Hong Kong, Macau Medical Service Providers to Have Better Market Access to Mainland

The Chinese medical organization market is becoming sweeter for foreign investors, especially those from Hong Kong and Macau, thanks to easier market access being allowed by the government.

Following the circular issued by the Chinese government last year to further encourage foreign capital entry into China’s medical organization market, a circular (weiyizhengfa [2010] No. 105) issued jointly by the Ministry of Commerce and the Ministry of Health on December 14, 2010 relaxed requirements on minimum investment capital and equity holding ratios of Hong Kong and Macau medical service providers who look to establish joint or cooperative medical institutions in some areas in the mainland.

As the seventh supplementary agreement of the “Mainland and Hong Kong and Macao Closer Economic Partnership Arrangement” signed in 2003, Circular No.105 clarifies that there will be no minimum investment capital request for Hong Kong and Macau medical service providers who establish joint or cooperative medical institutions in Guangdong Province, while such establishment in the rest of Mainland China will require a minimum of RMB10 million from the Hong Kong and Macau investor side.

According to the circular, Hong Kong and Macau investors in Shanghai, Fujian, Guangdong, Hainan and Chongqing will not have to worry about a maximum ceiling imposed on their equity holding ratio in joint or cooperative medial institution establishment, while in the rest of Mainland China the Chinese side has to hold no less than 30 percent of equity in such joint ventures.

Hong Kong and Macau medical service providers are also allowed to establish wholly foreign-owned medical institutions in Guangdong Province, and it is becoming increasingly possible for them to have a wholly-foreign owned medical organization establishment in Shanghai, Fujian, Hainan and Chongqing as long as they meet related criteria.

China’s medical organization market has always been attractive to foreign investors because of the large demand from the massive population. However, restrictions – such as a minimum RMB10 million investment capital request for the foreign partners and the ban on branch company establishment of medical organizations with foreign capital – make market access relatively expensive. Experts say that with the new circular issued, not only will the mainland see an influx of Hong Kong and Macau-invested medical institutions, but a significant number of foreign investors will also regard the two areas as a popular destination for medical institution establishment, in order to obtain handier access to the mainland market.

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