Philips aims for healthy expansion in Chinese market

BEIJING - Seeing good momentum in the global healthcare sector, Royal Philips Electronics NV is planning to expand its healthcare business in China's rural areas, a market which is seen as a new driver of growth for the Dutch multinational group.

"We will increase efforts to deepen our presence in the countryside markets to maintain sustainable development in China, a huge market where we have achieved good performances in the high-end field," said Lu Yiqi, strategic marketing director at Philips Healthcare Greater China.

At present, the foreign industrial giants Philips, Siemens AG and General Electric Co hold a combined share of more than 70 percent of China's premium healthcare market, according to the news portal Yicai.com.

On Wednesday, Philips (China) Investment Co Ltd launched a second round of training for 110 paramedical staff at county-level hospitals in the Xinjiang Uygur autonomous region and suburbs in Beijing and Tianjin.

"Philips invested more than 10 million yuan ($1.5 million) on a training project for countryside paramedics last year, and the investment scale will probably be increased this year," Lu said.

"Through the project with county-level hospitals we can gain more information about the market demand in China's rural areas," he added.

According to Lu, there are currently more than 5,000 rural hospitals in China, most of which not only lack medical equipment but are also in need of technological support.

"Improving the technological expertise of hospital staff in these places is the most important task for us in developing the basic healthcare market in rural areas," Lu said.

Lu said Philips' factory in Suzhou, Jiangsu province will develop new products tailored to meet the demands of the rural market.

Philips' medical-photography plant, based in Suzhou, will become operational in 2012, and will provide imaging products for middle- and low-level hospitals in Chinese market.

The new production base, wholly funded by Philips at a cost of $54 million, is the company's largest investment project in China, Yicai said.

In the first half, Philips Healthcare sales grew 8 percent, 4 percent higher than the average sales increase of the group overall, driven by high single-digit growth in all businesses, notably its Home Healthcare Solutions and Patient Care & Clinical Informatics units.

"Healthcare performed strongly, improving earnings and growing comparable sales 8 percent higher than last year," said Frans van Houten, president and CEO of Royal Philips Electronics.

Meanwhile, Siemens is also tapping into China's basic healthcare market. In 2010, the company's healthcare division introduced low-cost products into the Chinese market.

China is expected to be the second-largest market in the world for Siemens' healthcare unit over the next two years, driven by the company's new plan focusing on the development of basic medical care.

Siemens will also develop new versions of its X-ray machines, computed tomography units and ultrasound devices to meet the demand from community and rural hospitals over the coming years.