At the end of last year, China promised drastic reforms for aid foreign investments. Xu Ping, lawyer at King&Wood Mallesons calls those plans “sweeping” in a review of the “2014 Draft” that has been released, although many restrictions remain in place.
Xu Ping, on the pharmaceutical and medical:
We also see a considerable change in the health care industry under 2014 Draft. 2014 Draft categorizes certain pharmaceutical products plagued with overcapacity to the “restricted” category (such as multivitamins and calcium) and categorizes narcotics and “A” class psychoactive drugs as “permitted”, which allows market screening instead of pure administrative regulation in the manufacture of these types of drugs .
On the other hand, under 2014 Draft, we notice the government imposes tighter control over the establishment of foreign invested medical institutions. Medical institution was once categorized as “restricted” industry under 2007 Catalogue, which only allowed foreign investment in the form of joint ventures. Then under the current 2011 Catalogue, medical institution was removed from the catalogue completely suggesting that foreign investors should be “permitted” to invest in medical institutions without restrictions. However, in practice, the establishment of wholly foreign-owned medical institutions remains difficult in China, and, only recently, FTZ begins to allow wholly foreign-owned medical institutions to be established. Since 2014 Draft moves medical institution back to the “restricted” category, it suggests that foreign investment in medical institution will remain restricted in the near foreseeable future.
More in the King&Wood Mallesons newsletter, on the plans for manufacturing, the auto industry, pharmaceutical an medical, telecom and internet, real estate, education and services.