Door opens for 100% foreign ownership of Chinese hospitals on pilot basis
US health care businesses see China as a waiting market, ready for the introduction of world-class hospitals and care centers. China understandably regards medical care as intensely domestic, and has limited foreign involvement to joint ventures or minority ownership.
A door has now opened. A cooperative framework for establishing a hospital in the Shanghai Pilot Free Trade Zone allows a German investor (Artemed Group) to create the first wholly foreign owned hospital in China since the PRC Revolution. This is a breakthrough since the 2010 announcement that China would allow foreign companies to own and operate hospitals in China, a notice that was followed by second thoughts and tentative steps toward implementation.
Approval of the Artemed Group’s project was immediately followed by a July 25, 2014 Notice regarding establishing Wholly Foreign-Owned Hospitals, issued by the Ministry of Commerce and the Health and Family Planning Commission. The Notice provides a framework for foreign medical care enterprises to establish wholly owned hospitals in seven pilot regions – Beijing, Tianjin, Shanghai, Jiangsu Province, Fujian Province, Guangdong Province and Hainan Province. This progression is consistent with China’s effort to open its economy by pilot projects, then Ministry guidance, and eventually an established basis for foreign businesses to enter sectors of the Chinese economy on a wholly owned basis.
For a comprehensive English and Chinese language summary of the July 2014 developments, click here, from the September 12, 2014 Jun He Bulletin. Jun He and Frost Brown Todd are members of MULTILAW, a multinational association of independent law firms. They work closely on matters for clients in China and the United States.
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Joseph J. Dehner Joe Dehner concentrates his practice on multinational business and securities disputes. He counsels a wide variety of companies, domestic and foreign, on issues confronting global business, including transnational investment, mergers and acquisitions, joint ventures, customs and trade issues, international business structures, distribution and agency agreements and the resolution of international disputes.