Sherbourne Consulting

Case Study Establishing a FICE in China — Healthcare

Sherbourne Consulting specialise in advisory services and project management — focussed on all aspects of a company’s market entry into China.

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This includes the incorporation of a business in an appropriate format, such as a foreign-invested commercial enterprise (FICE), and managing all of the critical issues required to establish a strategy for China.

Case Study Summary

Our client, an SME in the healthcare sector, was looking to set up a sales and distribution business in China: to establish sales of branded medical devices to the hospital and pharmacy sectors.

  • Challenges included building an understanding of likely timeframes and costs to develop the business case for board approval, protecting intellectual property, gaining the necessary product approvals, and researching all aspects of the market (including specialised distribution channels).
  • Our method involved detailed project management, both with the head office in the UK, and locally on the ground in China, designed to achieve establishment of the right entity against agreed milestones and timelines.
  • We successfully established a FICE, with registered intellectual property, product registrations, and key staff in place. The team went on to develop sales in line with expectations.
Photograph of Dave Roberts, China consultant

For enquiries, please contact: Mr. Graham Barker
Market Entry Consultant
+44 (0)1789 731 803
LinkedIn | Email

Sherbourne Consulting has extensive experience in the Chinese market, with specialist consultants based in the UK and China. We establish the right relationships for our clients with professional third-parties in order to deliver a long-term sustained competitive advantage.

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Please make an enquiry if you would like further information, or to arrange an appointment for a more detailed discussion and tailor-made advice.


Our UK Client: Healthcare

A successful SME — manufacturing and selling medical devices used in hospitals and sold in pharmacies around the world — wanted to investigate the market in China.

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The company’s board were looking to determine whether the company could successfully set up a suitable business entity to develop a strong framework for profitable sales growth.


Challenge: Building Confidence & Justifying the Investment

The client had well-established sales subsidiaries and agents/distributors around the world, but was not active in China.

In order to develop a China strategy, and to build a robust business case for the board, we needed a detailed understanding of:

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Method: Phase 1 — Building the Foundations

Market Research

We began with assessing the market size, structure, and attractiveness, as well as key regulations.

As is often the case in China, this revealed a lack of sufficiently detailed information, but was useful to provide background about structure and end users:

  1. Selection of suitable market research partners: with demonstrable medical device experience in China.
  2. Briefing and management of market research through to presentation of final reports and conclusions. Our research covered key opinion leaders, hospitals, pharmacies and a variety of market players; and interviews explored market demand and trends, channel structure, channel pricing, approval processes, strengths and weaknesses of competitor products and market strategies. Data gathering was supported by market visits to hospitals, pharmacies, industry groups and distributors with the client in order to build understanding and explore the key market drivers.
  3. In addition to exploring the market position of established MNCs, we worked to understand the domestic focus and capabilities of Chinese device manufacturers.
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Despite strong levels of competition from both MNCs and local companies, our research gave the client confidence that with the right approach they could still successfully enter the fast-growing market with their products.

Intellectual Property

“When IP rights have been secured in China, it is important to monitor the market for infringements. Should an infringement be detected, there are five main channels for enforcing IP rights.” — British Embassy Beijing

Review of intellectual property (IP) is a critical step which should be undertaken before activity in the market draws attention to the client.

A detailed review of the client’s IP portfolio was undertaken to understand the existing registrations and strategy for patents and trademarks across Asia, and particularly in China.

In close cooperation with the client’s trademark/patent agents in the UK and Beijing, a strategy was put in place for English and Chinese trademarks to:

We developed and tested Chinese trade-names with a variety of respondents, including doctors and patients.

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Device Registration

Medical devices are regulated by the State Food and Drug Administration (SFDA) in China. Specialist assistance is required to review classification and achieve registrations with the SFDA.

“Depending on classification, approval can take up to 2 years and sometimes longer. Recently, with a trend that points toward longer processes and reviews, this stage becomes the key rate-determining step in the establishment of a business in this sector.” Graham Barker, Sherbourne Consulting

We identified consultancies with the skills, experience, and Chinese/English language capabilities to manage this process with the SDFA for the agreed products, and to act as an official legal agent.

We reviewed the consultancies, and the final selection was made by visiting the shortlist with our client.


Method: Phase 2 — Developing the Business Plan

With phase 1 underway, the board supported the next phase of detailed planning and development of a business plan (prior to approving the establishment of a legal entity and recruitment of senior staff).

We established a structure of regular reviews and assessment of progress against key milestones with the project team. This made it possible for us to conduct our work transparently and establish clear communication lines with groups working on specific aspects of the project, such as packaging and product approvals.

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Work in this phase included:

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Method: Phase 3 — Implementing Our Plan

Following board approval of a final plan, an intense phase of implementation took place:

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Great care was taken to recruit an experienced Chinese general manager — active in the medical device sector and with an excellent track record: including working for MNCs.


Results: Operational FICE in China

We helped set up a fully established and operational FICE, able to import medical devices and develop sales across the chosen sectors (hospitals and pharmacies).

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