Why 60% of China's Stapler Enterprises Cluster in Changzhou: A Deep Dive into Its Rise as a Medical Device Powerhouse

Changzhou, located in southern Jiangsu Province and the heart of the Yangtze River Delta, borders Wuxi to the east, Nanjing and Zhenjiang to the west, and Wuxi and Xuancheng (Anhui) to the south. It is equidistant from the major metropolitan hubs of Shanghai and Nanjing, boasting a strategically advantageous geographical location.

In terms of transportation, Changzhou is served by the Beijing-Shanghai High-Speed Railway, the Shanghai-Nanjing Intercity Railway, the Shanghai-Nanjing Expressway, the Nanjing-Hangzhou Expressway, the Yangtze River Coastal Expressway, National Highway 312, the Beijing-Hangzhou Grand Canal, the national first-class port of Changzhou Port on the Yangtze River, and an international civil aviation airport, making water, land, and air transport highly convenient.

Nowadays, Changzhou is striving to join the ranks of cities with a GDP exceeding one trillion yuan. In 2022, its GDP reached RMB 955.01 billion, representing an approximately 12.56-fold increase from RMB 76.03 billion two decades ago.

However, beyond its locational advantages, what humanistic factors have accelerated Changzhou’s rise? Why have industries such as biopharmaceuticals, medical devices, new energy, and new materials clustered in Changzhou? This article presents a preliminary analysis using Changzhou’s surgical stapler industry as a case study, for reference only.

Since the launch of reform and opening-up, China has entered a grand era characterized by entrepreneurship and innovation. Over the past few decades, Chinese entrepreneurs have been broadly categorized into the Class of ’84, the Class of ’92, the Class of ’99, and the Class of 2015.

Around 1984, a group of entrepreneurs including Liu Chuanzhi, Lu Guanqiu, Ren Zhengfei, and Wang Shi embarked on their entrepreneurial journeys, later establishing many well-known companies such as Lenovo, Wanxiang, Huawei, and Vanke.

That year, a group of entrepreneurs in Changzhou also leveraged the local manufacturing base to establish some of the first surgical stapler production facilities in China. In this era of wild, breakneck growth, they introduced little innovation; instead, they entered the market and scaled up through imitation and low-cost strategies, later investing heavily in R&D to gradually transform into technology-driven enterprises.

Around 1992, Fan Minhua founded Poly Pharma, Guo Guangchang resigned to venture into business, and Shi Yuzhu established the Giant Group... Entrepreneurs of the “Class of ’92” began to take center stage.

During this period, Changzhou Zhiye Medical Instrument Research Institute Co., Ltd. was established, focusing on the research and development of surgical and endoscopic instruments (staplers), luminal stents, respiratory surgical instruments, and other products. Compared to the "Class of '84" entrepreneurs, they were more knowledgeable, had a better understanding of market dynamics, and were more familiar with modern corporate governance systems. Nevertheless, their company also suffered from extensive management practices and existed in a "three-no" state: no product layout strategy, no product R&D planning, and no corporate development strategy.

Since 1999, an increasing number of talented individuals have launched startups in emerging technological fields such as the internet, biotechnology, medical devices, new energy, and new materials. The most prominent among them are internet pioneers like Jack Ma, Pony Ma, Robin Li, and Richard Liu.

In Changzhou, Jiangsu, the number of entrepreneurs has also grown geometrically. For example, in the field of surgical staplers alone, numerous companies have emerged since 1999, including Changzhou Kangdi Medical Stapler, Changzhou Haida Medical, Changzhou Huasen Medical, Jiangsu Sanlian Xinghai, Jiangsu Brainsense, Changzhou Ivote, and Changzhou Resus.

Prior to 2005, the numerous surgical stapler manufacturers in Changzhou were largely characterized by extensive management practices and unregulated growth. It was only later that they gradually began to undergo transformation and upgrading, shifting toward technology-driven enterprise models.

After 2005, an increasing number of talented professionals flocked to Changzhou, and local medical device companies began to undergo changes.

Jiang Yikang, who founded Kanghui Medical, the leading orthopedics company, and Kangdi, a leading brand of surgical staplers, is one of the representative figures in Changzhou’s medical device industry. Taking Kanghui Medical, the orthopedic leader established by Jiang Yikang, as an example, the company hired professional managers such as Yang Libo and quality management system expert Wang Zhimin at high salaries in 2006 to implement a comprehensive revolution in its management team and provided equity incentives to the new management.

After Yang Libo took over Kanghui Medical, he first introduced mid-to-senior level executives from Fortune 500 companies, then planned product production and R&D, optimized marketing and overseas business, and deployed listing and acquisition plans.

Following its modernization transformation, Kanghui Medical, which had previously lacked clear direction, established more defined development goals, corporate mission, company culture, and strategic planning. Four years later, the implementation of modern corporate governance systems yielded significant results: in 2010, Kanghui Medical listed on the New York Stock Exchange, raising $68.42 million. Meanwhile, the company embarked on a high-growth trajectory characterized by domestic mergers and acquisitions and global expansion, achieving a net profit of $15.1 million that year, a 32.9% year-on-year increase.

Driven by Jiang Yikang, founder of Kanghui and Kangdi, a group of Changzhou-based stapler manufacturers were compelled into intense domestic competition, accelerating the establishment of modern regulatory frameworks to enhance their market competitiveness.

Following this market transformation, stapler manufacturers in Changzhou have adopted more scientific and compliant practices, facilitating smoother development. Subsequently, Kangdi, a domestic leader in the stapler sector, was fully acquired by Medtronic; Sanlian Xinghai was taken over by Qiaokang Capital (C-Bridge Capital); Changzhou Zhiye Medical, BrainSense, Ivote, and Resus were ultimately acquired by Lepu Medical; and Huasen Medical initiated A-share IPO counseling in 2022.

Interestingly, Kangdi’s founder, Jiang Yikang, had previously established Kanghui Medical, a leading domestic orthopedic company that was also acquired by Medtronic.

Furthermore, just as Zhang Chaoyang mentored prominent figures such as iQIYI CEO Gong Yu, Youku Tudou CEO Victor Koo, and Ku6.com founder Li Shanyou, Jiang Yikang has also cultivated a cohort of entrepreneurs, including Jiang Songbo, Chairman of Sanlian Xinghai; Yang Libo, Founder of BASS Medical Group; Long Weiwei, General Manager of Jianruibao Medical; and Jiang Shihua, General Manager of Weike Medical. [Note: Sanlian Xinghai, Jianruibao Medical, and Weike Medical all operate in the field of surgical staplers.]

After approximately two decades of gradual development, Changzhou’s surgical stapler manufacturers have evolved from a few scattered entities into an industry of modest scale. In contrast to the mere two or three companies present in the 1990s, Changzhou was home to 28 surgical stapler manufacturing enterprises by 2011.

Notably, the steady and rapid development of stapler manufacturers in Changzhou has benefited not only from their own efforts and innovation but also from rapid market penetration and the supervision, guidance, and management provided by local governments.

From the perspective of market development, the market size of surgical staplers in China was RMB 1.2 billion in 2009 and grew to RMB 8.3 billion in 2018, representing a compound annual growth rate (CAGR) of 19.46% over the ten-year period. (Data from Zhiyan Consulting)

From the government’s perspective, China’s medical device market was highly disordered from the 1980s and 1990s to the early 21st century, with regulatory authorities exercising lax oversight over manufacturers of various types of medical devices.

Meanwhile, the quality of enterprises varies significantly; many companies face numerous quality issues due to inadequate manufacturing technologies, while some medical device firms focus solely on imitation, neglecting brand building, innovation, and product quality.

In response to this predicament, the Changzhou Municipal Government at that time intervened decisively.

First, in April 1997, the Standing Committee of the Changzhou Municipal People’s Congress resolved to implement the strategy of revitalizing the city through science and education, subsequently focusing on attracting talent and establishing talent training bases. For instance, Changzhou initiated the construction of a university town in 2002 and introduced more than 10,000 professionals across various fields in 2003. These measures provided a talent reserve for medical device enterprises to achieve modernization and standardization, laying a solid human resource foundation for their rapid development.

In 2005, the Changzhou Municipal Committee of the Communist Party of China and the Changzhou Municipal People's Government decided to transform Changzhou University Town into Changzhou Science and Education City. After years of construction and development, Changzhou Science and Education CityChangzhou has successively introduced research institutions from 101 prestigious hospitals and institutes, including the Chinese Academy of Sciences, Tsinghua University, Peking University, Nanjing University, Harbin Institute of Technology, and Dalian University of Technology, creating the remarkable phenomenon that “while Changzhou is home to no famous universities, famous universities have gathered in Changzhou.”。

Second, the Changzhou Drug Administration provided practical, detail-oriented assistance to enterprises, guiding them to improve quality, emphasize branding, and strengthen research and development. For example, in 2003, the Changzhou Drug Administration, in joint action with the Medical Device Branch of the Changzhou Pharmaceutical Quality Management Association, required enterprises to strictly implement the Regulations on the Supervision and Administration of Medical Devices and other relevant regulations, guided medical device manufacturers in establishing quality management systems, and advised them to focus on brand building and promotion.

In addition, the Good Manufacturing Practice for Medical Devices (Trial), issued by the National Medical Products Administration, came into effect on January 1, 2011. During its implementation, many medical device manufacturers encountered numerous challenges. In response, the Changzhou Municipal Medical Products Administration organized industry experts and representatives from manufacturing enterprises to systematically verify and address difficulties arising from the detailed implementation rules. Furthermore, it developed and released model texts for validation and qualification clauses under sterile GMP requirements, providing demonstrative guidance to 97 medical device manufacturing enterprises in the city.

Third, Changzhou provides certain financial rewards and policy support to medical device enterprises that are committed to product development, dedicated to R&D, and sincere in brand building. For example, in 2009, the Changzhou Municipal Economic and Trade Commission issued documents to support innovation and helped medical device companies such as Chuangsheng, Kangdi, and Jianerkang connect with universities to facilitate industry-university-research collaboration. In 2010, the Changzhou Municipal Commission of Economy and Information Technology and the Municipal Finance Bureau awarded the “Special Fund for Supporting the Development of the Private Economy” to high-quality medical device enterprises including Kangdi.

Driven by corporate innovation, government support, favorable policies, and industry growth, Changzhou’s surgical stapler manufacturers have surged like a rocket, rapidly capturing the top position in China’s market share. Consequently, surgical staplers produced in Changzhou are now sold worldwide.

In April 2011, the “Changzhou 12th Five-Year Plan for the Development of Strategic Emerging Industries” was released.

The Plan points out: Although Changzhou's emerging industries have a relatively solid industrial foundation, many problems still exist. As of 2011, Changzhou's emerging industries, such as medical devices, lacked leading enterprises, and most companies were small in scale; the overall industrial scale was limited, accounting for a low proportion of the city's total economic output; technological innovation capability was weak, with few products possessing independent intellectual property rights, resulting in limited market competitiveness.

Meanwhile, Changzhou believes that although various emerging industries have attracted a large number of enterprises, their layout is fragmented with a low level of intensification. The overall strength of these enterprises is relatively weak, and industrial parks with distinct characteristics have not been formed. Furthermore, investment promotion lacks strategic projects, and there are few projects in emerging industries.

In addition, countries around the world and provinces and cities across China are vying to prioritize emerging industries as key development initiatives. Changzhou not only needs to compete with Beijing, Shanghai, Suzhou, Wuxi, and other regions for resources, but also contend with neighboring areas for talent.

In response to the aforementioned circumstances, Changzhou is determined to concentrate resources and efforts from all sectors to support the development of key areas such as new energy, new materials, biotechnology, and innovative pharmaceuticals. Specifically, in the field of medical devices, Changzhou plans to focus on developing orthopedic implants, endoscopic staplers, hemodialyzers, and digital minimally invasive equipment, building upon its existing strengths in orthopedics and surgical staplers.

Encouraged and supported by policy, a group of stapler manufacturers, including Changzhou Anke Medical, Changzhou Luokeman Medical, Zihang Precision, Jianruibao Medical, and Weike Medical, were established around 2010. Among them, Zihang Precision and Weike Medical were later acquired by Canopus Medical, which successfully completed its initial public offering (IPO) in 2022.

It is worth noting that these companies prioritized scientific research and innovation from their inception. Meanwhile, this cohort of entrepreneurs also demonstrated more modern management thinking; for instance, Yang Libo, founder of Changzhou Jianruibao Medical Equipment Co., Ltd., holds an MBA from Thunderbird School of Global Management and previously transformed Kanghui Medical from a small private enterprise into a multinational medical device giant.

In addition, Changzhou has proposed the following solutions to address the various issues mentioned in the “12th Five-Year Plan for the Development of Emerging Industries in Changzhou.”

The "Changzhou 12th Five-Year Plan for the Development of Emerging Industries" proposed to prioritize accelerating the development of the "One Core, Eight Parks." Among them,

“The One Core” refers to the Changzhou Science and Education Town, while the “Eight Parks” denote eight specialized industrial parks dedicated to emerging industries: creative industries, photovoltaics, biopharmaceuticals, new energy vehicles, wind power, semiconductor lighting, robotics and intelligent equipment, and advanced functional materials.

Taking the biopharmaceutical industrial park as an example, construction of the Changzhou Biopharmaceutical Industrial Park, located adjacent to the Xuejia Exit of the expressway, was officially launched in August 2010. With a planned area of 6.3 square kilometers, the park primarily covers industries such as medical equipment and device manufacturing.

At that time, the Changzhou Biomedical Industrial Park primarily focused on five key industrial sectors, including medical devices and equipment, biotechnology-based novel drugs, and reagents. After significant resource investment, the park achieved rapid development: in 2010, it was approved as a provincial-level science and technology industrial park; in 2011, it was designated as a Jiangsu Provincial Characteristic Industrial Base for Biopharmaceuticals and Engineering.

In 2013, the Changzhou Biopharmaceutical Industrial Park and Xuejia Town implemented an integrated “park-town” management model. The park’s area expanded from 6.3 square kilometers to 20.7 square kilometers, with its key industrial focus extending from therapeutic areas to prevention and rehabilitation. Its strategic positioning was also upgraded to the “Life Health Industrial Park.”

By 2014, 15 projects had signed agreements to settle in the industrial park, with a total investment exceeding RMB 15 billion. Years of accumulation have finally borne fruit.

Through the development of specialized industrial parks, Changzhou’s manufacturers of surgical staplers and other medical devices have gradually clustered together, reducing overall costs and establishing regional competitiveness. The emergence of supply chain enterprises has further refined socialized division of labor, ultimately enhancing corporate profitability and market competitiveness.

To address the challenges of weak technological innovation capabilities and a scarcity of products with independent intellectual property rights among enterprises in emerging industries, Changzhou has leveraged its talent development advantage encapsulated by the phrase “Changzhou has no prestigious universities, yet prestigious universities gather in Changzhou,” to strengthen the cultivation of innovative talents and encourage elite professionals to start businesses. For example, in 2013, physicians from Changzhou Wujin Hospital were deeply involved in the research and development of a pioneering triple-row stapler, which obtained a national patent and received registration approval from the China Food and Drug Administration (CFDA).

Meanwhile, Changzhou has vigorously introduced innovative projects and actively invited medical device projects from countries such as the United States and Israel to establish operations locally. For instance, through the efforts of the investment promotion department, Dekai Medical settled in Tianning District, Changzhou, with its world-first “bioabsorbable stapler pins” project; U.S.-based Biomet Inc. invested USD 15 million to build a factory in Changzhou; and 188 wholly Israeli-owned or Chinese-Israeli joint venture enterprises have established their presence in the China-Israel Changzhou Innovation Park.

In addition, Changzhou has helped bridge connections between enterprises and research institutions such as universities and institutes. In 2015, Changzhou organized a delegation of 38 entrepreneurs to visit Zhejiang University and held a technology matchmaking symposium to explore methods and pathways for bilateral cooperation. In 2021, the Changzhou Municipal Science and Technology Bureau facilitated the partnership between Huasen Medical and Israel’s Trendlines Group, enabling them to collaborate on the joint development of novel staplers.

To address the lack of strategic projects in investment attraction, Changzhou is simultaneously building financing platforms to incubate local enterprises into industry leaders and introducing renowned multinational medical device companies to promote inter-corporate investment and mergers and acquisitions.

Driven by corporate strategic initiatives and supported by the Changzhou municipal government, Medtronic acquired Kanghui Medical in 2012; Stryker merged with Chuangsheng Medical in 2013 for HK$5.9 billion; Covidien acquired a 65% stake in Kangdi Medical Staplers in 2014; and WuXi Capital and CDH Investments collectively injected RMB 100 million into Jianruibao Medical between 2013 and 2014.

It is worth noting that mergers and acquisitions in the medical device sector were highly active during this period, with major multinational corporations such as Medtronic, Johnson & Johnson, and Stryker primarily targeting companies in Changzhou for their acquisitions.

With the support of favorable policies, specialized industrial parks, platforms for innovative talent, and investment and financing platforms,Changzhou’s surgical stapler industry has also developed into a distinctive industrial cluster. According to local official data, in 2022, Changzhou was home to 53 manufacturers of surgical staplers, accounting for approximately 60% of such manufacturers nationwide.。

I had previously contemplated the relationship between “entrepreneurs in the era” and “the era of entrepreneurs.” After completing this article, I have gained new insights:

Entrepreneurs and this place, this era, are mutually reinforcing; the role of entrepreneurs cannot be overlooked. Had the first generation of stapler entrepreneurs not settled in Changzhou, taken root there, drawn nourishment, and grown stronger, Changzhou might not have included the development of the stapler industry in its “Five-Year Plan for Emerging Industries,” and the distinctive Changzhou stapler industrial cluster might never have emerged.

Regardless, it is hoped that local governments will provide tangible assistance to entrepreneurs in overcoming difficulties, enabling more people to achieve prosperity through entrepreneurship and driving urban GDP to new heights through business development.