China Counters U.S. Tariff – Time for More Manufacturing Setup in China

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China Counters U.S. Tariff – Time for More Manufacturing Setup in China

The China State Council issued tariff plan worth $60 billion on the 2nd batch of goods imported from U.S. on August 3. It will impose duties of 25%, 20%, 10% and 5% on the products if the Trump administration follows through on threats to tax $200 billion of Chinese goods.

Newly-announced medical items include a number of medical consumables, imaging equipment, and IVD reagents, adding to the pool of MRI, X-ray machine, patient monitor and some ophthalmic devices specified in the 1st batch:

  • 9 items subject 25% tariff: X-ray contrast agents, X-ray photographic film, surgical gloves and other consumables, etc.
  • 7 items subject 20% tariff: Disinfector, X-ray non-destructive flaw detector, and audiometer, thermometer, etc.
  • 5 items subject 10% tariff: Rubber clothing, alpha, beta, gamma ray equipment, veterinary devices, etc.
  • 23 items subject 5% tariff: MRI, ECG, X-machine, B-san, color ultrasound, hemodialysis machine, dentures, surgical gut suture; sterile kelp, absorbent hemostatic material, hernia mesh, etc.

For a complete list of tax imposed medical devices, please email info@ChinaMedDevice.com.

If the tariff plan takes into effect, more foreign manufacturers could be expected to set up factories in China. Apart from avoiding duties, there are other factors to consider such as extra advantages for domestic made products, encouragement of contract manufacturing and the increased government protection on IP:

  1. Domestically made: Made in China 2025 called for developing and local manufacturing imaging equipment, medical robots, 3D printed device, biodegradable vascular stents, and wearable diagnostics.
  2. Contract manufacturing: On June 25, 2018, Medical Device Amendment announced the plan to implement medical device registration holder system nationwide. The registration holder can now be independent of the manufacturer, encouraging local contract manufacturing as well as overseas manufacturers to set up facilities in China.
  3. Procurement limitation: The vast majority of hospitals in China, level-1 and level-2s, has been requiring to eliminate the procurement of imported medical products which further forces foreign manufacturers to seek local manufacturing in China.
  4. Increased IP protection: China government also puts more emphasis on IP protection. In March 2018, China State Council established China’s State Administration for Market Regulation (SAMR) as the key market regulator. Under SAMR, the State Intellectual Property Office has been elevated to the same level as CFDA. This is a major step and an indication that China is not only emphasizing market acceptance and quality system but also raising the importance of protecting IP.

 

To see our comments on China Medical Device Amendment published by the Regulatory Affairs Professional Society (RAPS), please click HERE.

If you are interested in setting up local manufacturing facilities in China and obtaining CFDA GMP certification, please email info@ChinaMedDevice.com.

 

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About China Med Device, LLC

China Med Device, LLC (https://ChinaMedDevice.com) provides turn-key solutions for western medical device/IVD companies to enter China with regulation and commercialization services. Our CFDA regulatory services cover strategy, RA, clinical evaluation, CRO, QA and post market compliance. We are experienced in handling innovation approvals and priority reviews. Our commercial services cover market assessment research, reimbursement, partnership, distribution qualification and management. We have offices in Beijing, Suzhou and Boston. Our management team has 100+ years of combined experience in medical device and IVD and has been involved with 1,000+ CFDA certificates and 250+ companies’ success.