China looks abroad
There are two striking things about our interview with Group CEO Charles Wang at Luye Medical. First is how long-term its strategy is and secondly, and most intriguingly, is how it plans to import models into China.
Luye went out and purchased the third largest Australian hospital group and the second largest oncology player in Singapore mainly in order to have the right models in place as the Chinese market opens up. It is not alone in this approach. Together with Macquarie Capital, China Resources Group bought 56% of Genesiscare, the largest Australian oncology player for A$1.7 billion in July 2016. Meanwhile, Fosun which is aggressively building a hospital chain in China, bought Portuguese hospital Luz Saude. Chinese insurance giant Ping An, which runs the biggest ehealth platform in China, has become the second largest shareholder in SE Asia outpatient chain Fullerton Health Corporation, after investing RMB800m ($121m). And two Chinese funds were in the race for I-Med, the largest Australian radiology group which has just been sold to Permira.
We think it is clear that it will be Chinese groups who have developed a deeper expertise in health care services from foreign acquisitions, who will dominate the Chinese market as it opens up. Foreign groups who lack connections and cultural insights will struggle. Luye Group is also a major pharma supplier in China. That will also help, particularly in oncology.
Wang’s very clear that he wants to build value-health based models which he can then import into China as the market there opens up. But he is in no hurry to do that, as he thinks it will take time for the sector to open up. Unlike others, we have talked to he is clear that much work needs to be done before most Chinese people will be confident in private health care. He and many other Chinese investors are comfortable to take the long game.
We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.
