(Yicai) March 4 -- The impact of escalating tensions in the Middle East on China’s medical device makers has so far been manageable, mainly disrupting logistics, as most firms only began expanding into the region relatively recently and only hold a small share of the market there, industry insiders told Yicai yesterday.

“As far as I know, trade with Iran will be affected, but mainly in terms of delayed business trips,” said the founder and chief executive officer of a Chinese medical device maker which does a small amount of business in the Middle East, generating only a few million Chinese yuan, equivalent to hundreds of thousands of US dollars, in annual revenue. “The largest markets in the Middle East are Saudi Arabia, the United Arab Emirates and Egypt which are relatively safe for now.”

“In the short term, the war has little impact on the healthcare sector because medical demand is rigid. But in the long run, industry growth depends on capital investment and financial support. If investor sentiment shifts, the impact could be more far-reaching,” a medical device investor said.

Entering the Middle East is not as easy as it looks, industry insiders said. On the surface, the region seems like an ideal market with strong purchasing power, heavy government investment and growing healthcare demand. But once companies actually move in, they face big differences in terms of the maturity of the healthcare system, regulatory frameworks, culture, ethnicity and social structures. This means Chinese medical device firms cannot just focus on sales but also need to build localized operations at the same time.

As a result, many Chinese startups still find it challenging to do business in the Middle East. “We are still observing the Middle East market and haven’t started any business there yet, but we are working on registration tie-ups in some Gulf countries,” the head of a Chinese surgical robot manufacturer said.

Chinese medical imaging firm United Imaging, for example, has set up its Middle East and North Africa headquarters in the UAE and has regional spare parts centers in Dubai and surrounding countries to support equipment installation, maintenance and rapid response services. It also has a science and technology office in Riyadh, Saudi Arabia, and has entered top-level medical institutions under the Al Mana healthcare network.

As of now, United Imaging’s products have entered more than 20 countries across the Middle East, Central Asia and Africa, forming a regional layout with Saudi Arabia and the UAE at the core, and expanding into Central Asian and African countries along the Belt and Road Initiative, the Shanghai-based firm said at the recent World Health Expo Dubai.

However, its Middle East business accounts for only a small share of its overall revenue and therefore the company has “basically not been affected,” a source familiar with the matter told Yicai. The firm has not publicly commented on the impact of the current tensions.

The Middle East accounts for less than 10 percent of major global medical device giants’ total sales, data showed. China exported about USD200 million worth of medical devices to Türkiye, Saudi Arabia and the UAE in the second half of last year, United Imaging said, citing export data of Chinese firms.

Editor: Kim Taylor