 In a move that will liberalise the healthcare sector in China, the Ministry of Commerce announced yesterday that, for the first time, foreign investors will be authorised to set up wholly foreign-owned medical institutions in seven cities across the country. Previously, foreign investment in hospitals was limited to a joint venture structure, with a requirement that the Chinese party holds no less than 30 percent equity, leading to little foreign investment in hospitals in China. Now, overseas investors will be permitted to establish foreign-funded hospitals through mergers and acquisitions in Beijing, Tianjin, Shanghai and Jiangsu, Fujian, Guangdong and Hainan provinces. Approvals for these hospitals will be overseen by provincial governments, the Ministry of Commerce said, adding that only investors from Macau, Taiwan and Hong Kong can practice traditional Chinese medicine. This is a significant milestone in the healthcare sector as it increases private participation in what was formerly an exclusively publically-run domain. In July of this year, German healthcare and medical product provider Artemed Group signed a framework agreement, spearheading China’s inaugural wholly foreign-funded hospital in Shanghai’s Free Trade Zone. The initiative comes on the back of a shortage of medical resources, a slew of conflicts between patients and doctors and a fragmented drug distribution and retail market. Strategically as well, the government is trying shore up the economy in one of the country’s fastest-growing sectors, generate a surge in the number of jobs and pave the way for increased competition. Whilst the rules have yet to be implemented, the issues emanating from this potentially landscape-changing announcement include regulatory approvals at local and national levels, licensing, construction, employment and labour issues and insurance. Brinton Scott, Partner in the Shanghai office of Winston & Strawn stated “this development represents another example of how China has opened up its healthcare sector to foreign investment. With Chinese consumer demand for these and other healthcare services on the rise, we expect to see a huge upturn in foreign investment into this area in the coming years.” |
