Subject: CHINA IMP/EXP NEWS (CN940415)

From: [email-masked] (wangc)
Date: Mon, 18 Apr 94 10:58:24 CDT

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 #         A BIWEEKLY NEWSLETTER FROM THE CHINA-LINK CLUB             #
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                    April 15, 1994 (CN940415) 

CONTENTS                                                           LINES
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EDITOR'S NOTES.................................................. 8 lines

CHINA OUTLOOK:
  CHINA UNVEILS PLAN FOR NATIONWIDE DATA NETWORKS.............. 79 lines

CHINA TRADE NEWS:     
  AFL-CIO CHIEF WOULD REVOKE CHINA'S TRADE PRIVILEGE........... 30 lines
  CHINA PROMISES FASTER RESPONSE ON DUMPING CHARGES............ 24 lines
  ECONOMIST PREDICTS TRADE DEFICIT FOR CHINA THIS YEAR......... 27 lines
  CHINA, VIETNAM SIGN TRANSIT GOODS ACCORD..................... 18 lines

CHINA MARKET GUIDE:
  CHINA - MEDICAL DEVICES MARKET OVERVIEW .................... 191 lines 
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EDITOR'S NOTES:

Due to the lack of human resources and fund, we have to cut our weekly
newsletter into bi-weekly style. China IMP/EXP News will be published on
every 1st and 15th of the month. We will resume our regular service when 
the conditions changed. At the same time, our business sections will not
be operational until further notice. Sorry for the service change.
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CHINA OUTLOOK:
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CHINA UNVEILS PLAN FOR NATIONWIDE DATA NETWORKS................ 79 lines

North American Business Report    DATE:  April 13, 1994   17:09 E.T.
 By Jeffrey Parker

 BEIJING (Reuter) - China's telecoms minister unveiled plans Wednesday
to build two nationwide digital information networks to help the
country on the path to economic development.

 But Minister of Posts and Telecommunications Wu Jichuan gave no
indication that Beijing would lift its ban on foreign investment in
China's rapidly growing communications system.

 Nor did he indicate whether China planned to ease recently enacted
curbs on who should be allowed to use its fledgling ''information
superhighway'' and what they may use it for.

 Wu nevertheless said that information exchange was as important to
development as the rule of law as China tries to leapfrog its way out
of technological backwardness.

 ''The establishment of a socialist market economy depends first on the
building of a complete legal system, and second on a well-informed
economic information network,'' he wrote in the Communist Party
flagship People's Daily.

 China in fact is building two parallel systems, Wu said, an
information resources network and an information telecommunications
network.

 Wu said the first would be a network of databases of various types of
information and data application systems. The second, he said, would be
an ''on-line operation of information resources and application systems
via state-owned public telecommunications networks.'' Wu gave no
details.

 China completed the foundation of its first nationwide on-line system
when the Chinapac network went into commercial operation in March.

 Chinapac has more than 20,000 user nodes in 267 cities in all
provinces -- including remote Tibet, Qinghai and Xinjiang -- all
linked digitally by fibre-optic cables or satellites. The network
transmits data at 64,000 bits per second.

 Wu said initial stages of another high-speed data network providing
''special digital circuits'' to customers in 21 provinces would go into
operation in July.

 Wu gave no budget for the massive nationwide investment and did not
discuss its financing.

 China has pledged to spend more than $6 billion this year alone on
fixed assets in telecommunications, much of it for imported switches
and other digital gear -- a bounty for Western high-tech exporters and
particularly for those with manufacturing joint ventures in China.

 Still, while Beijing encourages technology transfer and manufacturing
cooperation, it has resisted intense domestic and overseas pressure to
lift a ban on foreign equity involvement in its telecom network.

 Analysts say that without the sharply higher capital flows that would
come with foreign equity investment, China will be hard-pressed to
finance an ambitious plan to quadruple its telephone lines to 100
million by 2000.

 China regards its telecom system as a tool of national security that
must not fall into the hands of foreigners.

 Transfers of super-high-speed switches and computers also remain a
problem, despite this month's disbanding of the Cold War body COCOM
that blocked communist countries from importing technologies with
potential military uses.

 Western telecom executives in Beijing say Washington still restricts
export to China of the technologies to make high-tech goods, although
it signalled the demise of COCOM by lifting export controls on most of
the products individually.

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CHINA TRADE NEWS:     
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AFL-CIO CHIEF WOULD REVOKE CHINA'S TRADE PRIVILEGE.............. 30 lines
by: carl hartman THE ASSOCIATED PRESS     DATE: April  13, 1994 

- President Lane Kirkland of the AFL-CIO urged President Clinton on
Wednesday to revoke the privileges that helped China build a $22.8
billion surplus in its trade with the United States last year.

Clinton must decide by June 4 whether China has made enough progress on
human rights to warrant his renewing its status as a ''most-favored
nation.'' Business interests strongly support a renewal. If Clinton
says no, a big rise in tariffs on Chinese goods would make them more
expensive and harder to sell here. The Chinese surplus would drop
sharply.

Kirkland denounced trading companies in the United States which he said
are controlled by the Chinese army and include weapons among their
exports for sale here. The AFL-CIO, has also accused China of shipping
goods made by prison labor, a violation of U.S.  law.

Kirkland rejected the idea of supporting trade with China for the sake
of promoting jobs here.

''We are losing jobs to China,'' he told reporters. ''The deficit in
the balance of trade is a measure of the dimensions of that
.. . The issue with us is how human beings, how our brothers and
sisters in China who work for a living, are treated. There can be no
enhancement of the position of workers in any part of the world when
workers in another part of the world are abused and treated like
slaves.''

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CHINA PROMISES FASTER RESPONSE ON DUMPING CHARGES.............. 24 lines
dateline: beijing THE ASSOCIATED PRESS DATE: April 13, 1994 

In another move to meet international trade standards, China has
promised to respond quickly to dumping charges made by other
governments.

New regulations published by the trade ministry late Tuesday set out
detailed steps for responding to charges and measures for avoiding
them, the official Xinhua News Agency said.

In recent years, the United States, Japan and European Union have
accused China of dumping selling below cost exports as diverse as toys,
minerals, iron pipes and typewriter ribbons.

China is trying to join the General Agreement on Tariffs and Trade, the
world-trade body, but U.S. and European officials have said it can't
until it fully complies with market economy rules.

The new regulations ask companies to respond actively to accusations or
have their right to export revoked. Fines will be levied in cases of
serious violations, the report said.

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ECONOMIST PREDICTS TRADE DEFICIT FOR CHINA THIS YEAR .......... 27 lines
dateline: beijing THE ASSOCIATED PRESS     DATE: April  10, 1994

Inflation and a recent currency devaluation make it unlikely that China
will be able to reverse its 1993 trade deficit this year, an official
newspaper said Sunday.

Exports rose nearly 14 percent in January-February from the same period
in 1993, but imports were up 20.5 percent. China's two-month deficit
came to $1.24 billion.

Wang Huai'an, an economist with the trade ministry, said in the China
Daily that the early-months deficit boded poorly for 1994 because
China's trade balance was usually most favorable early in the year.

He said exports will be hurt by domestic inflation, which has been
running at an annual rate of more than 23 percent. The 33 percent
devaluation of the Chinese yuan in January also will damage the trade
balance, he added.  The government has been trying to slow economic
growth and hopes that will reduce imports. But Wang said many local
governments are still pushing ahead with high-growth plans that are
stimulating import demand.

China enjoyed three successive years of trade surpluses until 1993,
when the booming economy created a huge appetite for imported steel,
oil and other raw materials. It ended that year with a $12.18 billion
deficit.
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CHINA, VIETNAM SIGN TRANSIT GOODS ACCORD...................... 18 lines
Dateline: Beijing       Date: April 9, 1994       Word Count: 84

     China  and  Vietnam  signed Saturday an agreement on goods in
transit, the official Xinhua News Agency reported.

    Under  the  agreement,  China  and  Vietnam  will  permit  each
other's commodities  to  or from a third country to pass through
their territories, Xinhua said.

    Chinese  Ambassador  to Vietnam Zhang Qing and Vietnamese Vice
Minister of Trade Truong Dinh Tuyen signed the accord in Hanoi on
Saturday.

    The  passable  goods  do  not  include those banned from
importation or exportation by the regulations of the country
concerned, it said.

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CHINA MARKET GUIDE:
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CHINA - MEDICAL DEVICES MARKET OVERVIEW...................... 191 lines
15 MAR 94 AMCONSUL GUANGZHOU

MARKETING MEDICAL DEVICES IN CHINA - WHERE TO START?

1.  SUMMARY. the health bureau of guangdong province and the guangdong
provincial public health development general company, a medical
products distribution company owned by the bureau, provided an overview
of how medical device purchasing decisions are made in south china.
this cable is one of a series of international market insights on the
south china medical market.  end summary.

2.  GUANGDONG province has over 300 hospitals of 100+ beds each.  as
guangdong's economy thrives, municipal governments are building new
hospitals at a rapid rate.  these new hospitals will all strive to
raise standards of care by incorporating modern western technology.
panyu, zhongshan, dongguan, nanhai, schunde, and zhuhai, are just some
of the major cities with hospitals under planning or construction.  bau
an county is also reported to be planning a new hospital.  in the
zhuhai project, the municipal government is investing up to rmb50
million (usd6 million) in land and construction alone.  working
committees of members of the municipal government are responsible for
selecting all initial equipment purchased by each hospital; however,
all hospital construction, regardless of the source of construction
funds, must be approved by the bureau of public health planning
division.

3.  on march lst, comoff, comasst, and andrew loh, china general
manager of eli lilly and company, met with dr.  huang shixiang, deputy
director of the drug administration for the health bureau of guangdong
province, as well as feng shaomin, li guoyan, and wu xiaoyi, all of the
health bureau of guangdong province foreign affairs office.  amidst
some internal debate between health bureau staff members, the process
of importing and selling medical devices in southern china was
explained.  who's in charge?

4.  medical devices over usdl million must be approved for the
purchasing hospital by the ministry of public health in beijing.  any
medical devices selling for less than usdl million can be approved by
the provincial cofert.  the guangdong provincial health bureau must
review all medical device purchase applications (containing a
description of the product's features) submitted to the cofert to
decide whether the device constitutes an appropriately advantageous
medical technology - if the health bureau is incapable of deciding
internally, it organizes a group of professionals from large hospitals
to participate in the certification process.  new products that compete
with existing products in the marketplace are usually likely to be
approved.  after a medical device purchase is approved by the
provincial cofert, at the health bureau's recommendation, an import
permit is issued.

5.  regulations governing imports of particular medical products are
governed by a variety of ministries.  for example, mri (magnetic
resonance imaging) imports are governed by the electronic machinery
ministry in beijing, while plastic products are governed by a different
ministry.  foreign exchange and hospital budgeting

6.  if a municipal hospital wishes to spend its own foreign exchange
savings on medical equipment, it does not require cofert permission to
do so.  hospitals in coastal regions, who treat more foreigners, are
more likely to have their own foreign exchange reserves (i.e.
zhongshan, huaquiao, guangdong provincial, guangzhou #1 people's,
nanfang, and zhujiang hospitals).  over 20 hospitals in guangzhou have
control of their own budget.  hospitals without their own foreign
exchange reserves, on the other hand, must be have exchangeability of
their renminbi approved by the provincial by the cofert.  distribution
channels

7.  more expensive machinery is usually purchased directly by end users
through the central government.  less expensive products, such as
angioplasty catheters, on the other hand, are often purchased in larger
supply by import and trading companies.  according to health bureau
officials, these trading companies are too numerous to list, however,
they are a bit partial to the bureau's wholly owned distribution
company, described in further detail below.  one official commented
that there may even be too many importers, thus creating confusion and
destroying economies of scale.  an aside on drugs

8.  the regulations on drug production in china appear to be more
clearcut than those regulating medical devices.  bureau officials point
out that beijing has already published detailed regulations on drug
production and imports.  all foreign drug companies must register with
the drug administration department of the ministry of public health.
foreign competition

9.  Bureau officials could recall many wholly-owned u.s.  medical
companies with offices in guangzhou, although general electric and
hewlett packard are clearly in the marketplace.  japanese companies,
such as mitsubishi and kohmatsu are far more prevalent, offering
products such as ultrasound, cardiac monitoring, and x-ray units.  the
officials did not consider the japanese products to be as high quality
as the u.s., dutch, and german products, however they find them to be
considerably less expensive.  i left my heart in guangzhou

10.  MR. LOH and bureau officials acknowledged that guangdong was just
beginning to consider applications already popular in the west, such as
angioplasty and angiography.  a visit to guangdong provincial hospital
by mr. loh revealed that a catheterization lab (by phillips) had
already been installed, but local doctors were only performing
angiography procedures, rather than the more invasive percutaneous
transluminal coronary angioplasty (ptca) procedures.  western doctors
from the united states and hong kong, often of chinese descent,
occasionally performed angioplasty procedures at the hospital and
instructed chinese faculty while operating.  reportedly, u.s. ptca
catheters were in use during those operations, but they were likely
supplied by the visiting doctors.  only one interventional cardiologist
is on staff at the hospital.  anecdotal evidence suggests that one
reason ptca procedures are less frequent in china is due to the low
degree of heart disease among the chinese populace.  valvectomy
procedures, caused by a relatively high incidence of respiratory
problems, may be more common than in the west, however.  as more
western dietary habits (i.e. fast food) are entering chinese society,
heart disease may increase here over time.  the price is right?

11.  The price for various procedures  are set by a tripartite
committee consisting of the bureau of public health, the price bureau,
and the financial bureau.  each hospital is permitted to charge a set
amount of money for each procedure, regardless of its cost to the
hospital (i.e. rmb300 for each use of the ct machine).  if a treatment
costs more than the prescribed amount, the presiding doctor must submit
a note of explanation to the public health care examination committee,
which is supervised by the provincial government through the public
health bureau.  who pays?

12.  State employees' medical expenses are 100 percent covered by the
state.  factory workers are 50 percent covered by labor insurance,
joint-venture company employees are 50 percent covered by social
insurance, and self-employed workers are usually 100 percent self-pay.
the medical products marketplace from a distributor's perspective

13.  In a separate meeting, comoff, comasst, and dr. loh met with jiang
weitao and zhang shouyi, general manager and business manager,
respectively, of guangdong provincial public health development general
co., the medical products distribution company wholly-owned by the
health bureau of guangdong province.  the company has a total of 20
employees in its headquarters, but has a correspondent network of
distribution companies at the city and county level throughout the
province.  the company's annual sales are estimated to be approximately
rmb20 million (usd2.3 million); and, judging from the company's
apparent warehouse stock and catalog, its focus is on bigger ticket,
solid state testing and laboratory equipment (i.e. microscopes).  few
products are sold on consignment.  70 percent of the smaller city and
county hospitals in guangdong province purchase their equipment through
the public health bureau's distribution company, while larger hospitals
purchase many of their products directly to send money.

14.  Company officials suggest that anyone can copy a pharmaceutical
product, but medical devices are harder to duplicate.  accordingly, the
company's market is easier to defend from copyright violators than
distribution companies focused on drugs.  stiff competition

15.  In the current marketplace, company officials consider japanese
equipment prices to be lower, japanese after-sales support to be
better, and japanese promotional campaigns to be more effective.
despite these factors, they note that many chinese doctors want to use
u.s. medical products because they consider their quality, durability,
and sensitivity to be higher.  the reliance of u.s. companies on
distributors, rather than direct representative offices, may affect
this perception.  growing market

16.  Company officials also note that the south china health care
market is growing tremendously, and local government investment in new
hospitals and equipment is far outpacing that of the central government
and public health bureaus.  new hospitals will require new, advanced
medical equipment and forthcoming regulations from beijing are expected
to raise equipment standards in the near future.  advice for u.s.
companies

17.  General manager jiang suggested that u.s. companies and
distributors for u.s. medical equipment in south china need to ensure
that they have a large storage facility for their products, a strong
after-market support system, and at least a one year supply of spare
parts-  manufacturers should open representative offices in guangzhou
and hold regular promotional events involving advertising and training
seminars.  currently, many distributors and manufacturers hold
traveling training seminars or send doctors from smaller hospitals to
larger hospitals for training.  closing analysis

18.  Comment:  as many chinese doctors and health care officials appear
to be unfamiliar with modern u.s.  medical products, such as
laparoscopy and angioplasty, a serious education effort must be
launched before these products are accepted into standard chinese
medical practice.  surgery, which often requires significant manual
dexterity, is still as much of an art that must be practiced as it is a
science.  the growth in investment in hospitals in flourishing
guangdong province may provide an opportunity for u.s. medical product
companies to establish an early beachhead in the south china
marketplace through an investment in training and educating chinese
healthcare professionals about the life-saving and cost-saving benefits
of their products.  (fcs: nperetz) martin

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