If you're looking for near-term market opportunities or a glimmer of hope in the all the bad economic news, here's a number you may want to remember: $7.4 billion. That's the potential size of China's medical electronics market by 2016, according to IHS.
Though the industry is feeling the global economic slump, IHS expects a series of stimulus initiatives by the Chinese government to boost domestic demand. If that happens, revenue will grow at a compound annual rate of 13 percent. In 2011, revenue in this sector grew 19.6 percent from 2010 to $4 billion. IHS expects that figure to grow 18.4 percent this year to $4.8 billion.
At the heart of this momentum is China's latest focus on medicine and healthcare development, IHS iSuppli said. After the Ministry of Science and Technology released the 12th Five-Year Plan for the Medical Device and Equipment Industry, some important policies were implemented in the first half of the year.
In August, the Ministry of Health released another important document, the 2020 Health Strategy Research Report. It states expenditures on public hygiene will account for 6.5 to 7 percent (about $63.5 billion) of China's gross domestic product by 2020. Despite the uncertain economic situation, China's government is expected to continue increasing subsidies for policy implementation, IHS said. As a result, Tier 1 medical electronics vendors, which typically develop high-end products for mature markets, have been quick to announce plans and strategies for serving China's basic medical market. Many "plan to launch customized low-cost equipment targeting the second- and third-class cities."
At the other end of the spectrum, Chinese firms are increasing their R&D investment. Leading companies there are migrating away from low-end products in favor of complex ones meant to help "differentiate and enhance brand presence."
In addition, a promising consumer segment is emerging: personal healthcare monitoring. A variety of portable devices for home use are growing in popularity. IHS predicts revenue from consumer medical devices will rise 19 percent from last year to $1.1 billion in 2012. This market will likely continue to grow, the research firm said. "In order to reduce the cost of treatment, the government also is taking a proactive approach to healthcare by promoting healthier lifestyles among citizens and increasing public awareness of health issues." Electronics companies will have to meet high-performance and reliability requirements while building low-cost, portable devices that are easy for consumers to use.
Growth in China's consumer medical device market will also trickle down to chipmakers. IHS forecasts that the market will use about $70 million of semiconductor devices in 2012, accounting for 28.5 percent of total consumption. The big dilemma facing component suppliers will be to reduce design complexity as device portability becomes more important.
Though this may be a short-term revenue burst tied to the whim of short-term government stimulus, it's at least a move in a positive direction. In today's electronics world, and in the wake of cautionary outlooks for the next couple of quarters, you've got to appreciate a dose of good news now and again, even if it's only in a niche sector in one country.