China suffers from low healthcare spending levels by international standards, according to World Bank data. There is also a shortage of senior healthcare professionals due to the Cultural Revolution and economic under-development.
However, rising incomes and greater consumer choice are raising expectations in China ?but they are also leading to more cases of affluence-related chronic illnesses, such as cancer, diabetes and heart disease, which require sophisticated treatment. Both these developments represent an opportunity for multinationals but competition is growing and the regulatory environment is in a state of flux.
The Chinese healthcare market is highly regionalised, under-regulated and often corrupt. This makes it difficult to operate but therewards are seen as outweighing the problems. Some of the biggest foreign investors in China come from this sector, although the report says the government's attitude towards them is constantly changing. The ground rules for investment are also changing ?for example, one year foreign ownership in hospitals may be permitted but the next year it is restricted. And while incomes are rising, most ordinary people are still too poor to pay for Western-standard healthcare and there-fore healthcare provision by foreign investors is mostly limited to expatriates.
Most rural Chinese do not have any form of healthcare coverage. In the cities the numbers employed by state enterprises and in receipt of the welfare services which they provide are dwindling under the enterprise reform programme.
New forms of healthcare insurance are currently being worked out but this is a major task and total healthcare coverage is likely to deteriorate further before any new system can be launched. This means that the government healthcare network will be increasingly under-utilised and that any new facilities will contribute to over-capacity.
* The report Healthcare in China into the 21st century is available from the EIU, Tel +44 171 830 1007. Price ?75.