The national meeting concerns all medical devices!

On September 19, Premier Li Qiang of the State Council presided over an executive meeting of the State Council to study the standards for domestic products and related policies to be implemented in government procurement, which is crucial to the development of all medical device enterprises.

The meeting pointed out that for  formulating and issuing standards for domestic products in government procurement and related policies is an important measure to improve the government procurement system. The meeting emphasized:

·We should proceed from reality, reasonably classify and set national product standards, and clarify specific requirements for key components and key processes of specific products.

· It is necessary to fully listen to opinions from all sides, steadily promote the implementation of standards, set reasonable transition periods, and support enterprises in making industrial layout and investment plans in advance.

· All types of business entities should be treated equally without discrimination, and fair competition should be effectively guaranteed.

It is well-known that for a long period in the past, due to the lack of a unified standard for defining “domestic products”, there were vague identifications and significant differences in implementation in practice, and even various situations such as imported products enjoying preferential policies after being “rebranded” domestically.

In response to this, the Ministry of Finance of the People’s Republic of China drafted and issued the “Notice on Matters Concerning Standards for Domestic Products and Implementation Policies in the Government Procurement Field (Draft for Comment)” in December 2024, providing an official standard for the long-controversial issue in the industry regarding the “definition and scope of domestic products.”

New regulations are about to be implemented!

Purchasing domestic products can enjoy a 20% preferential treatment in quotation

The “Draft for Comment” clearly states that domestic products for government procurement must meet three major conditions simultaneously: the product is produced within the territory of China; the proportion of the cost of components produced within the territory of China in the product reaches the specified ratio; and it complies with the requirements for key components and key processes of specific products. The details are as follows:

1. It must be produced within the territory of China, and realize the change in attributes from raw materials and components to products, excluding OEM (Original Equipment Manufacturing), simple packaging, etc.

2. The proportion of the cost of components produced within China reaches the specified ratio, and the calculation formula is: (Cost of components of the product produced within China / Total cost of the product) ≥ Specified ratio.

3. On the basis of meeting the above conditions, for specific products, it is also necessary to determine requirements such as the key components of the product being produced within the territory of China and the key processes being completed within the territory of China.

In addition, to support and encourage the procurement of domestic products, the “Notice” also proposes a new preferential policy, whereby domestic products can enjoy a 20% price discount:

government procurement

1. In government procurement activities where both domestic products and non-domestic products participate in the competition, a 20% price deduction will be given to the quotation of domestic products, and the deducted price will be used for evaluation.

2. For a procurement project or a procurement that includes multiple products, if the sum of the costs of products provided by a supplier that meet the national product standards accounts for more than 80% of the total costs of the products provided by that supplier, a 20% price deduction will be given to the overall products provided by the supplier, and the price after deduction will be used for evaluation.

3. There is no doubt that this move will provide more support for domestic products to participate in government procurement.Of course, in order to avoid a “one-size-fits-all” approach, the policy has also set a transition period for the “localization” of relevant products.

The Ministry of Finance stated that after the introduction of standards and implementation policies for domestic products in the government procurement field, the Ministry of Finance, together with relevant departments, will formulate requirements on the proportion of costs of components produced within China for relevant products, as well as requirements on key components and key processes for specific products within 3 to 5 years, on the basis of fully soliciting opinions from various parties including domestic and foreign-funded enterprises, associations, and chambers of commerce.Prior to this, as long as a product was produced within the territory of China, it was regarded as a domestic product in government procurement activities.

Based on the medical device field, from the information conveyed in this State Council meeting, on the one hand, it is necessary to clearly define the identity of “domestic products”; on the other hand, in future domestic government procurement, supporting domestic products is certainly the primary principle, but foreign-funded enterprises and their cooperative enterprises that have achieved localized production and research and development in China will also receive more policy support.

The acceleration of localization,

local medical device enterprises usher in a new era of development!

In recent years, China’s medical device industry has entered a “period of intensive policies,” which emphasizes that government procurement should give priority to domestic products, while increasing support to promote the iteration and upgrading of domestic medical equipment.

For example, Anhui Province issued the “Work Plan for Promoting the Iterative Upgrade of Equipment and Facilities in the Field of Health and Health in Anhui Province”, putting forward a number of work objectives, one of which is to comprehensively improve the localization rate.

· The “Action Plan for the High-Quality Development of the Medical Equipment Industry (2023 – 2025)” also clearly states that great importance should be attached to the promotion and application of domestic medical equipment, and relevant supporting policies should be improved to promote the continuous iteration and upgrading of domestic medical equipment.

· Undoubtedly, under the new “domestic production” standard system, if foreign-funded enterprises want to enjoy the “domestic production policies”, they must introduce a certain proportion of raw materials, components, and product production technologies into China. This will undoubtedly bring benefits to the technological development of the domestic medical device industry and help promote the technical level of the entire industry to a new height.

However, what cannot be ignored at present is that as more and more multinational companies move their production bases to China, local enterprises in the same track will face more intense competition in the short term. This is both an opportunity and a challenge for domestic enterprises. While enjoying the dividends brought by the overall upgrading of the supply chain, domestic enterprises also need to make full preparations and actively respond to the impacts and challenges brought by industry competition.

China is encouraging China end uses for more domestic products in latest years. Thus, more and more overseas manufacturers are planning localization in China. BradyKnows localization team has extensive experiences in facility establishment, audit, supplier evaluation, manufacturing, registration, and marketing in China. Pls feel free to let us know any questions on China entry via info@bradyknowsmedical.com

By Medical Device Distributors Alliance

Translated & edited：Bradyknown