Editorial: Healthcare in China. Challenges and opportunities

During the last three decades, the People’s Republic of China has experienced an exceptional growth and industrial development. Thanks to specific policies, incomes have risen so much that there is now a substantial class of people with discretionary wealth and tastes for improved consumer goods and services. This new ruling middle class has great expectations in terms of quality of life and more sophisticated benefits associated with their growing income. The capability of meeting these expectations is the current crucial challenge for China. In fact, it is likely that the sustainability of the economic, social, and political system as a whole is dependent on the capacity of the economy to satisfy these emerging demands. The growing demand for high quality health-related products and services represents a great opportunity for US and Europe. Both in US and in Europe, the development of the health industry has been traditionally based on domestic markets (Di Tommaso and Schweitzer, 2005, 2010). However, a rising worldwide demand for health offers new opportunities for national health industries to expand and innovate, transforming a strictly domestic sector into an export industry. In this framework, the growing demand from emerging countries in particular might certainly accelerate and drive this path of change. Within the emerging countries, China is undoubtedly among the most promising contexts. Not only today it is the world’s most populous country, with over 1.3 billion people. It also has an increasingly old population: life expectancy at birth has reached high levels (77 years for females and 74 for males in 2015 according to the World Bank) and it is estimated to increase further. Currently, 200 million Chinese are more than 60 years old and they are expected to grow to over 300 million by 2030 (United Nations, 2014a). Moreover, there are about 160 million of one-child Chinese families (representing over 40 percent of Chinese households) (United Nations, 2014b). We do not know yet the effects on birth rates of the government’s partial relaxation of the one-child policy. While the policy might increase birth rates, worldwide data suggest that rising incomes might instead push towards smaller families. Nonetheless, the number of children is already large enough to represent an important component of demand for specific healthcare products and services. In this framework, there seem to be huge opportunities in developing policies to connect the two systems, both in terms of access to new promising markets and of well-being enhancement. At present, there seems to be an unbalanced situation. Chinese producers have a granted access to the domestic market, and a growing proportion of them are starting to appear on western markets. This has also been due to the government’s efforts aimed at promoting and developing its own healthcare industry. China in fact recognises health-related industries as pillar sectors and offers substantial government financial, regulatory and strategic support to its SOEs and private companies in the attempt to upgrade and move up the economic value chain. In doing so, Chinese policy makers utilise all the traditional industrial policies tools (picking-the-winner practices, infant industries protections, support of university-industry technology transfer, exploitation of public procurement demand) (Di Tommaso and Schweitzer, 2013; Di Tommaso et al., 2013). European and US producers are instead still facing obstacles in accessing the Chinese market. Despite the discussions about barriers to trade occurred in many bilateral and multinational negotiations with China, many observers argue that the country continues to pursue policies limiting market access for imported manufactured goods, agricultural products, and services. In the case of healthcare, this issue primarily applies to goods and services that are highly sophisticated and rooted in western medicine knowledge, still not widely diffused in China. The complex administrative procedure required for these goods is a strong deterrent for foreign entrants. Moreover, counterfeiting and trade secret thefts often occurs in the Chinese market. There is no doubt that the respect for intellectual property rights (IPR) is one the major issues that needs to be addressed. Especially in IP-intensive fields, which are prevalent in healthcare settings, an effective protection and concrete enforcement of IPR is crucial. Despite the progresses made since China’s entry in the WTO, many issues still represent sources of concern both in Europe and in the USA. Traditional and online sales of counterfeit goods (starting from the sales of active pharmaceutical ingredients) continue to be a serious problem. In this setting, foreign companies entering the Chinese market with innovative goods or services might quickly favour the reinforcement of new Chinese competitors (selling both in China and abroad) able to imitate their products without paying fees for IPR. And these unfair competitors might stay in the position of operating with impunity for a long while if Chinese authorities are reluctant to recognise and sanction such infringements. All these threats need vigorous policy actions. To remove these barriers inhibiting exports of American and European goods and services, foreign policy has to play a crucial role. This is a vital field of policy action in order to encourage exports and sales of legitimate IP-intensive goods and services related to provision of healthcare. Continuous bilateral and multilateral engagements to discuss IPR enforcement in China are crucial in the export oriented growth strategy we had discussed above. Continuous dialogue at all levels with Chinese authorities has to be promoted. When appropriate, concrete steps to enforce rights at the WTO have to be considered as another crucial field of action. Linking a complex export-oriented growth and anti-recession strategy to new economic and population trends in China implies a substantial structural adjustment of American and European economies. The assumption is that the Chinese market has the potentiality of driving this structural change. But this matching of EU and US supply and Chinese demand faces several obstacles including potential barriers placed by China (as the importer), and the large culture gap between European and American attitudes toward medical care and those in China. The need for this sort of connection is however so important for all the nations involved that it is well-worth exploring further.