By Mike Scott
Legal News
The need for new and advanced medical services is driving China to make it easier for American and Michigan-based health care companies to grow within the world’s most populous country, according to one area lawyer.
One of China’s principal economic efforts is to attract both better quality health care services to the country for its citizens, and corresponding investments into its burgeoning medical
industry, said Weisun Rao, an attorney with Miller Canfield, which has an office in Shanghai.
To improve its health care industry, China has made it easier and more attractive for foreign-owned companies to invest there, even allowing them to open or operate a hospital without requiring a partnership with a Chinese company, according to Rao.
Indeed, joint ventures are not always required now in China, particularly in health care, manufacturing and some other industries, Rao indicated.
Banking, however, is one example of heavily regulated industries that are still subject to tight control by its central government.
The need for better health care is also driving some of this openness within that industry, Rao said.
Certain parts of the country have sub-standard health care for its residents, and the sheer volume of residential needs and job creation is driving much of this government-sponsored demand.
Simply put, the quality of health care that many Chinese citizens receive does not compare favorably to those of other industrialized nations.
Creating jobs within the health care field is high on China’s agenda, Rao said. Yet, the country also wants to become better in medical innovations and knowledge.
“By inviting foreign investors (the government) is essentially admitting that is lagging behind and has some significant needs,” Rao said.
In addition, “the Chinese government itself is pouring tons of money into its economy to help grow health care investment within the country,” Rao said. “That includes grants and incentives for research and development companies in the field, which leads to tremendous opportunities for Michigan and Midwestern pharmaceutical companies to grow on a global basis.”
Foreign entrepreneurs and companies that can bring new technologies or intellectual property to China also may qualify for subsidies from the government as an incentive to start operations from the ground up, Rao said.
Certain economic development zones provide further financial assistance to attract these entrepreneurs and companies, he indicated.
Venture capital firms also are active in China, Rao said, meaning the availability of even more investment dollars for companies that are unable to obtain funds in the U.S.
While not every policy in China is designed to openly welcome such foreign-owned investments, the country’s focus on attracting health care has given opportunities to a wide range of stakeholders, including hospitals and medical providers, biopharmaceutical and pharmaceutical companies, medical device and equipment manufacturers, and more.
“Chinese companies are looking for capital or technologies from foreign companies that have something of value to sell or make,” Rao said. “Restrictions have largely been lifted and it’s a great time to look at doing business in China.”
Chinese policymakers have formally introduced a policy promoting indigenous innovations – The Medium and Long-Term National Plan for Science and Technology Development.
In addition to encouraging Chinese companies to develop new technologies, the policy also has resulted in several Chinese ministries and agencies jointly providing guidance, tax incentives, financial support, and technological investments to make the program work.
When the plan was unveiled it was feared that the policy essentially would serve as another hurdle for foreign-owned businesses to gain market share in the country, Rao said.
The original policy seemed to make government contracts available only to domestic companies and foreign-owned companies would not be eligible for certain tax benefits, Rao said.
However, under intense pressure from foreign governments and business communities, the Chinese government made some changes to the policy and clarified that this policy is not meant to exclude foreign company from gaining shares in the huge Chinese market.
Under the current regulations, a foreign-invested enterprise (FIE) in China, either as a wholly foreign-owned enterprise or a joint venture, has what is known as the “legal person” status.
“In making its products certifiable as domestic indigenous innovative products that qualified for preferential treatment for government contracts, the FIE is required to own relevant
Chinese patents and trademarks or a license to use items,” Rao said.
An FIE holding sufficient Chinese patents also may be eligible to be certified as a High and New Technology Enterprise, which enjoys a preferential tax rate of 15 percent compared to the standard 25 percent.
Advance strategic planning of the IP assets should be done if an FIE wishes to take advantage of these benefits, Rao said.
high-res image: http://www.millercanfield.com/people-574.html
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