Springtime-bloggen

This text is from Springtime's China issue tracker. The China issue tracker is a monthly report covering issues ranging from developments in public opinion and relations between China and other countries to company crises and hot media topics. We provide insight and analysis to help foreign businesses in China stay on top of important developments, as well as ad hoc updates on important events.

Chinese health care reform to help create new national champions?

The Chinese health care system is currently undergoing reforms with the goal to make basic health care accessible to every citizen by 2020. The reform seeks to expand health care coverage as well as correct some serious problems in the current system.

Many aspects of the reform have yet to be finalized, such as how a separation of hospitals and pharmacies will be implemented. So far the most developed part of the reform is implementation of the Essential Drug List (EDL), a list of drugs that will see tougher price controls and centralized procurement in order to keep costs down.

For companies with products on the EDL, the changes to how business will be done will be profound. But the consequences will reach even further.

The EDL, in its original incarnation, contains 307 drugs seen as essential to the grassroots level of health care in China. Local Health Bureaus can add to the list, as is the case in for example Chongqing where the list has an additional 43 drugs on it.

Procurement will be done on the provincial level. Companies will be able to submit their bids to provide drugs on the list though a web site and winners will be awarded contracts between six months and a year.

China has had many strong local pharmaceuticals providers, but few strong players on a national level. One of the objectives of the new system, according to local officials we have met, is to make it easier for companies to compete in other markets than their home provinces, making China “one market” for pharmaceuticals.

To help this, local governments will take steps to boost their local pharmaceutical companies, encouraging them to compete in other provinces. It is easy to see this becoming a government-backed arms race in the pharmaceutical sector, with each province wanting to promote their champions.

Companies also get help from the financial markets. In September, China’s largest pharmaceutical products distributor Sinopharm successfully raised more than one billion dollars in its Hong Kong IPO.

While the Chinese market is large, it won’t be enough, and companies will want to expand outside of China. And this is where the consequences of the health care reform will spread to other markets. As China upgrades its health care system, governments boost their local companies, and investors flock to provide the financing, China will be on its way to create a new set of national champions ready to take on markets abroad.

That will be a more important strategic development for foreign pharmaceutical companies than being on the local EDL or not.

If you're interested in receiving the full report, please contact Patrik Lockne at Springtime's Beijing office at patrik.lockne@springtime.nu.

This Sunday
Beijing was suddenly covered in snow. The week before we had eaten our lunch outside
in the sun, fully convinced we would see a few more weeks of warm autumn
weather.

The weather
changes all the time, and a bit of snow might seem mildly exciting for a Swede,
had it not been for some of the facts surrounding the sudden change of weather.

My daughter
was of course excited about the whole thing. Let’s go outside! We spent a few
confused minutes trying to locate our winter clothes, and went out. People were
taking pictures of the snow, and the kids made snow sculptures. All very
picturesque.

Returning
to the office this Monday I read that it was in fact the earliest snowfall since
1987, and the third earliest ever recorded in Beijing. So should I start
worrying about global cooling? Can we cancel that costly Copenhagen summit?
Sell the Prius and get a SUV?

No. It
turns out the heavy snowfall was triggered by the local weather “command centre”
in an attempt to mitigate the severe draught that has been plaguing this part
of China for a while. They blasted 186 sticks of silver iodide into the clouds,
triggering some 16 million cubic metres of rain and snow. “Although it was too
early for snowfall, the conditions were suitable, and we weren't going to
ignore any opportunity”, says one of the rainmakers who is quoted in South China
Morning Post.

While my
kids loved the snow, it was less popular with the passengers of some 200
delayed flights at the Beijing Capital International Airport. Seems the “command
centre” missed to tell everyone there was going to be heavy snowfall.

I am sure
we’ll see more man-made weather in Beijing. The weather “command centre” has a solid
track record. Last year’s Olympics saw great weather, and Hu Jintao could greet
the troops basking in sunshine at this year’s National Day celebrations. All
thanks to the rainmakers’ getting rid of unnecessary clouds the evening before.

But these
were events planned long in advance, not an opportunity grabbed at the last
moment. For those occasions, the rainmakers better learn to communicate better
or they will soon lose their popularity and their chance of becoming real heroes;
the bringers of perfect-weather picnics and crisp winter walks in the park.

“Forecasts”
seems very much last century’s tech.

/Patrik Lockne, consultant at Springtime's Beijing office

Yesterday
Geely announced that it is bidding for Ford’s Volvo unit. There are several
question marks surrounding the deal.

Will the
production stay in Sweden? Geely has said so. Will Geely bring more Volvos to
the Chinese market? Probably. Will the competing bidder, Jakob, present a better
bid? Who knows.

Many seem
to worry about technology transfer to China. “Geely is just interested in
getting Volvo’s technology” say some commentators, as if they had just
discovered a new reason for corporate mergers.

Others say
subcontractors may refuse to deliver to Volvo for fear of losing their technology
to the Chinese. This would be brave given the sorry state of the auto parts industry.

All of
these question marks will be straightened out as the deal gets closer. In the
meantime, speculating is fun.

Few seem to
have any insight into what kind of company and brand Geely really is. I asked
some Chinese friends for their opinion on Geely and the deal.

The
prevailing opinion is that Geely is a low-end brand, the opposite of Volvo. It’s
the kind of car first-time car buyers on a budget would get. Others felt some pride
in the fact that it is one of China’s successful car companies.

“The Geely
buyer is practical and does not want something fancy. They don’t care about
face”, said one friend. A statement
that could have been about Volvo, with their block-shaped models, a few decades
ago.

Some had apparently
not seen the news at all, and were frankly surprised that Geely would be buying
Volvo. Perhaps that says something about the relative importance of this deal
in China. While Volvo may be one of our crown jewels, it’s just another company
here.

Patrik Lockne, consultant at Springtime’s
Beijing office

Om gårdagen var dagen då partiet fick göra reklam för sig, så lämnade den här dagen mer utrymme åt folkets firande av Kinas 60-årsdag.

Jag begav mig till Himmelska fridens torg för att titta på de vagnar som ingick i gårdagens parad. Det var, skulle det visa sig, inte en helt unik idé.

Folk var tydligt glada och stolta, om än inte fullt så glada som de jag såg vid Fågelboet under de Olympiska spelen. Här nedan ett litet urval bilder från torget (eller gå direkt till bilderna på Springtimes Flickr-konto).

För någon timma sedan avslutades direktsändningen från den
stora nationaldagsparaden på Himmelska fridens torg.

Historia och nutid för den 60 år gamla Folkrepubliken skildrades
genom en två timmar lång parad. Runt 200 000 människor sägs ha deltagit i
uppvisningen.

Det fanns ingen chans att se paraden live. Myndigheterna har
genom restriktioner och via media låtit det bli tydligt att bästa sättet att
fira nationaldagen på är hemma i soffan framför TVn. De flesta verkar ha följt
påbudet. Under en promenad timman innan paraden såg jag mycket få människor,
och ännu färre bilar. Jag handlade mitt fika, gick hem och bänkade mig framför
TVn.

Det är svårt att inte bli imponerad av arrangemanget, och
det är något speciellt med att på TV se tusentals ballonger släppas av barn på Himmelska
fridens torg och sekunderna senare från lägenhetsfönstret se dem sväva upp mot himlen
några kilometer bort.

Paradens första del, en truppinspektion och militärparad, upptog
den inledande timman. Fascinationen över raka led och modern hårdvara avtar
efter ungefär en kvart. Flygvapnets överflygning över stan piggar upp en aning,
men det bestående intrycket är ändå att ha tittat bakåt till en tid då världens
supermakter jämförde längden på sina missiler.

Den andra delen är mer intressant. Under den visas viktiga
historiska perioder, Kinas samtliga provinser, och nutida framsteg upp. ”Mao
Zedong thought”, forna ledare som Deng Xiaoping och Jiang Zemin, nuvarande
presidenten Hu Jintao med sin teori om ”scientific development”, jordbruk,
rymdfarare, olympiska mästare, vindkraftverk, Expo 2010-maskoten och representanter för Kinas minoritetsfolk – alla passerade de förbi i en färgglad
kavalkad av dansande människor. I bakgrunden formade 80 000 elever från
stadens skolor slagord med hjälp av färgade plakat; ”tjäna folket”, ”följ
partiets påbud” och så vidare.

Det var få överraskningar. Budskapen är de vi känner igen;
modernisering, ett enat folk och ett styre som handfast och metodiskt för
landet framåt.

Men mest intressant var kanske det som saknades, som t ex de
första trettio åren av Folkrepublikens historia. Från revolutionen hoppar vi raskt
fram till 1978 och Kinas öppnande för omvärlden. Ingen hade förväntat sig att
se kassa stålverk, massvält och intellektuella med dumstrut på huvudet passera
i paraden. Men finns verkligen ingenting att säga om landets första trettio år?

Det är förstås fråga om en historieskrivning som passar det
nuvarande ledarskapet. Deras legitimitet bygger delvis på de tidiga kommunisternas
verk, men det svårt att förklara hur Det stora språnget och Kulturrevolutionen bidragit
till dagens positiva utveckling. Enklare då att lägga fokus på rymdraketer, höghastighetståg,
solceller och kvinnliga stridspiloter.

Jag är säker på att många kineser känner en enorm stolthet
när de ser paraden. Det har de all rätt att göra. Här har lidits mycket för den
relativt goda verklighet som många lever i idag. Och jag är lika säker på att
många i väst kommer att sucka över den skeva historieskrivningen, den övning i
kollektivism som paraden utgör och de ingrepp i folks vardag som
förberedelserna inneburit. For oss blir uppvisningen absurd.

Men det här var ingen uppvisning för dig och mig, det var en
två timmar lång reklamfilm för Kinas kommunistparti. Och den reklamfilmen
säljer ett fortsatt styre som jag tror att folket kommer att köpa.