Medical Device Distribution in China
With over 12,000 distributors in China’s medical device market, finding the proper partner to work with presents manufacturers with a unique challenge.
On this page we discuss in greater detail about Kojima’s distribution capabilities and offer additional pointers on what to look for when selecting a China distribution partner.
1. Kojima’s Distribution Capabilities
2. What To Know When Selecting A Distributor
3. Common Distribution Issues
1. Kojima’s Distribution Capabilities
Direct Sales & Dealer Management Solutions
Kojima operates a sophisticated one-stop distribution solution. Through the combination of direct sales to hospitals and sub-dealer management, Kojima has access to almost every major hospital in every province and municipality throughout China.
Direct Sales:
Selling imported medical devices directly into hospitals across China is Kojima’s core competency and this accounts for the majority of our sales volume. Through over 20+ years in the distribution business, Kojima was built strong, direct relationships with all of China’s VIP hospital accounts and physicians.
With regional offices and warehouse facilities throughout China, Kojima has built an infrastructure capable of importing, storing, selling, & distributing products across the country to efficiently facilitate the flow of goods into hospital operating rooms.
Dealer Management:
With over 20 years of medical sales expertise, our experience and on-the-ground knowledge enables us to effectively manage a network of local dealers to compliment and augment our direct sales.
Leverage on our extensive, countrywide network of hospitals and our sophisticated one-stop distribution solution to get your product in China’s medical device market with immediate and lasting results.
Distribution Reach & Regional Offices
Kojima operates its sales network on a national scale with distribution reach to every province and municipality in China. This is done using a 3-tier approach.
Tier 1: Headquarters in Hong Kong.
Tier 2: Five regional offices located in Beijing, Shanghai, Guangzhou, Dalian, & Jinan.
Tier 3: Multiple local offices located all across China.
Our 5 regional branch offices manage and distribute to 18 local/provincial offices in China.
2. What To Know When Selecting A Distributor
Direct vs. Indirect Sales
Looking to cut healthcare costs, the Chinese government has begun to pressure medical device manufacturers and distributors alike to lower costs. This has been accomplished primarily through the slow, but consistent, reduction in tender pricing in China’s central tendering system.
As margins continue to be squeezed across the board, we expect to see numerous Tier 2 & 3 distributors, who have primarily conducted direct hospital sales, shut down, with Tier 1 distributors forced to sell direct to the hospital community. This is in essence, a flattening of the distribution channel.
With prices and margins on the decline, we believe that relying on Tier 1 distributors to simply coordinate a sub-dealer network is no longer a long-term viable option. We encourage medical device manufacturers to look for national-level distributors with a strong history of direct sales capabilities, especially those with relationships with China’s VIP accounts.
Marketing and Brand Building Capabilities
With shrinking margins imposed on by the Chinese government more consolidated and strategic services, in addition to direct sales, will be asked of the national, Tier 1 distributor.
For example, does the China partner have the in-house capabilities to assume the strategic marketing and brand-building responsibilities usually entrusted to marketing and consulting-only companies?
At Kojima, with our administrative headquarters in Hong Kong and team of direct sales staff stationed throughout China, we are well positioned to effectively collect and disseminate marketing and product information to both the end-user and back to the manufacturer. Combined with our history of successful brand building for several of the world’s largest medical device companies, we believe in Kojima’s capabilities to assume the challenge of strategic market planning in China.
Product Specialty
When qualifying your list of potential distributors, examining a dealer’s current product portfolio can give important insight into that company’s abilities to successfully distribute your product.
Important questions to think about:
- Physicians with which specialties does the dealer already have strong relationships with?
- Is their current portfolio stronger in hospital equipment or everyday consumables?
- Does your device compliment a distributor’s current product mix? And vise-versa?
- Does the dealer have sufficient sales experience in your specific medical field to properly understand your device’s function and niche solution in the marketplace?
From the standpoint of taking advantage of a dealer’s existing physician relationships and analyzing how well their product portfolio is complimented by your device (and vise-versa), pairing with a dealer whose product portfolio best matches with your products maximizes everyone’s chances of a successfully distributed product.
Kojima’s core portfolio centers around both the interventional radiology/cardiology and orthopedic markets. Through years of direct sales experience, Kojima has built relationships with physicians in both markets, but especially true with radiologist physicians in the hospital’s cath-labs.
Communication Standards
In an opaque healthcare market such as China’s, we believe a premium is placed on a distributor’s ability to communicate effectively with product manufacturers. For the dealer, being able to explain to device manufacturers ‘why a product has or has not been selling well in the market’ and ‘how the market will change in the coming years’ is crucial for the two sides to formulate a successful and robust sales strategy.
From the initial consultation and market entry stage to later-stage market development, we believe a distributor must show a strong commitment to maintaining high levels of direct, timely, and professional communication.
3. Common Distribution Issues
Can You Trust Your Distributor?
With the transitory nature of distribution businesses here in China and the country’s reputation for IP violations (product replication), we understand that trust between a medical device manufacturer and their China distributor is placed at a premium.
While there is no denying that past experiences have made medical manufacturers hesitant to enter the Chinese market, we hope Kojima can serve as an example for how distribution companies should act. Registered and headquartered in Hong Kong, Kojima keeps tight control of its distribution operation in the mainland while operating under a western-style legal system. Our 20 years of business experience under the same company license reflects our long-term vision & ethical business practice.
Long-Term Commitment To Brand Building
Successful distribution is a long-term commitment, with ups and downs throughout the sales process. But regardless of sales history, it is crucial that the distributor maintain a consistent effort throughout when marketing your products in China by selling the brand name and actively marketing the key benefits of their products to physicians. But all too often, we find that distributors are simply interested in maximizing their margins and will jump from brand to brand, picking up new products and dropping old ones if incentivized to do so. This prevents the sales continuity needed to successfully distribute a product in the long run.
Kojima understands the importance of brand building for the long-term future. We have played an integral role in introducing and building the brand of a major multi-national company in China in the interventional radiology space back in the mid 1990’s and continue to distribute their products to this day. Our system of fairly treating and compensating our sales teams and sub-dealers (in areas that Kojima does not directly sell to) ensures annual continuity of our partner’s brands to the hospitals and doctors.
Kojima’s Other Services
Market Entry: Consultation, Registration, & Product Launch Services
Market Development: Product Positioning, Physician Education, & Conference/Seminar Services
We encourage interested device manufacturers to contact Kojima to further discuss the current distribution environment and opportunities in China.
