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The UAE, Turkey and Saudi Arabia now rank among the top growing markets for China’s medical instrument exports. According to China Customs, Q1 2024 exports to the United Arab Emirates increased by 23.4 percent, Turkey by 9.68 percent and Saudi Arabia by 8.34 percent.　

Industry insiders confirmed that more Chinese suppliers are participating in the annual Arab Health Medical Expo in Dubai, the largest medical instrument expo in the Middle East, where they showcase products tailored for this emerging market.　

Leading supplier United Imaging has attended for five consecutive years. Xia Jusong, United Imaging’s president of international business, told NewsChina that orders from the Middle East have grown steadily every year.

“This year’s expo saw the most Chinese enterprises yet,” Lin said, who declined to give his company’s name. “If we’d waited any longer, it would have been too late to get a foot in the door.”　

The sentiment was echoed by Ilan Maor, director of IsCham China, and managing partner at SHENG-BDO, a consultancy that connects Israeli and Chinese businesses. He believes that Chinese enterprises are eager to “work for globalization” due to shrinking profit margins at home, where the Chinese government’s expanding centralized purchasing policies favor low-cost medical products.　

“A couple of countries in the Middle East offer a strong financial foundation and increasing demand for new technologies. It’s inevitable that Chinese enterprises will rush in,” Maor said.　

Cai Shixuan, an international cooperation director of a Beijing-based firm that assists medical instrument companies planning to expand internationally, noted that the region’s nearly 500 million people across over 20 countries present a substantial customer base.　

“Companies tend to favor Saudi Arabia and the UAE, as they offer stronger per capita purchasing power compared to Iraq, Turkey, Iran and Egypt. Additionally, the less populated countries of Oman, Bahrain, Qatar and Kuwait usually purchase medical instruments through Saudi Arabia or the UAE,” Cai said.　

Lin Fangming explained that registering products in the Middle East is generally easier than in Europe or the US. “Getting a registration certificate in Saudi Arabia will help facilitate registration in neighboring countries,” Lin said.　

Cai emphasized that Saudi Arabia has greater demand than the UAE, largely due to the limited number of local manufacturers with advanced technologies. With a median age of 35, Saudi Arabia’s young population presents opportunities to enhance fundamental healthcare services.　

This demand prompted Chinese enterprises to tailor products for the Saudi market. Lin Fangming’s company focuses on diabetes testing equipment. According to the 10th International Diabetes Atlas by the International Diabetes Federation in 2021, adult diabetes is projected to rise by 87 percent across the Middle East and North Africa by 2045.　

Hu Zeyu, a researcher at Shanghai Pudong Development Bank, pointed out that Chinese enterprises previously exported low-cost medical materials, primarily to developed Western countries. However, the Middle East now offers a market for Chinese enterprises to export higher-cost instruments and in-vitro diagnostic products.　

“We have been active in the Middle East market since 2015… and have launched four products there,” Huang Junming, overseas market director of MedPrin, a Guangzhou-based company specializing in high-cost materials for neurosurgery, told NewsChina.　

Xia Jusong from United Imaging reported significant growth in exports to the Middle East over the past three to four years, with many of their high-end imaging instruments adopted by top-ranking hospitals. They have reached cooperation agreements with several high-end medical institutions in the region to provide technological support and training. 　

Other leading Chinese medical instrument companies like Mindray and Neusoft have made inroads, with Neusoft establishing a branch in Dubai in 2010. Neusoft has supplied several hundred large machines like digital CT scanners to more than 10 countries in the region.

In 2020, BGI established a lab for Covid-19 testing and monitoring in Abu Dhabi, UAE with local partner G42, an AI company. BGI has similar cooperation agreements with several other Middle Eastern companies, such as Saudi Arabia and Israel.　

Hu Zeyu with Shanghai Pudong Development Bank said that both public and private investors in the Middle East have been seeking to collaborate with overseas enterprises as their governments aim to reduce economic reliance on the volatile oil industry. The healthcare sector is a key focus of Saudi Arabia’s “Vision 2030” and “National Transition” plans to diversify its economy. According to “Vision 2030,” the Saudi government plans to invest more than US$65 billion in medical infrastructure.　

Similarly, the UAE aims to invest about US$8.3 billion in key industries, including pharmaceuticals and medical instruments.　

“The surge of interest in the Middle East is closely tied to the capital market,” Lin Fangming noted, pointing out that around half of world’s top 10 sovereign wealth funds are based in the region. Notably, funds such as the Kuwait Investment Authority and the Abu Dhabi Investment Authority have set up offices in major Chinese cities like Beijing and Shanghai.　

Since 2022, these sovereign wealth funds have been in close contact with Chinese healthcare enterprises, with many expecting investments from these funds.　

“These funds are guiding Chinese enterprises in their development in the Middle East,” Hu said.　

In August, Saudi Arabia’s Public Investment Fund reported that by July 2024, its total investment in China had reached US$22 billion, concentrated in the sci-tech, automotive and healthcare sectors.　

An anonymous insider told NewsChina that the Middle East’s desire for economic transition aligns with the increasing challenges Chinese enterprises face in securing financing at home.　

However, Xu Beike, a medical industry analyst, cautioned that Middle Eastern countries that lack a complete medical instrument industrial chain are expecting Chinese enterprises to do more than sell them products.　

This extends to hiring local staff, with Saudi Arabia’s Ministry of Human Resources and Social Development requiring overseas companies to take on a set ratio of local workers.　

Lin said his company is building a local team and is required to employ a specific number of locals despite the high monthly wages, which range from 20,000-30,000 yuan (US$2,800-4,300).　

Xia Jusong noted that United Imaging has established a wholly-owned branch in the UAE and a tech office in Saudi Arabia. They also have local parts centers in Dubai and neighboring countries to service the region.　

“Our Middle East team is highly localized. Aside from two people from headquarters [in China], the rest are locals,” he said.

Hu Zeyu told NewsChina that Chinese companies are still in the preliminary sales phase – focusing on local partnerships, as building a self-sufficient sales team or acquiring local agents can be cost prohibitive and time-consuming.　

However, finding reliable local partners can be challenging. Cai told NewsChina that relationship networks are crucial for the region, adding that strong ties with local royal families can help to promote a project.　

“Some agents in the Middle East have close relationships with local governments, and sometimes, the right person is the key to the market,” Huang said, though he cautioned that this approach does not apply universally across the region.　

Huang described the Middle Eastern market as a puzzle, with each country representing a unique piece. “We have to adopt different strategies for different pieces,” he said, revealing that his company took six years to become profitable after their first foray into the Middle Eastern market.　

Chinese enterprises also face competition from established brands from other countries. Many interviewees noted that Chinese brands are less recognized and influential in the Middle East. To address this, United Imaging initially targeted top-tier medical institutions to establish credibility.　

Xia recounted how their digital PET/ CT scanner entered the Middle East after a senior physician from the King Hussein Cancer Center in Jordan noticed it at an international nuclear medicine conference. CT scans involve X-rays to create images, while PET scanners use radioactive material.　

“That physician’s influence within the global medical community helped prompt his hospital to adjust its purchasing and it introduced our machine,” Xia said. “After that collaboration, we launched a talent training program with them and secured a place on their supplier list,” he added.　

Lin said that while low-value medical materials and instruments can easily sell in the Middle East, high-value products are typically preferred from established brands that provide both products and technical support.　

As a result, doing business in the Middle East may not generate immediate profits. “I found that most Chinese enterprises are actually in a fog when it comes to exporting. They often follow others without a clear strategy. Once the initial excitement cools, they realize the Middle East isn’t a gold mine and they’ll need to operate more efficiently,” Cai said. “Doing business in the Middle East is only an option for leading enterprises,” he added.　

Deng Xiaoyu, founder of MDCE CRO, a medical services and technologies firm, noted that much of the profit from medical instrument exports remains with European and American companies. Although the Middle East and Southeast Asia present attractive opportunities, few Chinese enterprises prioritize the Middle East.　

“The Middle Eastern market does not fit every Chinese medical instrument enterprise. It’s only for those with strong cash flow and capital reserves,” Lin said.　

“Entering the Middle East takes at least two to three years of preparation, with a continuous cash flow being essential,” Lin continued.　

He added that with weekends and holidays, people do not go to work, and this increases the time and cost for a Chinese enterprise to gain a foothold in the market, which is not feasible without sufficient cash flow.