Navigating the Pitfalls of Medical Device Global Expansion: A Strategic Guide for Chinese Enterprises

At a recent medical exhibition, “going global” emerged as one of the most frequently mentioned keywords by experts across the board. Moreover, amidst the bustling exhibition halls, a well-known product selection delegation from Indonesia and representatives from major Russian pharmaceutical companies even finalized intent-to-cooperate agreements with Chinese enterprises on-site, leaving those who had previously been skeptical profoundly impressed.

Is Going Global Really as Rosy as It Seems for Medical Device Companies? How Should They Plan Their International Expansion, and What Pitfalls Lie Along the Way? After interviewing industry insiders, VCBeat has compiled this article to serve as a reference for companies considering overseas expansion.

It is logical that global expansion has garnered significant attention from China’s medical device industry in recent years.

China's medical device industry has experienced rapid growth in recent years and is being cultivated as a future pillar industry with policy support. Currently, China has largely achieved domestic production in the field of low-cost basic medical devices; in the realm of high-end devices, the innovative achievements of China's medical device sector are evident to all, entering a decisive phase for achieving import substitution with domestically produced alternatives.

However, the industry’s rapid growth has inevitably led to more intense competition and escalating “involution.” Coupled with factors such as centralized procurement, profit margins for medical device companies have been significantly squeezed. They need to open up a “second battlefield” to expand their development space.

Of course, the prerequisite for market expansion is that one must be strong internally. In the past, there was a significant gap between China’s medical device industry and global standards, making international expansion merely an unrealistic aspiration. In recent years, China’s medical device sector has developed rapidly. Although some gaps remain compared to the world’s leading levels, it is an indisputable fact that its global competitiveness has improved substantially. Consequently, overseas markets, which can provide a “higher ceiling” for the growth of domestic medical device companies, have naturally come into focus.

Relatively speaking, Europe and the United States boast well-established regulatory and healthcare security systems, creating favorable conditions for the market launch and commercialization of innovative drugs and medical devices. The relatively tolerant pricing policies for innovative products provide strong incentives for realizing revenue from subsequent offerings. These regions also offer corresponding conveniences to enterprises in areas such as R&D and financing. Consequently, they have consistently remained popular destinations for Chinese medical device manufacturers seeking global expansion.

At the “Medical Device Overseas Expansion Forum and Global Medical Innovation Product Selection Meeting,” part of the “8th Future Healthcare Ecosystem Expo” (hereinafter referred to as “VBEF”), organized by VCBeat, VB100, Eggshell Research Institute, and VCBeat Orange, with strategic cooperative support from the Administrative Committee of Tianjin Binhai Zhongguancun Science Park and Beitang Bay Digital Economy Industrial Park, and jointly presented by the Future Healthcare Ecosystem Exhibition Area and Health Intelligence Valley, trade representatives from Europe prominently showcased their local competitive advantages.

For instance, Xiao Jia, Director of the Life Sciences Sector in China at IDA Ireland, stated that Ireland boasts a robust economy, high educational standards, an internationalized workforce, moderate labor costs, and favorable tax policies, making it one of the best global destinations for investment. Han Rui, Consul for Life Sciences and MedTech at the British Consulate-General in Shanghai, noted that the UK is one of the world’s top three life sciences hubs, featuring world-leading research capabilities and an innovative ecosystem. The UK government is committed to investing in the life sciences industry, providing tax incentives through policies supporting R&D and exports. Zhang Shumin, Senior Trade and Investment Officer at ACCIÓ (Catalonia Trade & Investment), also highlighted that the region has a vibrant life sciences startup scene, particularly with significant growth potential in digital health, making it a popular destination for international institutional investors.

On the other hand, in emerging markets such as Southeast Asia and the Middle East, Chinese medical devices also present significant opportunities due to their high cost-effectiveness.

For instance, driven by sustained high-speed economic growth, Indonesia’s demand for medical devices and medical consumables is steadily rising, with its market size continuing to expand. At the VBEF “Indonesia Market Entry Special Matchmaking Session,” Indonesian guests shared insights on local policies, regulations, and the investment climate, as well as strategies for establishing close collaborative partnerships with Indonesian companies.

Several clinical experts from Indonesia even stated directly,Indonesia has a pressing demand for surgical instruments。

The Middle East has emerged as a newly discovered “gold mine.” Cai Shixuan, Executive Director of Jianshang Chuhai, which focuses on helping medical device companies expand into the Middle East, stated thatThe Middle East and North Africa (MENA) region comprises 23 countries, covering a population of approximately 500 million, indicating substantial market potential. Among these, Saudi Arabia and the United Arab Emirates stand out with the largest populations, high economic development, and the most significant market positions.。

“Take Saudi Arabia as an example, where 70% of pharmaceutical and medical device products are primarily procured through government channels. Some neighboring smaller countries, due to their limited procurement scales, also opt to collaborate with Saudi Arabia by bundling their tenders together. Therefore, once companies penetrate these two markets, they will experience a significant spillover effect.”

“Based on my observations, currentlySaudi clients’ primary perception of Chinese products remains focused on cost-effectiveness. The market for certain products that may be labeled as low value-added is relatively large; categories such as syringes, infusion sets, and gloves have been explicitly identified by customers as being in demand., but rather a breakthrough point. Moreover, much of the Middle East market remains untapped,Domestic innovative medical devices, as well as products that have already obtained FDA and CE certifications, also present ample opportunities.” he added.

While the allure of global expansion is undeniable, it is clearly not as straightforward as often perceived. Significant disparities across countries in cultural contexts, regulatory processes, approval systems, and distribution and sales frameworks all pose substantial challenges for enterprises seeking to expand overseas.

At the “Summit Forum on China’s Path to Innovation in Medical Devices,” co-hosted by VBInsight and Proxima Ventures, Wang Zewei, Head of Strategic Cooperation and Investment at Guoke Hengtai, directly addressed the pain points of medical device companies expanding overseas, such as"Market access is a major pain point."“Previously, manufacturers would entrust overseas distributors to handle local product registration, with the distributor serving as the license holder. However, these distributors often represent more than a dozen other products and prioritize those with the highest profit margins. Consequently, you may find that after securing the registration certificate, the distributor makes little effort to drive your sales volume. In some cases, they even develop competing products similar to yours within a few months. This sometimes forces Chinese companies to launch an alternative brand to re-enter the country or region.”

This reflects inadequate top-level design. Taking localized manufacturing as an example, “countries are promoting local production, and product registration for locally manufactured goods is significantly faster than that for imported products. For instance, the current localization rate of medical device manufacturing in Indonesia is less than 20%. Therefore, Indonesia has introduced a policy similar to ‘Making Indonesia 2030,’ aiming to raise its domestic manufacturing rate to 40% by 2030.”If your products are not locally manufactured in Indonesia, you may be ineligible to participate in centralized procurement for public hospitals in Indonesia, even if you have completed local registration.. However, establishing a manufacturing facility in Indonesia or overseas by a single manufacturer is not actually a cost-effective investment.”

Wang Zewei stated,"Forming alliances to expand overseas remains an effective solution to this problem."“Guoke Hengtai has always relied on the high barriers created by its strong capital and operational capabilities to become an infrastructure builder for the entire medical device ecosystem. Therefore, we are also planning to help domestic innovative companies expand overseas. We can serve as a third-party CRO license holder, while simultaneously investing in shared CDMO manufacturing centers abroad to help companies rapidly achieve market access through localized production. Meanwhile, we are planning a series of initiatives, including shared overseas warehouses, permanent overseas showrooms, shared overseas channel recruitment, shared cross-border CEM systems, shared physician training, and shared overseas surgical support services. These measures can reduce the costs incurred by individual companies when expanding internationally, enabling cost reduction, efficiency improvement, and collaborative global expansion.”

Cai Shixuan stated in an interview with VCBeat,Registration is merely the starting point; subsequent distribution, agency arrangements, and services are all issues that require corresponding consideration.。

“In fact, over the past few years, some Chinese companies have also ventured into the Russian market. At that time, a large number of Chinese products had already entered Russia. However, follow-up after-sales services and other agency support failed to keep pace, resulting in broken products going unrepaired. When users approached local distributors, these distributors shifted the responsibility back to China, severely damaging the reputation of Chinese-made products. They were essentially blacklisted locally, and it will take a long time to rebuild trust. These are painful lessons learned.”

He believes that the internationalization of products can be roughly divided into three steps.The first step is “products going global”, namely, the simple sale of products;Step Two is “Brand Retention”, that is, to retain the brand locally through a suite of brand-aligned services;The third step is “localized operations”, enabling the brand to integrate into the local community and truly imprint itself on people’s minds.

“Terms like ‘going global’ or ‘expanding overseas’ are not particularly accurate. What I emphasize is ‘going deep’—penetrating local markets and understanding the needs of local users, so that our brand can truly resonate with them,” added Cai Shixuan.

He further stated that companies must have a correct understanding of global expansion and be prepared for long-term planning: “There are always those who believe that, leveraging the advantages of being a major manufacturing country, their products will inevitably sell well abroad. This mindset must absolutely change! Even if a product performs well in China, consumer purchasing power and target demographics vary from country to country; these factors mean that the product may not necessarily find a market locally.”

Cai Shixuan further highlighted some of the “pitfalls” by drawing on lessons from expanding into the Middle East: “Chinese healthcare brands are still at a relatively early stage in their understanding of global expansion, so they need to stay vigilant and avoid being deceived. There are many fraudsters in the Middle East who all claim to have various resources. Companies should prioritize partnering with reputable organizations whose backgrounds can be verified to mitigate risks.”

“Take Saudi Arabia as an example; it remains, in objective reality, a society governed by personal relationships.Many local oligopolistic distributors are backed by powerful regional family conglomerates with deep political and business connections. For identical products, the endorsement of such family groups may facilitate success in tender bidding processes.“If you lack any background or connections, you will encounter certain difficulties in this area and it won’t be that easy.”

As a representative of Chinese medical device companies exploring overseas markets, Ji Hualei, Chairman of Yuefan Medical, candidly shared with VCBeat thatIt is not easy for small and medium-sized medical device enterprises in China to expand overseas. Due to size constraints, they cannot simultaneously establish a presence in the global market; nor can they initiate bidding and sales for bulk products.

However, he believes that small and medium-sized enterprises (SMEs) do not face only disadvantages when expanding overseas.Due to their small size, these enterprises are agile and can pivot quickly, with short decision-making cycles. Moreover, their smaller scale makes them less likely to trigger international trade frictions. Meanwhile, small and medium-sized enterprises (SMEs) tend to focus more on niche segments, making it easier for them to establish technological and market barriers.

He cited the experience of taking his company’s migraine treatment device, HeadaTerm, to overseas markets as an illustration of the challenges faced by small and medium-sized enterprises in global expansion.

“HeadaTerm1 obtained its CE mark and FDA clearance around 2017, but its international expansion was far from smooth. Because the FDA classified HT1 as a prescription medical device, we could only make sales upon receiving both a physician’s prescription and payment. As a result, this product saw virtually no sales in the United States over the following few years,” he told VCBeat.

“We subsequently conducted a post-marketing study (PMS) for HT1 in Europe. Multicenter clinical trials demonstrated that our product had a 23% higher efficacy rate than commonly used medications, with no drug-related side effects. This facilitated the product’s relatively smooth inclusion in the national reimbursement lists of European countries such as Denmark,” added Ji Hualei.

Ji Hualei stated that although HT1 has gained market traction in Europe, Canada, and Australia, these successes cannot offset the losses incurred from being unable to sell in the United States. Consequently, Yuefan Medical began seeking further breakthroughs in the U.S. market. Through usability studies conducted in the United States, Yuefan Medical demonstrated that users can operate the product safely with minimal risk by following the instructions for use and leveraging its streamlined human-machine interface. These efforts ultimately paid off: HeadaTerm2 received FDA clearance this year as an over-the-counter (OTC) device and has been recommended by U.S. clinical experts, positioning it to become the company’s flagship product in the coming year.

Although it is challenging for medical device companies to expand overseas, there are many pioneers in China who have made significant explorations. Yuefan Medical’s products have obtained market access in the United States, Europe, Australia, Canada, Israel, and Vietnam, and have been included in the U.S. HSA and FSA insurance reimbursement lists, Denmark’s national health insurance system, and Israel’s HMO national health insurance reimbursement list, achieving phased success in its global expansion. Ji Hualei also shared his experiences and lessons learned in overseas expansion with VCBeat.

Ji Hualei stated,Whether the product can meet market demand is of paramount importance.: “It is essential to listen to the market. Product developers should focus on understanding what users truly want, rather than making assumptions about what they think users want.”

Citing Yuefan Medical’s first product, the anti-nausea and vomiting wristband, as an example, he highlighted the importance of meeting market demands. “For a long time, our team believed that cancer patients undergoing chemotherapy and pregnant women constituted our largest customer base, while motion sickness from car or sea travel did not represent the most valuable market segment. Therefore, we invested substantial resources in developing and educating the medical-grade market.”

“However, the market did not share this view. In fact, our product’s sales in consumer-grade markets—such as for motion sickness (carsickness and seasickness), altitude sickness, and hangovers—far exceeded those in medical-grade markets like chemotherapy-induced nausea and morning sickness in pregnant women. More interestingly, without our knowledge, multiple consumer guides and cruise guides in the United States, Canada, the United Kingdom, and Israel began recommending our anti-nausea wristbands to users. Ultimately, the market taught us that motion sickness represents the greatest demand for our product.”

Furthermore, he believes thatEnterprises Need to Stay Curious, Which May Lead to Unexpected GainsFor instance, in clinical trials of anti-emetic wristbands, Yuefan Medical discovered that certain types of electrical stimulation not only prevent nausea and vomiting but also exert effects in other areas, such as appetite suppression and blood pressure control. Currently, The Ohio State University in the United States, the University of Toronto in Canada, and top Chinese medical schools are collaborating with the company to investigate its mechanisms of action and efficacy.

“This curiosity could enable us to create blockbuster products akin to semaglutide in the medical device sector, delivering benefits to humanity across diverse fronts.”

Regarding the sequencing of international expansion, Ji Hualei also shared his experience of “crossing the river by feeling the stones.” He stated that Yuefan Medical prioritized English-speaking countries, particularly the United States and Canada, when expanding overseas. “The North American market is the largest and fastest-growing region for medical devices. Once successfully penetrated, it offers the greatest benefits and is nearly irreplaceable. Moreover, English serves as the sole working language, making operations more manageable; both countries share a common legal framework, with clear regulations from the FDA and Health Canada, enabling efficient communication. These factors make North America a relatively easier region to develop.”

In contrast, Yuefan Medical has chosen to make the European market its second most important target for international expansion: “It is much more difficult for small and medium-sized companies to develop the European market. First, they must overcome language barriers; just covering France, Germany, and Spain requires proficiency in three languages, making it challenging to find suitable talent for market development and customer service. Second, legal systems vary across countries, and regulations regarding tariffs, value-added tax (VAT), and other aspects are not uniform, which further increases operational complexity.”

For other regions, Yuefan Medical prefers to seek local partners for collaboration. Currently, Yuefan Medical is working with partners in Israel, Vietnam, Japan, and South Korea to obtain licenses, cultivate its brand, and sell products in the Middle East, Northeast Asia, and Southeast Asia.

“We have self-assessed that we lack the local capability to provide product registration and sales services in the local language, and are unfamiliar with local regulations and legal systems. Therefore, we seek partners in these regions who share similar values and are interested in the long-term commercialization of our products. These partners have visited our domestic production facilities in China multiple times for inspections and coordination. Overall, we believe that joint development with partners can rapidly and cost-effectively expand our international market coverage and enhance brand awareness.”

Regarding Yuefan Medical’s overseas expansion, Ji Hualei summarized several key points. He believesFirst, it is essential to clarify that the objective of expanding medical device businesses into overseas markets is to generate profits; regulatory registration is a necessary but not sufficient condition for commercializing medical device products.“Some industry peers place excessive emphasis on regulatory approvals such as FDA clearance and CE marking. In reality, a registration certificate is merely one of the tools for medical device products to generate profit; a large number of dormant FDA registrations fail to yield any commercial value.”

Secondly,Listen to users' voices and understand their needs“This requires companies to be ‘willing to listen’ and ‘able to understand.’ ‘Willing to listen’ means replacing internal thinking (what developers think) with external thinking (what users think), but truly achieving this is quite difficult, and we often find ourselves in a state of dilemma. ‘Able to understand’ entails gaining insight into the cultural backgrounds and consumption habits of consumers in different regions; only by putting ourselves in their shoes can we deliver products and services that satisfy users.”

Finally, there isContinuous Innovation. Ji Hualei illustrated the importance of continuous innovation through usability studies during the process of HT2’s approval as an over-the-counter (OTC) medical device in the United States. “Continuous innovation is crucial; it enables effective adaptation to regulatory changes and requirements, facilitates the adoption of advanced raw materials and manufacturing processes to enhance competitiveness, improves communication with users to boost satisfaction, and ensures long-term profitability.”

“Going global” has undoubtedly become a buzzword commanding intense attention across the industry today. An increasing number of medical and healthcare enterprises are incorporating international expansion into their strategic plans, making the need to build a comprehensive ecosystem more urgent than ever. An investor present at VBEF remarked, “Going global is not only a priority that current medical innovation enterprises must emphasize, but also a long-term commitment. This requires the support of a complete ecosystem. Therefore, moving forward, whether through VBEF serving as a bridge or through collaborative efforts among all stakeholders—including government, industry, academia, research institutions, healthcare providers, and investors—we must actively work together to foster a robust ecosystem and jointly strengthen and expand our global endeavors.”

Furthermore, multiple industry experts also agreed in their communications with VCBeat that,Going global should not be a short-term endeavor driven by fleeting impulses; enterprises ought to forgo immediate gains in favor of long-term strategic planning, working collectively to uphold the reputation of “Chinese medical devices.”。

VCBeat will continue to monitor topics related to global expansion, and we welcome readers to submit topic suggestions and leads.