CEC Health Fund Prospectus: Building an Integrated Ecosystem of Business, Data, and Capital Anchored in Healthcare Big Data

Investing in the field of healthcare big data has emerged as a cutting-edge direction for the health and medical industry in recent years. Both state-backed entities and private enterprises are actively making strategic investments, involving the establishment of data centers and practical applications across multiple sectors.

As one of the most prominent national teams, China Electronics Data Service Company, a subsidiary of China Electronics Corporation (CEC), has established a comprehensive health and medical big data platform system. By leveraging strengths in technology, applications, platform development, and industrial investment, the company has achieved remarkable results.

Recently, VCBeat (WeChat ID: vcbeat) conducted exclusive interviews with Li Shifeng, Chairman of China Electronics Data Service Co., Ltd. and China Electronics Digital Finance, as well as Managing Partner of China Electronics Health Fund, and Song Yu, General Manager of China Electronics Digital Finance and Partner of China Electronics Health Fund, to provide a detailed overview of the strategic layout of China Electronics Data and China Electronics Health Fund in the field of healthcare big data.

Li Shifeng, Chairman of China Electronics Data Service Co., Ltd. and Chairman of China Electronics Digital Finance, as well as Managing Partner of China Electronics Health Fund

How CEC Health Fund Builds and Aggregates Its Ecosystem: To understand this issue, it is essential to gain an in-depth understanding of its primary sponsor, CEC Data. CEC Data, fully named CEC Data Service Co., Ltd., is a specialized platform company under China Electronics Corporation (CEC) that provides data integration, management, and application services for key national industries and departments, serving as the national team in the development of the health and medical big data industry.

When China Electronics Data was established, it designated healthcare big data as its key development focus. “At the time of our registration and incorporation in 2014, we were the first central state-owned enterprise to include ‘data’ in its corporate name and to make data services its core business. There are two reasons why we chose to focus on the healthcare industry: first, as a central state-owned enterprise, we have a social responsibility to concentrate on industries and sectors that are vital to the national economy and national security; second, China Electronics already had a certain foundation in the healthcare sector and was optimistic about the future growth potential of the broader health industry,” said Li Shifeng.

Once the strategic direction was set, China Electronics Data established two major objectives: first, to become a national team member and a leader in the field of healthcare big data; and second, to explore and initially establish a business model recognized by the market.

To achieve the first objective, China Electronics Data has extensively participated in national projects on healthcare big data and joined key relevant organizations. These initiatives include serving as the main platform for the China Healthcare Big Data Industry Group Corporation; undertaking the planning, construction, and operation of the National Pilot Project (Fuzhou) for the National Healthcare Big Data Center and Industrial Park; acting as the sole implementing entity for the National Development and Reform Commission’s key “Internet + Healthcare” initiative; co-establishing the National Engineering Laboratory for Medical Big Data Application Technology; and serving as the Secretariat Unit of the China Healthcare Big Data Industry Alliance.

Regarding the second objective, Li Shifeng believes that while health and medical big data holds immense value, monetization will take time. Therefore, gaining recognition from prominent social capital serves as an interim milestone. In June this year, Sequoia Capital China and Broadband Capital’s Hongkuan Big Data Industry Investment became shareholders of CEC Data. “The entry of social capital signifies their endorsement of your business model and represents one of our phased achievements.”

Li Shifeng concluded that, from the perspectives of strategic positioning, business direction, corporate governance structure, and business model, China Electronics Data demonstrates state-owned enterprises’ proactive embrace of new business formats, representing an innovation in institutional mechanisms.

From a policy perspective, health and medical big data has become the most cutting-edge hotspot in the healthcare industry in recent years, and the development of the health and medical big data industry has been elevated to a national strategy.

As pointed out in the State Council General Office’s “Document No. 47,” health and medical big data is a crucial foundational strategic resource for the nation. Its application and development will bring about profound changes to healthcare models, help stimulate the momentum and vitality of deepening healthcare reform, improve the efficiency and quality of health and medical services, expand resource supply to continuously meet the multi-level and diversified health needs of the public, and foster new business formats and economic growth drivers.

From the 2015 "Outline for Promoting the Development of Big Data," to the 2016 "Document No. 47," and further to the recent emphasis placed during the second group study session of the Political Bureau of the CPC Central Committee on "promoting the implementation of the national big data strategy and accelerating the construction of a Digital China," policymakers’ supportive stance toward the development of the health and medical big data industry has become increasingly clear.

Recent Policies on the Big Data Industry in Healthcare

With clear objectives and a well-defined path, China Electronics Data adopted an “ecosystem development” model in its business advancement, rapidly establishing an ecosystem centered on the national team for health and medical big data through an open mindset and a platform-based strategy.

VCBeat has summarized the recent activities of Zhongdian Data:

In October 2016, China Electronics Data, as a primary initiator, jointly invested with Shanghai State-owned Investment Company and other parties to establish the Shanghai Data Exchange;

In April 2017, China Electronics Data launched the National Health and Medical Big Data Platform (Fuzhou) and the National Health and Medical Big Data Security Service Platform (Fuzhou) projects;

In June 2017, CEC Data joined hands with IBM, Tencent, Philips, Sequoia Broadband, the National Adjustment Fund, and other members of the Health and Medical Big Data Industry Ecosystem Alliance to plan and implement the national pilot project for the construction of health and medical big data centers and industrial parks.

In June 2017, CEC Data initiated the establishment of the CEC Health and Medical Big Data Fund, with an initial fundraising amount of RMB 3 billion, focusing on investments in the broader health and medical industry;

In July 2017, China Electronics Data (CEData) entered into a strategic partnership with Tencent. The two parties will establish comprehensive and in-depth cooperation in the field of big data technology for health and medical care, focusing on areas such as the integration of health and medical data, clinical decision support, and the development of an ecosystem for health and medical applications.

In September 2017, China Electronics Data signed a comprehensive cooperation agreement with IBM to introduce Watson Health-related solutions into China, helping the country address significant challenges and opportunities in chronic disease management, population health, and clinical decision support.

“Our partners are predominantly the leading enterprises and public institutions in the industry. Through resource sharing and complementary strengths, we are building an ecosystem for the big data industry in healthcare, fostering robust interaction and collaborative innovation across the data, application, and capital levels,” said Li Shifeng.

Of course, while extensively collaborating with external enterprises, China Electronics Data also focuses on building its own core capabilities. Li Shifeng told VCBeat that the core competencies of China Electronics Data lie in “security” and “intelligence.”

“Leveraging the support of China Electronics Corporation, we have established a data security framework that covers the entire data lifecycle, encompassing intrinsic safety, process safety, industrial control system (ICS) security, and data security. This framework is built upon an integrated security platform comprising three core components: a security integration system, a security management and control system, and a security emergency response system.”

In terms of “intelligence,” the primary strategic focus is artificial intelligence. In addition to the aforementioned collaboration with IBM, China Electronics Data also partnered with Tianjin University during the same period to cooperate in the fields of brain cognition and intelligent diagnosis for healthcare.

“In our AI strategy, we primarily leverage our ecosystem model and platform capabilities, utilizing the advantages of the national-level platform for health and medical big data to foster new technologies and facilitate the implementation of cutting-edge innovations.”

“From a technical perspective, CEC Data holds 53 independent intellectual property rights in areas such as data aggregation, data governance, data security, and data mining. We are making strategic independent arrangements primarily to provide foundational support for the platform. Connectivity, computing power, and data constitute the core of CEC Data; these are the three key areas we focus on while co-building a platform ecosystem with industry enterprises. Given that any single company has limited technical and service capabilities, this is why we persist in independent technology development while also engaging in extensive cooperation with other industry players,” stated Li Shifeng.

To cultivate an industrial ecosystem for health and medical big data, China Electronics Data initiated the establishment of the CE Health & Medical Big Data (Hangzhou) Equity Investment Fund Partnership (Limited Partnership) (hereinafter referred to as the “CE Health Fund”) and its management company, China Electronics Shurong Investment Management (Hangzhou) Co., Ltd., in June 2017. The fund has a management scale of RMB 3 billion.

As a key capital link in CEC Data’s ecosystem layout, the CEC Health Fund focuses on investing in highly relevant fields radiating from the health and medical data industry, including Fintech, Biotech, artificial intelligence, and next-generation internet technologies. It has completed investments in companies such as Senyi Intelligent and Medlinker.

In addition, CEC Health Fund has made a strategic investment in Tonghe Yucheng Capital. Leveraging the advantages of the CEC Data healthcare big data national team, both parties will engage in multi-level cooperation to jointly build business, data, and capital ecosystems.

Why the Aggressive Moves at the Capital Level? VCBeat Asked Chairman Li Shifeng.

Li Shifeng stated that the establishment of the CEC Health Fund was driven by the needs arising during the development of CEC Data. In the process of building an industrial ecosystem, there was a need for a capital segment to enrich the ecosystem’s substance and to flexibly aggregate and mobilize resources; thus, the CEC Health Fund was launched.

Li Shifeng introduced to VCBeat that the CEC Health Fund is a professionally managed fund operating on a fully market-oriented basis, with its management team members hailing from top-tier investment institutions both domestically and internationally, possessing extensive investment experience and professional expertise. By leveraging capital as a link to support the industrial ecosystem of CEC Data, the fund serves as a crucial component of CEC Data’s platform strategy.

“Unlike pure venture capital firms or other private equity industrial funds, CEC Health Fund is backed by the CEC Data Platform, and all our portfolio companies have been market-validated. Post-investment, we provide serviced management and inject resources such as data to help these enterprises achieve sustained, rapid growth,” added Song Yu.

Based on the distinctive features and outstanding performance of the CEC Health Fund, Song Yu, General Manager of CEC Shurong and Partner of the CEC Health Fund, was named “Capital New Force Figure of the Year” in the healthcare industry for 2017 at the VCBeat “Top 100 Future Healthcare Companies 2017” forum and industry awards, which recently concluded.

VCBeat Founder Li Datao (left) presents the award to Song Yu (right), Partner at CEC Health Fund

“Take the two companies we have already invested in as examples; both are outstanding players in their respective niche sectors. Senyi Intelligence holds advantages in data governance, natural language processing, and Chinese word segmentation, while Medlinker is a clear leader in physician platforms and the commercial application of medical data. Following investment by the CEC Health Fund, we provide more than just capital injection; we also tilt resources and market support toward these enterprises to facilitate resource integration and practical implementation,” said Song Yu.

Linked by capital, CEC Data’s business ecosystem, data ecosystem, and capital ecosystem work in synergy to establish a comprehensive ecosystem for the health and medical big data industry chain.

Regarding the future development of the big data industry in healthcare, Li Shifeng believes that efforts should primarily focus on three aspects: First, policy—building upon national pilot programs, supporting policies and regional pilots should be gradually implemented to refine management mechanisms. Second, technology—prioritizing the resolution of standardization and security issues to enable full integration and sharing of data from various parties under a security-first premise. Third, application—encouraging more practical attempts to explore effective business models, thereby ensuring that all stakeholders across the industry chain benefit.

“We will build the healthcare big data platform from a national perspective, fulfilling the mission of the national team. By leveraging technology, data, and capital, we will ensure that healthcare big data truly benefits the public, supports government administration, and promotes enterprise development,” Li Shifeng concluded.