class and to be honest, the middle class in China is doing very well and is very much comparable to European middle class – I think you know as well and even in some ways better off in terms of spending power. On what can be spent. So, yes, the clients are all families, most of them all go to public schools and the children go to public school and to our education center based in Beijing. I have a son of 7 years old, he’s going to public school here and many of our kids are his classmates, at least in the same school and to be honest, just as an example how still rare it is also – I’m living really in the outskirts of Beijing, my son is in a public school and this is – it’s a huge public school, I think about 1500 students and I’m still the only foreign parent in the whole school. So, it’s also like an imagination for the listeners that you’re still a minority as so to say but a blissful minority. It’s not something negative at all. But you get close to the people, you get close to the residents in the compound, also with the school – the school has its social factor in this.

Matthieu David: What are the parents looking for? Are they looking for opening the mind of their children? Are they looking for core competencies like English – being fluent in English, or are they looking also now and because the education market may be more mature than before – are they looking maybe also to learn how to play a piece of theatre? How to learn instruments? How to do liberal arts, drawing, and so on? What’s your perception of it and the evolution of it over the last 10 years? My perception and I’d like to know if you agree with that is that – 10 years ago it was much more about core skills, learning English – learning maths, learning whatever core subjects and now it opening up to the drawing, dancing, music instruments, playing theatre. Is my understanding correct? Do you see that with your clients?

Gordon Dumoulin: Yeah, I see that and you are correct. It’s more – you have specific courses, when you talk about English, you have specific courses but our general courses have the aim that the students and the kids are able to express themselves and they feel comfortable to express. We do – in our education center based in Beijing, we do many ways, we play Shakespeare, we have many jokes, we do games and all in English and it’s all about that they can feel more comfortable in expressing themselves. I don’t correct them every time when they make a mistake. Let them talk, let them express, let them speak – and this trend what you just mentioned is correct, people are looking for – you know, kids who are more able to express themselves, to be more diversified in many ways, also internationally that they learn more. We also talk a lot about cultures in other countries so they learn more about this. I’m amazed about what the kids know here about other cultures in comparison to what I learned in Europe about China which was a big mystery at that time. But I’m amazed at what they already know and I want to give it a more attaché that they also see and feel. So, yes and then we have specific courses also of course – I mean for example when a kid needs to have an exam for a certain school, for example, Cambridge or Toefl or things like that, we have specific courses to prepare them for this, so there’s also, of course, a specific target course and then we have the general language course.

Matthieu David: I see, so still you feel that there’s a functional need for education to pass the exam, but it’s opening up to more liberal arts and more non-core skills. One other thing you are mentioning on your LinkedIn profile – it’s a bit another topic, but you say change is inevitable. You have written that – why do you say so, because I wanted to ask you because Peter Drucker who is a consultant we look into a lot at our company Daxue consulting, invented the name of strategy and business, is saying – what’s in common with all entrepreneurs? It’s not their education, it’s not where they come from, it’s not their social background, what they have in common is that they think change is positive. They see change as full of opportunities when none entrepreneurs would see change as a threat. As something which is threatening their position. So why are you writing change is inevitable?

Gordon Dumoulin: Because first of all this – how you look at it, it doesn’t matter. Whether you take it positive or as a threat, but I do believe that change is inevitable. We have a very – unfortunately not a lot of positive situations today, all over the world because of the coronavirus but change is inevitable and that’s what I learnt also here in China. Indeed, in Europe, many people see change as a threat, but in China, you have to change, you have to adapt. There is a certain – I don’t call it negativity, there’s a certain nervousness that you need to improve, you need to change, or this doesn’t work so we need to go another way. There’s always something happening and this is also coming to my third passion what I’m doing, I’m also doing a blog of 5iZ – actually started, I’m no longer on LinkedIn. For me, it’s cross-cultural awareness about different cultures and different societies what the change is there, and what are the differences there. And so, what I learned in China – change is inevitable, but I also see that in other societies that this applies also to other societies and if you see it as a threat it holds people back and societies as well.

Matthieu David: I wanted to talk about 5iZ as you mention it, and especially about the name, I found it very interesting and shows how deeper you know China. You named 5iZ because China is not talking about North, South, West, East only – but also North, South, West, East, and Centre like Tiananmen being at the center of China and the center of the world. Would you mind telling us more about what does it mean for you?

Gordon Dumoulin: Actually it has been – you know, before I went to China I was most of the time in expert management jobs, so I traveled for about 15 years all over the world, meeting many cultures and doing business there, coming to the homes and so you know – culture was always a passion for me and seeing different cultures, and I had been in China before I had moved here, also many times but just being here for a week is something else and plunging in a black hole and start to live here. And China gave me – China as a country, as a society gave me so much learning that you can look at things in so many different ways. We have been brought up which is normal, as Chinese have been brought up here and Europeans have been brought up in Europe, you always have some kind of mindset in the culture and the society where you grow up, and this is natural and this is normal. And having the opportunity to live here, spend time here in a practically almost Chinese environment it was really – I’m very grateful having that experience and banging many walls because you have your own mind-set and like everybody is stubborn and everybody wants to have their right. So, you have many different learning experiences about how people think and how other people can think and approach new things. So, it’s very important that people start to realize all over the world that there are many differences in culture and cultural intelligence in how to do things. Also in business and when we go then into the business side you have many fantastic models on how to do business, but at the end of the day, it’s about feeling the people and about feeling the country and also knowledge about what worries those people – what is their daily life. What’s it all about and how they approach problems, and opportunities as well. How they teach their kids, how they live at home. I’ve been grateful in this and I wanted to share that and coming back to the name, 5iZ – yes center is a very basic thing which I feel also a little now. You know I mean – all the changes happening for example today – also with the virus, but Chinese society 10 years ago and today is completely different almost. You go through many changes and you learn to be more resilient. You learn to be calmer and tackle problems, threats, or opportunities in a calmer, resilient way and if it doesn’t work – fine, you go to the next opportunity.

Matthieu David: It’s close to 1 hour, I have a few questions to end the discussion. The first one and I often ask these questions – what books inspired you the most when understanding about China?

Gordon Dumoulin: For me, one book generally, not only about China – and I read it last year, I’m still reading it again – it’s The Silk Roads, from Peter Frankopan. It’s a fantastic book about the history and about the world history but through a very different perspective and the message what you learn there is that the history what we learned as a kid, in our society is very different from the kid in another society. Such as China or anywhere in the world. And so, this is a book I really recommend – also in understanding China. First of all, you cannot understand China completely – no one understands China, you don’t understand France – I don’t understand France completely – you all have these few items which characterize a country but this is nothing to make this diverse society clear because it’s very diverse. So, just for the perspective – read this book and know that you know nothing about the country. So be objective when coming here.

Then some other books – first of all, there are many books about how to do business, how to be successful, get your things, e-commerce – digital retail, new retail – all this. Read those books, some of them are great but it’s not about understanding China, it’s about understanding the market because China is a society and its people. This is what I’m always telling many people – because people want to know about China – I say why do you want to know about China? Because I want to do business – I say either you find a good local partner, then you don’t need to understand China. If you want to understand China you need to know the culture, you need to spend some time, you need to read about it. Few books that I have on this one is – first of all, a very old one and but still, it grasps a good feeling, its Red Star Over China – from Edgar Snow. Red Star over China- he was an American, he was actually the first foreigner who met Mao Zedong and this story gives you an insight also how people think and we are not talking about the historical events, but how people think and many thoughts are still applied today – how people think in terms of the collectivity of pragmatism in many – the many characteristics which are not defined, but which indicate as the characters of Chinese society is coming back. Secondly, I think – I don’t know if people have seen the Wandering Earth – the movie, the Chinese science fiction movie, a great one last year – I’m not sure if it’s not Netflix already – because I don’t have Netflix here, but read his book, it’s from Liu Cixin, he is one of the biggest science fiction writers in China – so in general, read either fiction or non-fiction biographies if you want to learn about China more.

Matthieu David: If I say more, The Three-Body Problem is written by him as, well right?

Gordon Dumoulin: Yes, exactly.

Matthieu David: And it has been popularised by Obama who read it before it was published and The Dark Forest the other one which was – yeah – I think he’s buried in Peking University and he was the first one – maybe the only one, but he was the first one I’m sure to be the member of the Chinese communist party and he lived in China all over the different periods of China, including during the controlled evolution. What are the most surprising success for you in China and the most surprising failure in China you have witnessed? I’ll give you an example of mine – I’m very surprised how e-commerce developed, because when I arrived people were paying cash at the front door when they get delivered and they didn’t want to use their credit card and now it seems that they use their phone to pay with a QR code that could be scanned with another number, taking more money than what you really want to pay. So, it’s a change I wouldn’t have expected to go so fast and so far.

Gordon Dumoulin: Yes, coming to your example this is very true and we always think about Chinese 10 years – 15 years ago with piles of cash because they wouldn’t trust anything else and they wouldn’t trust other people – while this is totally gone in 10 years, in less than 10 years even. But yes – I mean the daily change, as an example the daily changes that are happening – but also the daily changes and the daily speed what’s happening to yourself. You are really coming in to – you are forced to keep moving, to keep moving either by new regulations, by new opportunities, other companies like you say the new retail is coming. We are forced today, we are forced today with the quarantine or the confinement – our school has been closed for 2 months because we are not allowed to open and we don’t want to open because we want to be safe. We are already working, we have now our video classes at the weekend, we have our online classes. My wife is teaching almost the whole day online classes. We have set up an online library – we all did this in a matter of weeks. As for the surprising success is indeed the fast change which is happening and that you can adapt to that. So actually, this success is not more like business success, but it can come out in the business – the success is that you must break yourself open. You must be more adaptable and you must be more wide looking in things which you might be stuck in the business – for example, you have been doing business for 10 – 15 years at home or Europe or even here in China and you say I cannot do anything else. This is what it is. No, this is not true, even within your own business you can innovate. You can differentiate. As for the speed of differentiation of innovation is stimulated – also even forced upon you because – not forced in a negative way but you go with the flow, and you also want to lead some of those flows. So, this is I feel really a success in myself that you are much more wide – open-minded in doing business.

Matthieu David: Last question – what do you read to stay up to date on China? What are your sources? I believe that’s a common question for foreigners – what kind of sources can they use? It’s hard to read the Chinese newspapers, even for people who have a very good Chinese level HSK 5 or 6 – it could be hard. So, what are the other sources you are using to stay up to date on what’s going on?

Gordon Dumoulin: First of all, I think – of course, you have some English language – like China Daily, Global Times – many people see these newspapers often as not very objective but actually there are many interesting articles and there are many insights which can teach you more about China. Also, about society, also about governance. Some more other sites – there’s also one site – it’s called Sixth Hong and they have some social articles, articles about society, about what’s moving the people and different kind of aspects, they touch these topics and you have similar sites of this like RADI China, Sub China – so you actually have different sites where you can find – so to say non-mainstream insights of China. Because the mainstream – people know but there’s actually – it’s not very interesting because it’s always coming back to the same, and it doesn’t give you an image of society and when you want to do business here or when you want to be interested or when you are interested in China, you need to know more about the people and what’s moving the people – because they are your customers or your suppliers and you also want to trust your suppliers. So, try to find some other news agencies which diversify the news. Of course, go to my blog, I post almost every day different things about Chinese society. LinkedIn is also a fantastic medium with many people telling their own experiences and their own insights and so – this is usually the sources what I’m using, and then, of course, you have the Chinese twitter – Weibo, you have WeChat where you find the trends, what’s happening in China.

Matthieu David: What’s the link for your website?

Gordon Dumoulin: 5iz-China.com.

Matthieu David: Thanks Gordon for your time, thank you very much it was very instructive, very interesting to see how you have been able to develop your business on natural ingredients, a very unique business I believe. I wouldn’t have the chance I think to interview someone who has been able to go into this industry which looks very, very local. Thank you everyone for listening and stay safe during these times of virus outbreak. I hope you all stay safe.

Bye, everyone.


China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article China Paradigm transcript #98: Doing business in the blossoming Chinese natural ingredients market is the first one to appear on Daxue Consulting - Market Research China.

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Telemedicine in China: Healthcare reaches a new status quo during the COVID-19 pandemic https://daxueconsulting.com/telemedicine-in-china/ https://daxueconsulting.com/telemedicine-in-china/#respond Sun, 26 Jul 2020 20:09:00 +0000 http://daxueconsulting.com/?p=15510 Data source: askCI.com- Market size of telemedicine in China from 2015-2019 Telemedicine consumer penetration Given the COVID-19 situation in the beginning of 2020, it is no surprise that the penetration rate jumped up by 2% YOY. By April 2019, the number of users of online telemedicine services in China had reached 45 million, with industry […]

This article Telemedicine in China: Healthcare reaches a new status quo during the COVID-19 pandemic is the first one to appear on Daxue Consulting - Market Research China.

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telemedicine market size

Data source: askCI.com- Market size of telemedicine in China from 2015-2019

Telemedicine consumer penetration

Given the COVID-19 situation in the beginning of 2020, it is no surprise that the penetration rate jumped up by 2% YOY. By April 2019, the number of users of online telemedicine services in China had reached 45 million, with industry penetration reaching 6.6%. The penetration rate continued to rise from 2018 to 2019 and will likely maintain its growth momentum in the future. It is expected to exceed 8% in 2020 and the scale of users will continue to expand.

The penetration rate of China's telemedicine industry from 2018 to 2020
Data source: bg.qianzhan.com-The penetration rate of China’s telemedicine industry from 2018 to 2020

Telemedicine apps and websites are no longer just patients from 1st-tier cities, but people in 2nd and 3rd-tier cities are beginning to use telemedicine platforms. People under 35 years old are the main users, however, the middle-aged & elderly groups’ needs have not yet been explored. Telemedicine companies should pay more attention to the convenience and operability of online consultation to seize this part of consumers.

The characteristics of telemedicine industry in China

5G technology

Construction of 5G base stations is accelerating and 5G networks are expected to cover prefecture-level cities nationwide by the end of the year
 

Source: Sohu.com – Construction of 5G base stations is accelerating and 5G networks are expected to cover prefecture-level cities nationwide by the end of the year

In 2020, 5G technology helped telemedicine enter a new stage of development and explore new scenarios for application. Telemedicine in China started relatively late. In 1988, the PLA General Hospital conducted a remote case discussion of neurosurgery with a German hospital via satellite, which was the first telemedicine activity in the modern sense in China. China’s telemedicine industry has developed rapidly later on, owing to the development of computer technology, communication technology, digital medical equipment technology, hospital information management technology and a series of core technologies in telemedicine.

In early 2020, during the COVID-19 outbreak, China’s telemedicine was more widely applied and developed with the support of 5G technology. Zte and Sichuan Telecom assisted West China Hospital of Sichuan University and Chengdu Public Health Clinical Medical Center to realize 5G remote consultation of two COVID-19 cases for the first time.

5G telemedicine trolley has been launched in Wuhan Huoshenshan Hospital. In some places, China Mobile has launched the application of “5G infrared thermal imaging temperature measurement” to realize the simultaneous scanning and temperature measurement of many people.

Driven by 5G technology, the application scenarios of telemedicine have been expanded, such as remote ultrasound, remote surgery, mobile ward rounds, remote monitoring, remote consultation and remote first aid.

The uneven distribution of medical resources

In China, the distribution of superior medical resources is extremely uneven. More than 70% of the third-level grade-A hospitals are located in the eastern region, making the potential demand for telemedicine in the central and western regions huge.

The proportion of third-level grade-A hospitals in the three regions in 2018
 

Data source: chyxx.com – The proportion of third-level grade-A hospitals in the three regions in 2018

Telemedicine in China’s ageing society

China’s huge population base has already put medical resources to a severe test. On top of this, China has encountered the problems of relatively unbalanced economic development and unevenly medical resources distribution. At the same time, China’s population is aging, and immense pressure is put on the younger generations to care for the elderly.

The United Nations issued a standard: as 65 years old people account for more than 7% of the total population, the country is considered an aging society. According to data released by Chinese National Bureau of Statistics (NBS), the proportion of the population over 65 years old has reached 11.9% in 2018.

the proportion of people aged 65 and over in China from 2000 to 2018
 

Data source: chyxx.com – The proportion of people aged 65 and over in China from 2000 to 2018

As the elderly have entered a period of decline, they are much more likely to be infected with various diseases than their younger counterparts, which greatly increases the market demand for medical resources. Telemedicine can solve the imbalance of medical services in different regions to a large extent as well as integrate and utilize medical resources through the Internet, which will be conducive to the stability of our society and the protection of people’s healthcare.

Telemedicine platforms in China under the influence of COVID-19

Accelerate the construction of telemedicine platforms in China from hospitals

Due to the COVID-19 outbreak, the urgent need for epidemic prevention and control has promoted the construction of telemedicine platforms in China from hospitals, which reached a new peak in February 2020, with 65 telemedicine platforms from hospitals built in a single month. During the epidemic, in addition to online outpatient services and pneumonia consultation services provided by existing telemedicine platforms, traditional public hospitals and other medical institutions also launched online telemedicine platforms on an emergency basis.

Previously, most of the public hospital informatization construction remained in the “digital hospital” level, such as “intelligent outpatient service”. The degree of informatization is mainly reflected in basic services such as hospital registration, consultation, settlement and medical record management. The epidemic has accelerated the construction of remote online consultation in hospitals and the real patient-oriented Internet diagnosis as well as treatment services which have begun to develop.

Number of Chinese hospitals with own telemedicine platforms from 2019-2020
 

Data source: Xinhua.com – Number of Chinese hospitals with own telemedicine platforms from 2019-2020

Take one of the leading platforms – PingAn Good Doctor as an example

PingAn Good Doctor is the wholly-owned subsidiary of PingAn Group and leader in telemedicine services in China.

It covers four major business segments: online medical consultation, consumption medical care, health malls, health management and interaction. The number of users reached 5.67 million on February 5th, with an increase of 8.4% before the 2020 Lunar new year.

In terms of city distribution, the proportion of customers from new first-tier cities is the largest while the proportion of customers from first-tier cities is the smallest.

In terms of age distribution, consumers aged 24 to 30 account for the largest proportion.

Ping'an Good Doctor users are disproportionately in first tier-cities.
 

Data source: qianfan.analysys.cn, Ping’an Good Doctor users are disproportionately in first tier-cities.

the age distribution of Ping'An Good Doctor users are young, although elderly are more likely to experience health problems
 

Data source: qianfan.analysys.cn, Ping’An Good Doctor users are usually young, although elderly are more likely to experience health problems

Monthly active users of PingAn Good Doctor app increased rapidly since January, 2020 (COVID-19 outbreak).

monthly active users of Ping’an Good Doctor
 

Data Source: qianfan.analysys.cn, monthly active users of Ping’an Good Doctor

Limitations and Opportunities

With the deepening of “Internet Plus”, Internet economy has become an important factor in China’s economic development. “Internet + medical treatment” has been constantly applied and developed.

The coverage rate of 4G network has reached more than 95% and 5G network has been officially commercialized. Software services, cloud computing, big data and other industries are developing rapidly, laying a good technical foundation for telemedicine. With the use of automated and intelligent technologies, telemedicine is gaining more and more recognition from patients. Therefore, it can drive the increase of huge demands and the potential space of telemedicine market will be huge.

Since 2009, a series of established policies have demonstrated the government’s strong determination to develop telemedicine. With the intensive introduction of policies, the policy environment of the telemedicine industry in China is clear and the industry will usher in rapid development.

However, the telemedicine industry in China has not yet developed a mature business mode, remaining some problems like vague pricing policies, uneven payment systems and wide variations in health care from place to place. Additionally, an obvious concern with telemedicine is that it is easy to ignore symptoms that can only be diagnosed in a “face-to-face” setting, leaving health-care providers vulnerable to negligence claims and insurance coverage. At the same time, patients are also prone to misdiagnosis or missed diagnosis.

Social habits and careful regulation hinder the application of telemedicine. For many people around the world including Chinese, the COVID-19 outbreak is already forcing a change in social habits that is likely to have a permanent positive impact on telemedicine.

Author: Qing Zheng


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The mental health market in China awakens through digital channels https://daxueconsulting.com/mental-health-market-china/ Thu, 09 Jul 2020 21:03:00 +0000 http://daxueconsulting.com/?p=48482 While China’s rapid economic development improves the living quality, there are also concerns of worsening mental health in the context of fast-paced life. As a nation that is still recovering from taboos around the topic, the supply does not meet the demand in the mental health care market in China. According to White paper on […]

This article The mental health market in China awakens through digital channels is the first one to appear on Daxue Consulting - Market Research China.

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While China’s rapid economic development improves the living quality, there are also concerns of worsening mental health in the context of fast-paced life. As a nation that is still recovering from taboos around the topic, the supply does not meet the demand in the mental health care market in China.

According to White paper on mental health of Urban Residents in China, among 1.1 million people in the sample, nearly 75% suffer suboptimal levels of mental health  while only 10.3% enjoy a healthy mental status. The paper also indicates that there is a relationship between the mental health and physical health. 50.1% of people who have physical health also suffer mental health problems. Specifically, people who are diagnosed with tumours, diabetes and hypertension are more likely to have anxiety and depression.

A more recent survey by Teenager newspaper reported that in 2018, more than a third of the young adult in the age group 14-35 were at risk for depression and 10% had severe depression. The rate of young adults with no mental health issues dropped by 5.3% between 2008 and 2018. The risk of mild-to-moderate depression increased 5% (compare to 2008) and the risk of severe depression was also higher than in 2008. All the evidence points out the fact that more and more people in China are facing mental health problems. Additionally, the Chinese government announced a series of documents (Health China movement健康中国行动) to urge local school and institutions to pay more attention to children and teenagers’ psychological wellbeing. It is therefore important to understand the current development of China’s mental health care market and how it is organised.

Mental health care market in China: The growth of C2C psychotherapy online platforms

According to iiMedia research, the scale of e-commerce users of therapist services in China exceeded 20 million in 2018, and it is expected to triple in 2020. Rather than offline services, Chinese tend to choose online therapist services as it is more convenient and private. There are a large number of consumers needing a therapist for emotional setbacks as well as depression. This research suggests that with the development of user education the growth of the e-commerce market for therapist services will slow down in the next few years, and the services will refine themselves with more diversified segments.

Chinese go online for therapy sessions

Data source: iiMedia, Chinese go online for therapy sessions

Song Guo Qing Su (SGQS松果倾诉) and Hao Xin Qing (HXQ 好心情) are the e-commerce psychotherapy platforms that are trending. Both SGQS and HXQ use a C2C business model to deliver their service. SGQS attracts many independent yet less qualified therapists to join the platform. A client can choose either to communicate via text or a call and the therapists will charge accordingly. The price is in a wide range and usually much cheaper than the professional therapist in the hospital. However, SGQS does not guarantee the quality of the therapists. The same kind services are proposed on Tao Bao (淘宝) as well.

In contrast, HXQ is relatively more professional in terms of quality of therapists. According to HXQ website, the therapists registered with HXQ are all from public hospital psychiatry, neurology and psychology department doctors. Almost 20 thousand psychiatrists, accounting for 80% of the psychiatrists nation-wide, are registered with HXQ. HXQ uses the cloud and big data technology that share the sources with the supply chain of the medical and health products. Hence, HXQ is not only a provider of psychological consulting services but also a health supplement retailer.

CEO of HXQ’s presentation about online mental healthcare market in China

Image source: Sohu new report, CEO of HXQ’s presentation about online mental healthcare market in China

Supply in the the mental health care market in China

In a China Paradigms interview, Zhang Ying Fei, a psychological therapist in China points out that the Chinese mental health market is underdeveloped. Even though many people want to become a therapist and some of them do obtain a certificate, low future income and high upfront investment are obstacles. In order to get the certificate, aspiring therapists need to invest time and money for training, which normally lasts six months to one year.

Independent therapists face unstable income and high investment in training

The supply of therapists in China is short partly due to the sacrifices that therapists must make. According to Zhang, “Even if someone has the certificate they are not going to be a therapist. Who can really be a therapist; according to what I observed are those that are really determined and so they have to sacrifice many things; their time, their current job”


See our China Paradigms episode with Zhang Ying Fei


Zhang says the length of the training is not enough to train people professionally. Therefore, extra investment of time and money is needed for more professionalism. This normally takes a few years and the student needs to be financially independent to do so. The low income is another obstacle, being an independent therapist in China does not guarantee a high income. It is quite the contrary, most of the people take this profession as a part-time job because of the low income and unstable consumer leads. The pay is around 200 to 300 yuan per hour which is a relatively low return on the prior investment. Additionally, there is time needed to manage the clients.. To summarize, there are four obstacles to become an independent therapist: high investment in time and money for training; low future income; unstable consumer leads and difficulty of self-managing clients.

Opportunities and challenges in mental health care market in China

Data driven technology to improve the service

Mr Chen, the CEO of Hao Xin Qing (HXQ) says the next step of HXQ is to strengthen the online systems and attract more registered doctors to join the platform. Due to the relatively conservative Chinese society which possesses a stigma against mental disorders, in combination with expensive consulting fees, Chinese people with mental sub-health are often not willing to seek professional help.

According to 2019 white paper on Mental and Psychological, 92% of Chinese who suffer mental health problems never receive any treatment. Problem such as depression and anxiety are often ignored. Some of them even refuse to admit they have mental problems. Providing an online platform protect patients’ privacy and reduce the cost for both sides. The white paper indicates that indirect mental treatment via online platforms costs an average of 350 Yuan while the direct treatment via off-line hospital costs 1,032 Yuan. Around 50% reduction on cost via online platforms. In the future, HXQ will consider introducing the offline services for their patients if there is need for rehabilitative treatment.

Future market entrants will have to discuss the growing challenges. First, the therapist’s certificate in China is easy to obtain. This reduces the quality of the therapists and increases the complaints from the consumers. This lack of regulatory policies in the mental health market makes it difficult for people with complaints to report.  Secondly, there is no standard fee in the industry. Companies charge differently, raising concerns about the quality of the service as well as barrier of client trust. Therefore, regulations are necessary for the future to guarantee the growth of the mental health market in China.


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The Traditional Chinese Medicine market: Boosted by COVID-19? https://daxueconsulting.com/traditional-chinese-medicine-market/ Sun, 14 Jun 2020 20:31:00 +0000 http://daxueconsulting.com/?p=47912 Traditional Chinese Medicine takes 30-40% of China’s pharmaceutical market The Chinese pharmaceutical market consist of biologics, generics, OTC drugs, and traditional Chinese medicine. The traditional Chinese medicine market comprises about 30-40% of drug sales in China. It also displays more rapid growth than other segments of the pharmaceutical market in China. Yangtze River Pharmaceutical Group, […]

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Traditional Chinese Medicine takes 30-40% of China’s pharmaceutical market

The Chinese pharmaceutical market consist of biologics, generics, OTC drugs, and traditional Chinese medicine. The traditional Chinese medicine market comprises about 30-40% of drug sales in China. It also displays more rapid growth than other segments of the pharmaceutical market in China. Yangtze River Pharmaceutical Group, Shanghai Pharmaceutical Co Ltd, and Yunan Baiyao Group take up over one-third of the market share, indicating a highly consolidated market. They all provide traditional Chinese medicines. Regarding the traditional Chinese medicine market specifically, key players involve China TCM, Yunnan Baiyao, Beijing Tong Ren Tang, Guangzhou BYS, and Pien Tzhe Huang. TCM products are generally categorized into Chinese patent medicines, decoction pieces, and Chinese herbs.

The traditional Chinese medicine market in China will keep growing in the new normal

Though often controversial in modern times, Traditional Chinese Medicine’s (TCM) has played a significant role in the health care system in China since ancient times. It is predicted that TCM will continue to grow in significance in the post-COVID-19 era in China. A survey about public trust in TCM in China showed that, as of November 2019, 49% of Chinese respondents prefer traditional Chinese medicine to Western medicine treatment (51%). Recent years have also witnessed a steady growth in the volume of diagnosis and treatment of medical institutions specializing in TCM. Such a phenomenon is a result of political, economic, socio-cultural, and technological implications. An increasingly aging population, rising GDP per capita, expanding health insurance programs and urbanization, technological advancement in TCM industry, and very importantly, favorable government policies support as well as promotion of TCM in mass media jointly contribute to the TCM market growth.

Notably, the Chinese government has set TCM as a strategic priority to support the development of the medical industry. The policies issued will facilitate progress in TCM medical care, scientific research, education, and culture. It will encourage the establishment of a more sophisticated TCM service network that covers both urban and rural areas. Furthermore, the State Council called for the protection and industrialization of TCM herbs and innovation in the TCM industry.     

The traditional Chinese medicine market scale in from 2020-2024 is expected to be higher after the COVID-19 outbreak.
[Source: China Pharmaceutical News “The TCM market scale in from 2020-2024 is expected to be higher after the COVID-19 outbreak.”]

Chinese herbal decoction pieces and Chinese medicine formula granules are growing in popularity

Among the subcategories of TCM, Chinese herbal decoction pieces (中药饮片) and TCM formula granules (中药配方颗粒) are growing in popularity. TCM decoction pieces are mainly Chinese herbs that have been processed. It uses decoction technology such as ultra-fine pulverization to processed raw materials (e.g. herb, insect, shell, dried plants) based on Chinese medicine theories and Chinese medicine processing methods, which can be taken directly as a pharmaceutical formula or taken directly, or further processed into Chinese patent medicine products. Chinse decoction pieces can be used directly in clinical treatment. Development of modernized decoction technology has led to the strong growth. The TCM formula granule grew steadily in the past ten years and will also continue to display an upward trend in the future.

The midstream traditional Chinese medicine market is the core of TCM industry, the production of which will impact the development of the upstream market.
[Source: iiMedia “The midstream TCM market is the core of TCM industry, the production of which will impact the development of the upstream market.”]

Upon doctors’ prescription, the assistants do not give patients raw materials, but processed recipes, patients will have to use these powders or liquid to make a Chinese medicinal soup. With the policy dividend, the Chinese decoction pieces sector has developed steadily. The revenue growth rate bottomed out in 2018 and reached 210.49 billion yuan, an increase of 14.2% year-on-year. It shows a prospect for growth in the coming years. General hospitals and TCM hospitals are the major consumer markets for processed TCM, with revenue accounting for 48%, followed by clinics with revenue accounting for 22.5%.  

The discussion of TCM efficacy polarizes into two competing positions

Before the COVID-19 outbreak, analysts had predicted the strong growth of TCM market revenue. Given that TCM was said to be used to treat over 90% of patients in China during the COVID-19, it is predictable that public trust in TCM will increase, leading to growing demand in the market. The demand here refers not only to the treatment of confirmed diseases but also to general health optimization. TCM is known for optimizing health by balancing the entire body system, hence it is a preventative medicine. Many Chinese believe TCM is effective for general health optimization and treating minor or chronic ailments. Compared to western medicine, they believe TCM does less harm to one’s body  because it’s side effects are minimal. These perceptions have been rooted in the minds and hearts of the majority of individuals in China. 

What TCM Skeptics say

There are also a large number of TCM. Some say the theoretical foundation of TCM was much weaker than that of western medicine which is backed by sound physiochemical studies and research data. TCM is an experience-based subject and has a high level of ambiguity and uncertainty. That is why TCM is still not fully accepted as part of the modern medical science system. The status quo of TCM is that there is a lack of evidence to prove its efficacy due to its complexity. A traditional Chinese medicine prescription may have dozens of medicines, thus it’s hard to tell which one(s) are effective, what is the effective dosage, and whether it remains effective if we single out each ingredient. Even though it has been used in clinical diagnosis and treatment for centuries, it remains an issue to explain TCM’s pharmacological mechanism.    

Inspired by TCM, Tu Youyou managed to identify and extract the powerful antimalarial compound artemisinin
[Source: MedSci “Inspired by TCM, Tu Youyou managed to identify and extract the powerful antimalarial compound artemisinin.”]

In short, it does not come to a simple conclusion to say whether TCM is effective or not. The core of this discussion is not TCM itself, but the research framework and system. Tu Youyou’s achievement in the area of TCM is a stark example of the truth that with an evidence-based research method, TCM is proved to have high value in health care. Tu Youyou (屠呦呦) is a Chinese pharmaceutical chemist, studied traditional herbal medicines and managed to extract a substance, artemisinin (also known as 青蒿素), which inhibits the malaria parasite. She received the 2015 Nobel Prize in Physiology or Medicine for her work and brought TCM into the limelight. 

The role of TCM during COVID-19 remains uncertain

Talking about  COVID-19, while there is still no vaccine for COVID-19, western drugs like Remdesivir and Avigan are said to be effective. In China, during the early stage of the pandemic outbreak, there were news informing that the Chinese Academy of Sciences Shanghai Institute of Materia Medica (SIMM) along with the Wuhan Institute of Virology have had preliminary findings showing that Shuanghuanglian liquid, a traditional Chinese patent medicine, can inhibit the novel coronavirus. Suddenly people set off on a panic buying spree. Amid the buying spree were rebuttals to the rumor, saying that there was no strong evidence to prove that Shuanhuanglian can effectively inhibit the virus.

According to the National Medical Products Administration, by 15 March 2020, TCM was said to be used to treat 91.64% cases in Hubei Province, 89.10% in Wuhan. The proportion of Chinese medicine participating in treatment nationwide is 92.41%. Apparently, with the statistics released, there is a heated discussion on TCM on the Internet. Searches for Chinese medicine on Baidu have increased significantly during the COVID-19. While the mass media keeps promoting TCM, a lot of people are questioning the credibility of the statistics and the link between TCM and COVID-19 treatment based on the statistical approach as well as pathology.  

 Search frequency for 'Traditional Chinese Medicine' spiked during the COVID-19 outbreak in China]

[Baidu Index, Search frequency for ‘Traditional Chinese Medicine’ spiked during the COVID-19 outbreak in China]

Will TCM products be accepted abroad?

Meanwhile, China has sent TCM drugs like Lianhua Qingwen abroad as part of humanitarian aids. It seems like a step forward of TCM on a global scale. However, there is still a long way for TCM to go to be accepted overseas. The key is an evidence-based modern medicine approach, determining the efficacy by comparing the existing evidence, not just the impression and the individual. It is a process from roughness to preciseness. In other words, for TCM to be accepted in the western world, using a western “ruler” in investigations is crucial, just like Tu Youyou’s case. It is going to be tough for TCM to enter the western culture using Chinese standards because it is by nature a complex and unfamiliar oriental mechanism to the western ideology. 

Like many TCM, the adverse drug reactions of Lianhua Qingwen remains unclear
[Source: Baidu Baike “Like many TCM, the adverse drug reactions of Lianhua Qingwen remains unclear.” ]

The public opinions call for a scientific approach in TCM investigation   

Zhong Nanshan, an advisor in managing the COVID-19 pandemic, once written in his autobiography that traditional Chinese medicine, as an accumulation of empirical medicine, must follow the path of evidence-based medicine, truly convince people of its efficacy in the clinic, and then further explore the mechanism. To tackle the bottleneck of empirical medicine in traditional Chinese medicine, practitioners must transform effective individual patient cases of traditional Chinese medicine into generic and effective solutions to the disease groups through modern evidence-based medicine research models.

Therefore, although TCM is raised to a high strategic position in domestic settings, it still has a long way to go in global settings. It is too early to say TCM is a step closer to an alternative to Western medicine, given that there are still various unresolved doubts in its cradle. To compliment or to undermine, there are complicated factors involved. Under the COVID-19 pandemic, it is hard to justify the role of TCM in a phenomenal event like this. Admittedly, it does facilitate people’s thinking about TCM, which will contribute to the development of TCM investigation in the health care system in China. Perhaps in the “new normal”, we will witness a transformational journey of TCM in China, endorsed by the government’s initiative and leading practitioners coming out of the pandemic.  


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The eye supplements market in China: Driven by office workers and elderly https://daxueconsulting.com/eye-supplements-market-in-china/ Tue, 09 Jun 2020 22:19:00 +0000 http://daxueconsulting.com/?p=47785 The eye supplements market in China is growing Facing the increasing elderly population and risks of eye diseases for office workers, eye supplements market in China is growing.  Statistics show, China’s elderly population will increase to 418 million in 2035, accounting for 1/4 of the total population. Cataract and glaucoma are often the most common […]

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The eye supplements market in China is growing

Facing the increasing elderly population and risks of eye diseases for office workers, eye supplements market in China is growing. 

Statistics show, China’s elderly population will increase to 418 million in 2035, accounting for 1/4 of the total population. Cataract and glaucoma are often the most common problems of eye health in the elderly. Age-related macular degeneration (AMD) is another big eyes-related issue. In China, 4 million people suffered from age-related macular degeneration in 2017. It has become one of the important reasons affecting the eye health of the elderly. The incidence of age-related macular degeneration increases with age. Timely taking of eye supplements can help to treat AMD at an early stage. Otherwise, it is highly likely that the lesion will cause severe visual impairment or even blindness.

Besides the silver generation in China, white-collar workers in China are the ones who experience various high-energy blue lights such as mobile phones and computers. This blue light radiation for a long time leads to various problems such as eye fatigue, itching and soreness. At present, the prevention of visual damage caused by blue light is the main directions of the eye healthcare market in China.

The retail value of eye care market in China is increasing

In 2014 retail value of eye care market in China accounted for 24 billion yuan. In 2019 it reached 28 billion yuan.

Retail value of eye care market in China
[Data Source: Euromonitor, ‘Retail value of eye care market in China’]

The eye care market includes eye disease medicine (cataract medicine, glaucoma medicine) industry, eyewear industry, eye protection industry. Eye supplements include Chinese medicine eye patch, eye drops, blueberry nutrition capsules, etc.

The concentration ratio of the eye supplements market in China is 36.4%. The compound annual growth rate (CAGR) of this market was higher from 2005-2012 and accounted for 9%. From 2012-2019 it was 5.1%.

Different reasons for purchasing eye health supplements

According to iimedia research, in 2019 19.8% of the respondents preferred health supplements related to eye care and pressure reduction.

Category preferences of health supplements consumption in China
[Data Source: iimedia, ‘Category preferences of health supplements consumption in China’]

High rate of eye-related diseases in China

Data shows the prevalence rate of cataract in China among those aged between 60 – 89 years old is around 80%. It is above 90% for those older than 90 years old. Besides, around 25 million elderly people in China in year 2018 had the macular degeneration issue. The age-standardized prevalence rates of glaucoma have increased over the past 20 years, reaching 2.6% in rural China.  

People with macular degeneration in China
[Data Source: Age Club, ‘People with macular degeneration in China’]

Big number of people with myopia creates opportunities for eye supplements market in China

In 2016, the number of myopic patients in China has reached 600 million. By 2020, the total number will reach 700 million, accounting for about 49% of the total population.

People with myopia in China
[Data Source: BigData, ‘Number of people with myopia in China’]

According to the “Results of Chinese Children and Adolescents Myopia Survey 2018”, the overall myopia rate of children was 53.6%. Among them, 14.5% of 6-year-old children, 36% of primary school students, 71.6% of junior high school students. 81% of high school students had myopia. The myopia problem of children and adolescents becomes more and more serious as their academic performance increases. Myopia is also a driver of the eyeglasses market in China.

People with myopia in China by age consumers of the eye supplement market in China
[Data Source: BigData, ‘People with myopia in China by age’]

China’s myopic population is already huge. At the same time the situation is getting worse with the popularity of different electronic devices in China.

Lutein and zeaxanthin products grow in the eye supplements market in China

The combination of zeaxanthin and lutein can filter harmful blue light, protect eyes from oxidative stress and radical damage. Besides, it reduces macular damage, playing a role in maintaining normal vision of the retina. Such supplements also prevent age-related macular degeneration. In addition, lutein protects eyesight, delaying the progression of myopia, and alleviating visual fatigue. However, the human body cannot synthesize lutein itself. That is the reason of growing demand for lutein-based eye supplements. In 2008, the National Health Commission approved Lutein Ester from Marigold Flower as a new resource for food efficacy.

Lutein and zeaxanthin production in China

In the pharmaceutical industry in China,  lutein and zeaxanthin is used in the development of eye care products.From 2012 to 2016, the compound annual growth rate of products based on lutein and zeaxanthin were 25% and 18%.  Between 2017 and 2020, the lutein price compound annual growth rate will reach 6.3%. The market size will exceed 350 million US dollars in 2020.

Chinese enterprises have officially produced lutein since 2000. There are two types of products, natural and synthetic. The latter has the largest output (a company in Lanxi City, Zhejiang Province). The domestic annual production capacity of lutein has been 10-20 tons.

Blueberries eye supplements production

Companies also widely use blueberry to produce eye supplements. Blueberries contain an antioxidant called anthocyanin that may provide eye protection and even improve vision. China’s northeast Daxing’anling region has established a domestic blueberry production and processing base. At present, Chinese companies export blueberry dry powder that meets international standards to Japan and Europe. The estimated annual export volume is about 10 tons.

COVID-19 impact on eye supplements market in China

According to Baidu index, the search for ‘eye care’ grew after the lockdown. But none of these researches are related to eye supplements. Instead, they are related to anti-blue light electronic devices, eye-protection exercises and eye-care instruments.

Eye care related search terms

Baidu index: eye care related search terms

Prospects of eye supplements market in China

Eye supplements targeting the old people have great market potential. Especially for those have macular-degeneration issue. A Chinese company called BY-HEALTH (汤臣倍健) launched a product called ‘EASEYE’ (健视佳) in 2018 targeting at this group. It earned 47 million yuan in terms of revenue and this company is expanding its domestic market.  This product contains triple nutrients of β-carotene, lutein ester and anthocyanin, which has the effect of alleviating visual fatigue. Moreover, elderly people’s health awareness becomes higher due to the coronavirus outbreak in China.


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China Paradigm 104: Running an oral care business in China after selling a 400-person food delivery company https://daxueconsulting.com/china-paradigm-oral-care-business-china/ Mon, 25 May 2020 04:53:02 +0000 http://daxueconsulting.com/?p=47648 Oral care business in China Matthieu David interviews Lucas Englehardt, founder & CEO at xixilab. Hard work pays off. At least this was the case for Lucas’s first business which was food delivery. Using flyer marketing he’s managed to grow it into a sizable business and then eventually sell it to a German company for […]

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Oral care business in China

Matthieu David interviews Lucas Englehardt, founder & CEO at xixilab. Hard work pays off. At least this was the case for Lucas’s first business which was food delivery. Using flyer marketing he’s managed to grow it into a sizable business and then eventually sell it to a German company for a great deal. Now Lucas Englehardt is focusing on the dental care market and has been successful in building xixilab into a profitable business in China, in a country that has a powerful public healthcare system. But what products does xixilab sell and what marketing strategies does it employ to generate revenue? Let’s find out in this new China Paradigm podcast.

  • 0:15 Guest introduction
  • 3:13 Story Time: Why xixilab?
  • 7:21 Customizing and Remixing – how xixilab develop their product
  • 11:03 How to maintain product quality while going through the approval process
  • 13:00 Supply and Demand – how xixilab keeps its prices low
  • 16:19 The state of the market – how privatized is teeth care in China
  • 18:16 How does xixilab market directly to their consumers?
  • 19:25 Teeth whitening and teeth straightening – which one is xixilab’s focus product?
  • 22:34 More about xixilab’s company size and business
  • 23:29 How did Lucas Englehardt raise money for his business?
  • 25:24 China Accelerator – why would a seasoned entrepreneur benefit from it?
  • 28:10 Social Media Marketing – China vs The West
  • 29:54 About food delivery marketing – Lucas Englehardt’s second business
  • 36:04 Making It Work – the vision behind Lucas Englehardt’s food delivery business
  • 39:26 The state of the food delivery business in China right now
  • 43:39 Two Different Approaches – Lucas Englehardt’s xixilab business vs his former food delivery business
  • 47:39 What book has inspired Lucas Englehardt the most in his entrepreneurial journey?
  • 49:50 What books about China would Lucas Englehardt recommend?
  • 51:30 What productivity tool does Lucas Englehardt like best in China?
  • 55:09 What failure and success has Lucas Englehardt witnessed in China?

🖱 China Paradigm website

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We believe, that China, with 20% of the world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.


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The healthcare market in China https://daxueconsulting.com/healthcare-market-china/ https://daxueconsulting.com/healthcare-market-china/#respond Mon, 18 May 2020 21:20:00 +0000 http://daxueconsulting.com/?p=16205 The healthcare market in China continues to expand rapidly, driven by an aging population, economic growth, and an expanding basic health insurance. With the growing awareness of healthcare in China, the market is emerging fast.  The pharmaceutical market in China is considered as one of the main sectors in the economy, encompassing many departments of […]

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The healthcare market in China continues to expand rapidly, driven by an aging population, economic growth, and an expanding basic health insurance. With the growing awareness of healthcare in China, the market is emerging fast.  The pharmaceutical market in China is considered as one of the main sectors in the economy, encompassing many departments of healthcare field like the manufacturing of pharmaceutical machinery, clinical instruments, manufactured chemical substances and medications. There is an increasing number of leading global corporate organizations which have found significant long-term prospects in the healthcare market in China. Hence, a large number of overseas pharmaceutical corporations have already set up or expanded their presence in China.

This article will take a look at some of the main trends in the healthcare market in China, especially in tangent with COVID-19.

COVID-19 impact on healthcare in China

The COVID-19 has disturbed mankind’s way of life. Corresponding to the change in life, the consumer demand varies. To dip into the COVID-19 impact, here is a peek at the impact on healthcare in China.

Key sentiment: treat yourself

Since the epidemic, 75% of consumers are giving greater importance to their wellbeing, the demand of products for precaution such as dietary supplements, traditional Chinese medicine, vaccines and health insurance are expected to grow.

Mental treatment

Chinese mental health was also impacted by COVID-19. During the epidemic, many individuals have reported that themselves and their families have suffered from insomnia. Because of the quarantine, young Chinese people often stay up late watching series and playing games, damaging regular sleeping patterns. Some of them stated that they need help from melatonin and sleeping pills. The situation got even worst for medical workers. Due to high pressure and daily limited scope of activities, mental health significantly weakens and even aroused mental health disorders. When it comes to COVID-19 impact on healthcare in China, mental healthcare should also be taken into consideration.

The adoption of technology in healthcare offerings would be accelerated

A notable feature of China’s response to the COVID-19 has been the widespread use of mobile apps for medical information and services. Healthcare apps like Ping An Good Doctor, Ding Xiang Yuan, and Chunyu Doctor saw their user bases grow dramatically in response to the COVID-19. Ping An Good Doctor, for instance, reported a 900 percent increase in new users from December 2019 to January 2020.

During the epidemic, some Chinese hospitals are utilized robots to assist medical workers. Wuhan’s Hongshan Sports Centeri used robots and IoT-enabled technology to monitor patients’ temperatures, vital signs, heart rates, and other indicators to reduce personal interaction.

Focus on pharmaceuticals and vaccines

After the official confirmation that COVID-19 was human-to-human transmissible, Chinese citizens were keen on exploiting methods to combat the virus. Xinhua advised concerned people to try Shuang Huang Lian, an oral remedy, to combat virus, backing up the claim with a study by the Shanghai Institute of Meteria Medica and the Wuhan Institute of Virology. After the news report, Shuang Huang Lian sold out across the country and reached its peak on Baidu search even though the claim was denied by the popular medical information site Dxy.

 Shuang Huang Lian and COVID-19 searches on Baidu the healthcare market in China

[Source: Baidu Index, Shuang Huang Lian and COVID-19 searches on Baidu]

However, the Chinese pharmaceutical industry did stand in the spotlight during COVID-19 epidemic by proving its efficacy by practice. Of the confirmed cases of COVID-19 in China, 74,187 people used traditional Chinese medicine, accounting for 91.5%. Observation of clinical efficacy shows that the total effective rate of Chinese pharmaceutical to combat the virus has reached more than 90%. With the effective result shown, the global demand for Chinese pharmaceuticals are expected to soar.

Since the outbreak of COVID-19, people paid continuous attention to vaccines, which is seen as the core method to change the status quo and bring to normal life back.

Vaccines search during Coronavirus on Baidu

[Source: Baidu Index, Chinese netizen searches for vaccines during COVID-19]


Segments of the healthcare market in China

People’s growing awareness of healthcare and the acceleration of population aging have brought prosperity to healthcare market in China.

Healthcare services and facilities in China

Healthcare in China is mainly supported by facilities such as hospitals and nursing homes.

Hospitals in China

The total number of hospitals in China has increased significantly over the last decade from roughly 197 thousand in 2008 to about 33 thousand hospitals in 2018. The region with the highest number of hospitals in China had been Shandong province with 2,451 hospitals, followed by Sichuan province with 2,219 hospitals. The booming trend of Chinese hospitals can be interpreted by the improve of China’s medical security system. 1,344.52 million people, over 95% of the country’s total population had been covered by the basic medical insurance system.

Chinese hospitals are divided into public hospitals and private hospitals by economic type. There had been 21,165 private hospitals in China, including 2,185 new ones compared with the same period of 2018 and accounting for 63.9% of the total number of hospitals. Social capital largely flows to specialized hospitals which need low investment but produce high return on investment and are in demand. In China, over 65% of private hospitals are specialized hospitals.

Nursing homes in China

With the increase of income and the improve in the pension system in China, pension consciousness is gaining popularity among the elder, the demand for nursing homes in China is stimulated. From 2013 to 2017, the number of patients in nursing homes in China showed an overall upward trend, which reached more than 2 million in 2018. However, the supply gap was growing from 2016 to 2018, reaching 9.14 million in 2018. The composition of nursing homes is unified since most of them are government facilities; there are relatively few privately owned ones.

Regarding the required services for nursing homes, 18.9% of China’s elderly population requires professional treatment, however, 15.9% of practitioners lack senior-focused professional training and 76.9% only receive fundamental training.  Related searches to “nursing homes” are “price,” “is it profitable to run a private nursing home,” and “how much is the nursing home per month.”

The medical device market in China

AI in China’s healthcare

AI is greatly applied in the healthcare market in China. The market size of the AI-related healthcare industry already reached 9.6 billion RMB. In 2019, AI expenditure in Chinese hospitals was RMB1.7 billion, with an increase of 88% over the previous year. A survey conducted by AI Blue Book – Chinese AI development in healthcare 2019 shows that a majority of Chinese respondents (78.4%) hold supportive attitudes towards the development of AI in healthcare.

AI has become a national strategy in China. The state has put forward higher requirements for the development of medical artificial intelligence. In July 2017, the State Council issued the “Circular if the State Council on Printing and Distributing Plan for Artificial Intelligence Development in a New Era”.

AI’s unprecedented tech advancements stood out during COVID-19. Regarding healthcare, the most visible use of AI is in mass surveillance and diagnosis which greatly help on combating the virus.

The biotech market in China

The industry scale of the biotech market in China boomed from 2010 to 2017, with a growth from RMB315.6 billion to RMB919.4 billion. The average CAGR is 17.7%. In China, the biotech industry are divided into seven categories: biomedical industry, biomedical engineering, bioagriculture, biomanufacturing industry, bioenergy industry, bioenvironmental protection industry, and bioservice industry.

The Market Size of biotech in China, growing part of the healthcare market

[Data source: chyxx.com –The Market Size of biotech in China, 2010-2017]

Biotech greatly contributed to speed up the confirmation of COVID-19. The core of COVID-19 testing diagnostic kits are Biochip, which enables virus testing within 15 minutes.

The diabetes treatment market in China

China is currently the country with the largest number of diabetes patients, which is around 116.4 million adults. The prevalence of diabetes in China increased by 2.7% from 2008 to 2013. The 20 to 39-year age group drives the increase of over-weight and obesity. IDF estimates that the annual health expenditure on diabetes in China is 294.6 billion dollars, ranking the first in the world.

In the early stage of diabetes, the increase in blood sugar of diabetic patients will not cause obvious symptoms of discomfort. It can only be discovered and diagnosed by blood collection, which makes it difficult for early detection and screening of diabetic patients. The penetration rate of diabetes diagnosis and treatment in China is only 30%, and over 60 million patients have not received treatment. With the development of economic, the national healthcare in China raises. Local governments have proposed a policy of free medical examination for the elderly once a year. In the early future, the demand of diabetes treatment will continue to expand with increasing penetration rate of diagnosis.

Dominated by foreign brands

Foreign brands still dominate the diabetes treatment market in China. They remain as the major contributors of new diabetic drug innovations. Compared with the global market, China’s diabetes drug structure is backwards, with traditional hypoglycemic drugs as the mainstay. But the new hypoglycemic is developing. In the adjustment of the national medical insurance catalog in 2017, five domestic DPP-4 inhibitors were included in the national catalog, and then liraglutide also entered the national medical insurance catalog through national negotiations. The launch of the new mechanism of hypoglycemic medicine in China and the introduction of them into the national medical insurance will bring about a structural upgrade of the domestic diabetes drug market. However, due to the high price of the new mechanism of hypoglycemic drugs, they are only used as second-line drugs.

Medicine market in China

Pharmaceutical market in China

China’s pharmaceutical market has been constantly growing in recent years. It is estimated to reach $161.8 billion by 2023 and take a 30% share of the global market. As part of the “Made in China 2025” industrial plan, China hopes to reinvent its pharmaceutical industry. The pharmaceutical industry is a high-technology field that requires massive amounts of research and development.

The vaccine market in China

As an important precaution method, vaccine is spurring in the healthcare market in China. Driven by the ‘Two Child Policy’ and the booming demand for novel vaccines such as HPV vaccine, the market size of Chinese vaccine is estimated to grow to 40 billion yuan in 2025.

Market size of Chinese Vaccine

[Data source: Statista, size of Chinese Vaccine Market, 2019-2025]

There are two categories of Chinese vaccine one stands for public sector (Category I) which are compulsory and free of charge, while the other one is part of the private sector (Category II). Category II vaccines in China will be included in the free-of-charge category I vaccines in China, leaving less market share for foreign companies and making it more difficult for foreign-made vaccines to stay in the Chinese vaccine market.

The traditional Chinese medicine (TCM) market in China

The market size of TCM is expected to reach to RMB537.6 billion in 2020, which account for 32.4% of the medicine market in China. TCM treatment shared the same popularity as western medicine when it comes to healthcare in China. A survey shown that 49% of respondents prefer TCM treatment, which is basically the same as that of Western medicine.

The Market Size of TCM in China, 2011-2020

[Data source: Qianzhan, The Market Size of TCM in China, 2011-2020]

Indeed, we can find the first traces of traditional Chinese medicine 5,000 years ago. The treatment also adapted to the modern life and modern practices of the Chinese medicine. Traditional Chinese medicine has spread to 183 countries and regions in the world, currently 103 Member States have approved the use of acupuncture, 29 of which have established laws and regulations on traditional medicine, and 18 have included acupuncture in the medical insurance system. With the international recognition of traditional Chinese medicine and the “Belt and Road Development Plan for Traditional Chinese Medicine (2016-2020)” and other policies to encourage Chinese medicine culture to “go global”, the import and export trade see a good opportunity for development.

Author: Dongni He


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Daxue Talks transcript #60: How to avoid mistakes when checking buyer’s certificates in China? https://daxueconsulting.com/avoid-mistakes-checking-buyer-certificates-china/ Thu, 07 May 2020 03:43:01 +0000 http://daxueconsulting.com/?p=47418 Checking buyer’s certificates in China Find here Daxue Talks episode 60. In this interview, Mathieu Chavant discusses how to check buyer’s certificates in China and will answer the question of whether third-party laboratories provide a list of certified factories or products from factories Full transcript below: What are the common mistakes when checking the certificate of […]

This article Daxue Talks transcript #60: How to avoid mistakes when checking buyer’s certificates in China? is the first one to appear on Daxue Consulting - Market Research China.

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Checking buyer’s certificates in China

Find here Daxue Talks episode 60. In this interview, Mathieu Chavant discusses how to check buyer’s certificates in China and will answer the question of whether third-party laboratories provide a list of certified factories or products from factories

Full transcript below:

What are the common mistakes when checking the certificate of a buyer?

I would say the common – the first one and the biggest one is to consider that you receive a certificate that is good.

People have to be reminded that it’s a piece of paper. It looks good, it has a logo, it has a stamp – it is really fakeable. We live in a world we Photoshop or any other modifying software. It’s really easy to do that. So, when you receive a certificate, don’t consider that your work is done. So, this is the first mistake.

The second mistake is to not know what document you need for the type of product when checking buyer’s certificates in China. There are some products that don’t need to have the certificate but a declaration of conformity. Sorry for the big complicated terms but a declaration of conformity is issued by the manufacturer. Not by a third-party laboratory. So, the manufacturer they produce and they can issue a document to say – my products are compliant. But if you ask the factory for a certificate and then this product doesn’t need a certificate, then basically you make a mistake of not checking buyer’s certificates in China. But it’s not as important as the opposite. You think you need a declaration of conformity, but actually you need a certificate and you don’t – you messed up everything. So, the second mistake is I would say the absence of knowledge regarding the mandatory documents you need for your products.

And the third one is to not consider that we are in a really fast-changing world. I can tell you that there was a third-party laboratory from Europe that was authorized before to issue the certificate and then the European Union decided that this company cannot issue certificates anymore, or they cannot accept the certificate. I can tell you that there are other cases like this and there is official information online – you can ask for a checking buyer’s certificates in China to know what is the most updated information for your product to reassure the buyer.

When we talk specifically about products which are heavily sourced, for instance, FFPQ, N95, and surgical masks – what are the best practice and mistakes to avoid on those products?

So, on this product, I would say it depends if you an experienced actor on the market like you sourced products for many years or you’re a newcomer. For experienced actors, they know that the first thing you need to do is to choose your supplier based on the risk assessment level. And the level you decide it yourself, but in that case right now as we speak this step is often skipped because I would say its maybe people misunderstand it or they forget it exists, but when you choose a supplier you have to understand there are some risks. I’m just going to name a few examples that – are you buying through the real manufacturer? How many layers are between yourself and the manufacturer? The address you have for the manufacturer is it where it’s manufactured or where it’s packaged. How long this factory is making this kind of product? We are talking about products that can save lives or at least protect us to have more dead in different countries. So since how long this manufacturer is doing this? Are they doing the certificate or are they doing some other additional quality control internally?

So, this is all the risk assessment on the manufacturer’s side. On the supplier side. Then, of course, as I already mentioned, you have to do some self-research on the product classification and on the standards. If you go online LinkedIn, Baidu, Google wherever – you just type classification of a medical device or PPE – personal protective equipment, you will find dozens of articles or pdf coming from official sources to help you to understand. It takes one or two hours to get the basic knowledge. Then, of course, when you know the product and the classification, you have to request the related document to the factory. As I mentioned before, non-blurred – we see so many blurred you know when the address is completely blurred on purpose to protect something – I don’t know what, but this is not a valid document. You cannot check anything. Then of course- the step after is to double-check the authenticity of the document with the laboratory and as I would say – this is a personal recommendation to add another layer of quality. It can be a partial test – so as a buyer you are paying for the additional test to make sure that the product that’s going to ship to your buyer is performing according to its intended use.

We talk about it but for instance the filtration system- you can perform a test only on the filtration system but it’s not a complex test, it’s only a partial test. Or you can do an inspection per batch of production. Let’s say you order half a million of masks and the certificate is 6 months old. You can add an inspection, so which means an inspector that goes on-site – look at the product to say that this batch, this half a million products look closer to the golden sample that was sent for the certification and then your buyer – the buyer usually they like these additional steps because it’s exactly for their production. It’s not for the whole production of the factory; it’s exactly for what they are buying.

Can third-party laboratories provide a list of certified factories or products from factories?

It’s another really good question. So, when we see this question, I would say one-third of the requests we receive every day during this time, its related to this list of certified factories or certified products. Here it’s a really tricky question because in our status for the third-party laboratory we are declared officially like any company, but we are also audited and this audited gives us the authorization to issue the certificate and because of all this we have to remain impartial. If you go back to the example, I gave you which the manufacturer, the buyer, and we are in the middle, we are the third party. So, we don’t belong to one or the other. And because of this special status, when we receive this request, it’s impossible for us to give a list because it means that if we give one factory – A – if my company said – oh you should go for factory A, it would mean that all the other factories are less good than the factory A, and this is not the purpose. When we certify the factory or certify the product, it means that at this moment this factory or this product complies with the regulation, but that does mean that they are better than the other one. That’s something that people need to understand, and the second point is – sourcing company – this is their job. They do the due diligence on the factory and the supplier, they do the risk assessment on the factory and suppliers, so they have the list and I would say this is how they make money. So, you should either do your own sourcing or rely on this kind of company.


Any questions? We will find an expert to answer them. Drop your questions in the comments or send us an email – dx@daxueconsulting.com.

This article Daxue Talks transcript #60: How to avoid mistakes when checking buyer’s certificates in China? is the first one to appear on Daxue Consulting - Market Research China.

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Daxue Talks 60: Third-party laboratory cooperation with manufacturers and buyers in China https://daxueconsulting.com/third-party-laboratory-cooperation-manufacturers-buyers-china/ Thu, 07 May 2020 03:41:15 +0000 http://daxueconsulting.com/?p=47405 Third-party laboratory in China In this China business vlog Mathieu Chavant, senior Manager at TÜV Rheinland Greater China, talks about the third-party laboratory, certificates, and declarations to sell in China with the focus on heavily sourced products during COVID-19. Jump to the questions: 00:26 What are the common mistakes when checking the certificate of a […]

This article Daxue Talks 60: Third-party laboratory cooperation with manufacturers and buyers in China is the first one to appear on Daxue Consulting - Market Research China.

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Third-party laboratory in China

In this China business vlog Mathieu Chavant, senior Manager at TÜV Rheinland Greater China, talks about the third-party laboratory, certificates, and declarations to sell in China with the focus on heavily sourced products during COVID-19.

Jump to the questions:

  • 00:26 What are the common mistakes when checking the certificate of a buyer?
  • 02:52 When we talk specifically about products which are heavily sourced, for instance, FFPQ, N95, and surgical masks – what are the best practice and mistakes to avoid on those products?
  • 06:40 Can third party laboratories provide a list of certified factories or products from factories?


Daxue Talks is a show powered by daxue consulting, a china-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.

This article Daxue Talks 60: Third-party laboratory cooperation with manufacturers and buyers in China is the first one to appear on Daxue Consulting - Market Research China.

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