From Cultural Heritage to Medical Innovation: Shaoxing Yuecheng's Rise as a High-Ground for Medical Device Industry

When Shaoxing is mentioned, the common perception is that of a renowned cultural city nestled in the misty rainlands of Jiangnan. In reality, Shaoxing is also a hub of innovation, having been named by Forbes China as one of the top 30 most innovative cities in China in 2018. Furthermore, Shaoxing has been included in the latest batch of National Innovative City Pilot Programs by the Ministry of Science and Technology and the National Development and Reform Commission.

The healthcare industry has emerged as a prominent sector driving innovative development in Shaoxing City over the past two years. In Yuecheng District, where the Shaoxing Municipal Government is located, the output value of health equipment manufacturing by industrial enterprises above designated size reached RMB 5.55 billion in 2018, with operating revenue of RMB 5.03 billion and profits of RMB 445 million. The region has formed a development pattern led by key enterprises such as Zhende, Haisheng, and Mingzhong, alongside vigorous growth among numerous small and micro enterprises with strong innovation capabilities, while also attracting many high-level overseas entrepreneurial teams.

How to leverage existing advantageous resources and build industrial clusters has become a key challenge in driving sustained innovation.

It is well known that the development of industrial innovation cannot proceed without government support. In this regard, Yuecheng District in Shaoxing has made renewed efforts by establishing the Shaoxing Yuecheng Medical Device Industry Innovation Service Complex. To date, nearly RMB 50 million has been invested solely in the upgrading and renovation of the complex.

In terms of locational advantages, Yuecheng District is situated on the south bank of Hangzhou Bay and at the northern foothills of Mount Kuaiji. Located in the core area of the Greater Bay Area of Zhejiang, it serves as a key node in the integrated development of the Yangtze River Delta and the urban integration of Hangzhou, Shaoxing, and Ningbo. Upon completion of the ongoing construction of the Shaoxing Metro, Hangzhou will be accessible within 15 minutes.

In terms of its strengths in the life and health industry, Shaoxing’s Yuecheng District has long accumulated substantial industrial resources. The district’s industrial clusters now encompass medical materials, wearable devices, and large-scale medical equipment. It is designated as a National Torch Program Characteristic Industrial Base for Shaoxing Health Equipment and New Medical Materials, and is home to two provincial-level key enterprise research institutes.

The Shaoxing Yuecheng Medical Device Industry Innovation Service Complex has been able to establish its foothold in Yuecheng not only due to its unique regional geographic advantages and robust industrial resources, but also because industrial upgrading has become a key opportunity for the complex’s development.

Gu Feng, Deputy Director of the Science and Technology Bureau of Yuecheng District in Shaoxing (holding director-level rank and presiding over administrative work), told reporters: “The medical device industry in Yuecheng District is demonstrating strong growth momentum, home to multiple leading enterprises as well as high-caliber startups with global reach. From the perspective of Shaoxing City as a whole, the establishment of the Medical Device Innovation Service Complex is essential for implementing Zhejiang Province’s ‘Eight-Eight Strategy.’ We have adopted measures tailored to local conditions, revitalizing existing assets by repurposing the former textile factory site—effectively ‘replacing old birds with new ones’—to transform it into a hub for high-quality medical device projects. Meanwhile, we are formulating a series of supporting policies to facilitate the development of the complex. We hope that the complex will leverage industrial agglomeration effects and generate a radiating impact.”

Choosing to enter the market through medical devices, Yuecheng District has not only recognized the industrial value of this sector but also its social value in driving healthcare development. Gu Feng stated, “With the advent of an aging society, demand for healthcare services will continue to grow. China’s capabilities in the field of medical devices remain relatively weak, with the market largely dominated by imported products. Given the high technological intensity of the medical device industry, we are very optimistic about its future prospects.”

Currently, in terms of hardware infrastructure, Yuecheng District has made a total investment of nearly RMB 50 million. The main structure of the Medical Device Industry Innovation Service Complex covers an area of 202 mu, with a total floor area of 92,000 square meters.

With supportive policies in place and hardware facilities fully equipped, the Yuecheng District Government selected Shaoxing Lanbei Investment Management Co., Ltd. as the operational management entity to integrate and introduce medical innovation resources from Peking University Medical Innovation Valley.

In building soft power, the Yuecheng District Government believes that professionals should handle professional matters, which is the primary reason for selecting Lanbei Investment.

It is well known that the planning and management of an industrial park place significant demands on strategic vision and the ability to revitalize resources. A compatible operational philosophy can foster thriving development, whereas unrealistic planning can leave the park stagnant. Many parks spend considerable time exploring how to identify suitable operational partners.

What attracted the Yuecheng District Government to Lanbei Investment was its abundant resources and extensive experience. Gu Feng stated, “We conducted careful deliberation and comprehensive research in selecting our operating partner. We visited a medical industrial park in Beijing managed by Peking University Medical Innovation Valley, a partner of Lanbei Investment. Their professional expertise and resource advantages enable them to replicate their model in other regions, tailored to local characteristics.”

Specifically, the advantages can be categorized into four aspects. First, Lanbei Investment is a subsidiary of Beijing Lanfeng Capital Management Co., Ltd. Lanfeng Capital adopts an internationalized capital operation model and positions health investment as one of its key strategic business segments. On the industrial front, Lanfeng Capital maintains extensive connections with numerous domestic and international medical and elderly care institutions, and it is also a strategic partner of Peking University Medical Innovation Valley.

Liang Jingfeng, Partner at Lanfeng Capital, stated, “Peking University Healthcare Innovation Valley has established a comprehensive medical innovation incubation system, demonstrating strong capabilities in integrating healthcare and scientific research resources, along with extensive experience in successfully operating the Peking University Healthcare Industrial Park. During our geographic expansion, leveraging years of synergy and collaboration between both parties in areas such as enterprise incubation, financing matchmaking, and technology transfer, we have tailored the export of Peking University Healthcare Innovation Valley’s mature and professional medical park operational system to align with Shaoxing’s industrial characteristics. This system has been further upgraded and implemented within the Integrated Service Complex for Medical Device Industry Innovation.”

In addition to its collaboration with Peking University Medical Innovation Valley, Lanfeng Capital possesses mature experience in industrial park operations. It has undertaken the cooperative operation of the Precision Medicine Industrial Park, one of the 14 strategic emerging industry bases in Anhui Province, demonstrating extensive expertise in partnering with local governments to manage industrial parks.

The third major advantage is Lanfeng Capital’s specialized healthcare investment fund, which leverages the firm’s financial strength to provide synergistic opportunities in capital and financial services for enterprises within the complex.

Finally, Lanbei Investment boasts an excellent management team. The core members of the team have previously held senior executive positions at large financial institutions or central state-owned enterprises, ensuring standardized and professional operational management, as well as more efficient collaboration with government entities.

The infrastructure and management team have endowed the Shaoxing Yuecheng Medical Device Industry Innovation Service Complex with both soft and hard strengths, aggregating substantial resources. However, activating existing resources and introducing them to link with innovative enterprises hinges on the strategic positioning and planning of the Complex.

Liang Jingfeng stated, “The operational philosophy of the complex can be summarized in eight Chinese characters: ‘adapt to local conditions, and ensure professional management.’ The Yuecheng District Government has defined two key aspects for the complex’s positioning: in terms of its role, it serves as a vehicle for industrial structural adjustment and transformation/upgrading; in terms of its function, it is an integrated platform combining government, industry, academia, research, finance, intermediaries, and media.”

This concept is not a pipe dream. In addition to the aforementioned advantages in existing funding and scientific research resources, Liang Jingfeng also elaborated on the specific implementation path for the philosophy of “tailoring strategies to local conditions and ensuring professional operations.”

During the initial operational phase, Lanbei Investment reached a consensus with the government to provide operational services in line with its positioning as a professional medical and health industrial park. The complex’s operational team members all possess over six years of experience in managing medical industrial parks. In the early-stage renovation and upgrading of the complex, Lanbei Investment offered numerous professional recommendations tailored to the characteristics of the medical device industry, covering aspects such as electrical infrastructure configuration, pipeline layout, functional zoning, and renovation design.

As enterprises gradually settle in, Lanbei Investment, leveraging government support, has adopted the “Fund + Base + Platform + Commercialization” operational model to build an integrated ecosystem for medical device industry innovation that combines government, industry, academia, research, finance, intermediaries, and media. This initiative aims to address the full spectrum of challenges faced by innovative medical device companies, from R&D and incubation to production implementation.

Liang Jingfeng stated, “We hope that the Yuecheng Medical Device Industry Innovation Service Complex will become a platform for the innovation and commercialization of medical devices in Shaoxing and even the broader Yangtze River Delta region. By aggregating innovation resources, the platform enables various industry stakeholders to identify promising innovation projects and access information on industrial collaboration. Furthermore, in facilitating the international commercialization and introduction of innovative achievements, the platform serves as a link connecting research institutes, expert talent, and investment institutions.”

Those familiar with industrial parks know that no two parks in the world are exactly alike; how well a park integrates with local development determines its ultimate potential. We are currently at the beginning of the “golden decade” for China’s domestic medical device industry. This period also represents a critical juncture for Shaoxing’s industrial transformation and upgrading. The challenge Shaoxing faces is how to transition from a mature hub of traditional manufacturing into a demonstration zone for industrial transformation and upgrading, by cultivating emerging supportive industries and distinctive competitive sectors, thereby building an innovation-driven industrial chain led by high-end industries.

Focusing on the high-end medical device sector, the establishment of high-level innovation platforms and industrial carriers to foster the emergence of numerous medical device enterprises will serve as an excellent response and a significant achievement in industrial transformation and upgrading. The creation and development of the complex are grounded in this reality. On one hand, it integrates existing medical device enterprises in Shaoxing, pooling efforts and fostering a strong collaborative atmosphere to form a cohesive force, thereby establishing an industrial cluster hub for Zhejiang and even the Yangtze River Delta region. On the other hand, through collective wisdom and effort, it introduces high-quality domestic and international resources, strategically strengthening key elements such as infrastructure support, scientific research capabilities, market-oriented commercialization of achievements, and sci-tech financial assistance for the Yuecheng medical device industry. This truly achieves a close integration of technological innovation services with the advantages of traditional manufacturing, promoting industrial upgrading to proceed more effectively and sustainably.

Gu Feng introduced that, to date, the Shaoxing Yuecheng Medical Device Industry Innovation Service Complex has signed agreements with 10 companies, representing a total investment of nearly RMB 300 million. More than 20 additional companies expressing interest in relocating are currently in negotiations. The sectors involved include in vitro diagnostic reagents, medical devices, biomedical materials, 3D printing materials, and smart healthcare.

Regarding the selection criteria for tenant companies, Gu Feng stated, “We aim to attract representative enterprises that demonstrate innovation in medical devices. We implement a negative list system, imposing restrictions on certain high-energy-consuming and high-pollution businesses. Tenant companies are subject to annual assessments by the complex to ensure the quality of the park’s development.”

“We have not adopted a one-size-fits-all approach in screening tenant companies; instead, we apply different criteria for different types of enterprises. The first category comprises early-stage innovative companies, such as those involved in ‘Domestic Substitution 2.0’ projects, initiatives addressing urgent clinical needs, and global innovation projects. Although their output value and tax contributions are not yet significant, they serve as the locomotives driving future development,” said Liang Jingfeng. “For another category of companies capable of achieving economies of scale, we employ a separate set of screening and evaluation metrics, particularly regarding rent and taxation.”

A famous line describing Shaoxing’s scenery reads, “The Yue mountains remain ever green, the waters ever white; the people of Yue dwell in a land of mountains and rivers.” Perhaps in the future, medical devices will become another urban hallmark of Shaoxing.

Event Theme:2019 Shaoxing International Summit on Innovation in the Medical Device Industry — and Signing Ceremony for the Shaoxing Yuecheng Medical Device Industry Innovation Service Complex

Event Duration:May 28, 2019

Venue:Zhejiang·Shaoxing Kuaiji Mountain Yangming Hotel

Event Overview:Hosted by the People’s Government of Yuecheng District and the Shaoxing Municipal Science and Technology Bureau, co-organized by the Yuecheng District Science and Technology Bureau and the Shaoxing Yuecheng Medical Device Industry Innovation Service Complex, and supported by Beijing Lanfeng Capital, Peking University Healthcare Innovation Valley, and Shaoxing Lanbei Investment, with Probe Capital and VCBeat serving as strategic partners, this summit leveraged the signing ceremony for the Shaoxing Yuecheng Medical Device Industry Innovation Service Complex as a catalyst. By bringing together more than 200 participants—including government officials, academicians, medical device industry professionals, investors, and media representatives—the event established a high-quality platform for exchange and collaboration in the medical device sector, thereby fostering cooperation across the entire industry chain and jointly promoting the development of the medical device industry in the Yangtze River Delta region.

Event Registration Link:http://suo.im/5rZBRW

Official website details link:http://suo.im/4XZov0http://suo.im/4XZov0

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