Deep Dive
Shownotes Transcript
The European Union summons auto industry leaders as BMW and Tesla join Chinese automakers in resisting EU tariffs on electric vehicles. An opinion poll shows 85% of Greenlanders do not want to be part of the United States.
And after opening up to global investors, how attractive is China to foreign-funded hospitals? Welcome to Road Today, the Spring Festival Edition. I'm Ge'Anna in Beijing. To listen to this episode again or to catch up on previous episodes, you can download our podcast by searching Road Today.
the european commission has convened a meeting of auto industry leaders to discuss competition from china and the united states this follows bmw and tesla's decision to sue the eu over tariffs on electric cars from china the two companies are the latest to join a growing number of chinese car makers including geely and byd who are also against these tariffs
Last year, the EU imposed tariffs on EVs manufactured by these brands ranging from 8% to 36%. These are in addition to the standard 10% tariff on all car imports to the bloc. To delve into this, joining us on the line is Professor Chu Qiang, fellow of Belt and Road Research Center at Minzu University of China. Thanks for joining us. Thank you.
Professor, Tesla and BMW have now joined several Chinese automakers in suing the European Commission over these additional tariffs. What do you think is the primary business consideration behind their decision? So I think most importantly is to secure the global supply chain. Well, BMW, Tesla, Volkswagen, well, they are international operation. Basically, they have a huge investment and presence in China as well as in Europe.
So which means every Mercedes, every BMW, every Tesla you drive probably will have many of the parts that have been made in many different locations of the whole world. For example, ECU in China, the tires in ASEAN nations, and also for the chassis in the European Union.
So if you are trying to block the whole value chain, the whole supply chain, it means a very high extra cost and also many unnecessary, you know, chargings for those companies. And also, it will destabilize the whole operation for these companies, right?
And I think secondly, because of their extra cost and also the instabilities of the supply chain. So it will actually debuff the competitiveness of those European companies. I think that's also the reason considered by BMW, by, you know, Volkswagen, by Tesla and those European giants.
And also, I think for them, there's a third consideration is that how they can avoid the escalation of the trade conflicts. Because if the European Union continues to enforce those tariffs and other punishment on China, well, China will for sure retaliate on the European Union. So who is in between?
will actually suffer the most, which means the one who invested in the European Union as well as in China, those big automobile companies as well as for the mechanic companies. So actually they're going to suffer the most and they're going to be the largest victim and the loser of this trade war. So I think they want to stand out and try to stop the things from being escalated further. I think that's their very, very clear consideration. Okay.
Indeed, this lawsuit underscored the growing tensions in the global EV industry. Then Professor, previously Chinese firms have already filed a lawsuit in the EU General Court. Now with Tesla and BMW joining the legal battle, do you think this will somehow influence the lawsuit's progress and final outcome?
Oh, yes, it will definitely do so because BMW, Tesla is still the largest, well, traditional vehicle as well as for the EV vehicle companies in the European Union. And they're contributing huge job supplies as well as for taxations for European Union. I think their opinion actually matters. If this pair of four will actually, you know, hurt the stake that have been holding by Tesla and BMW and other giants,
And I think those companies will actually consider about how they can relocate their factories, relocate their jobs to some other places. That will mean exsanguinating of the profit and taxations and jobs in European Union. So I think they will consider that. And also, I think if their opinion cannot be listened by European Union, I think the whole uncertainty on the market, especially on the automobile market, will be amplified.
And also, I think the whole competition and supply chain scenario will also be changed. As I just mentioned, those relocation, this redundant arrangement of human resources, supply chain, and also change on the orders on all kinds of raw material and also on the parts supplies and all these change on the orders will also add into a lot of instability in the global supply chain of automobile companies.
So I think nobody would like to see that. As we mentioned in recent years, the European EV industry has faced intense competition from China and the United States. Yes, external competition is a key factor, but internal industry dynamics also play a crucial role, right? Then in your opinion, what are the internal factors contributing to the struggles of the EU's EV industry?
Well, I think in just one simple word, the European Union is getting old and it's more and more have an inappropriate structure towards manufacturing. Look, the European Union used to be probably the most important manufacturing center. I mean, the high-tech manufacturing center of the whole world.
France, Germany, Italy, and the Nordic countries. They used to represent the highest level of the modernized manufacturing industry of the whole world. Take a look at their aviation industry, electric industry, power industry, automobile industry, and the shipbuilding industry. And all those things, the crown jewels are long gone.
Well, they are suffering from the aging problems, for sure. We've been seeing the aging problems in European Union are getting worse and worse. Everybody knows that. Well, no excuse. Well, I think China, Japan, South Korea, those manufacturing centers are all having aging problems. But the thing is,
They are competitive edge in technology losing as well. China and Japan and South Korea chose another way to supplement those aging problems, a disadvantage. For example, we're using robot. We're using higher technology or more efficient power supplies to mend up for this aging problems, a lack of manual labor. But the European Union, they chose another way, which is to switch technology.
the real economy, the real deal manufacturing into the virtual economy. For example, in the past 10 years to 20 years, the European Union are focusing more on switching their economy towards the finance as well as towards the service industries, for example, like tourism, for example, like other culture industries, which is good, though, but they are getting rid of their
strongest long suit, which is modernized manufacturing. And also, I think, secondly, is their cost disadvantage. While China and Japan, even though they have aging problems, but still, as I mentioned, they use all kinds of ways to promote their efficiencies.
efficiency and lower the cost, for example by largely using the robot technology and green electricities. But the European Union right now, they try to remove the nuclear power and adopt the green power, but they are manufacturing of the green power still have a very high cost against China.
And they do not have an advantage in this area. And also for their population and demographic structures, their manual labor are very expensive and they do not, you know, take advantage of the immigrants very well. So the immigrants have now become the
burden of their manufacturing industry rather than being the very good support for the manufacturing industries. They're not training this immigrant with, you know, scale school, with all kinds of engineering. They're not turning them into the good engineers, but more like a burden on the social benefit systems.
And that can be a problem. And thirdly, in China, we have a saying. It's called wax and wane always forms a circle. Well, in a previous industry revolution, European mechanics, European engineering technology are the best of the whole world. So which means the BMW, which means the Mercedes have the best car of the whole world, even acknowledged by Japan, by China, by United States. But also...
Also, it means they will have a very slow adaptation toward the newer technology. For example, in this round of electrification vehicles, the green vehicles, European Union lagging behind. Just take a look how many good brands of EV are leading by the European companies.
None. Stellantis are using Chinese technology and Tesla technology. And BMW right now are cooperating with China as well as for Volkswagen and Mercedes. So which means they are lagging behind. They cannot adapt to the latest technology. They have a higher cost and they cannot fit in the world market like before. So I think all those internal factors are actually, you know, making European Union, you know, been drained in the swamp recently.
But as you said, the European Union is seeking a solution by imposing tariffs on Chinese-made EVs in an attempt to protect domestic manufacturers and promote local industry growth. So the question is, can rising tariffs truly address the fundamental problems within the EU's EV sectors?
Well, absolutely no. Everybody knows tariff is just a temporary tool to calm down the public opinion, not an economic solution. Just take a look at what China has done in the past 20 years. China does not
have a very mature automobile industry in the first place. And what China has been agreed to do to catch up is to cooperate with the European companies. We have Baic, we have Saic, we have the first automobile company in China, and they are all joint venture between Chinese local company with European company. For example, the Shanghai automobile company has been joined hand with Volkswagen, joint
Beijing has been joined hand with the BMW. And we try to catch up not by bashing our competitors, not by closing up the doors, but by reaching out the arms and welcome them to join us because we believe corporate
creating was our competitors, which are very good competitors. We can learn from them and train our own human resources and learn technologies. And before China opens up its market, our tariffs towards other were very high. But
As China has been open more and more further and further, Chinese automobile tariff has been dropping continuously. Right now, I think only towards very large emission vehicles and super luxury vehicle brand, we still charge extra tariff.
And now I think the Chinese automobile tariff towards all the overseas brands are actually very, very fair. So that's a reason why China has laid such a good foundation in the last round of the industrial revolution and laid a foundation for current round of the EV era in China and made China the best EV market.
manufacturers in the whole world. So I think BMW understand that. Volkswagen, Mercedes, they all understand that. They are the first companies to stand out and oppose European Commission's decision to put tariff on China because they know if they want to catch up in this round, they need to work with the best player, which is
Chinese companies, BYD, CATL, and the others, so that they can catch up with the latest trend. If you use tariffs to block them away, you will only have one effect, that is to block yourself from the international standard, best technology, and international market
So they will make themselves worse and worse and lagging behind and behind. So I think that's a reason why those giants themselves are actually opposing the tariffs the most. But I don't think European Commission and their bureaucratic officials can actually understand that.
As you mentioned, BMW is an industry veteran and some believe as a European company, its lawsuits suggest you view these tariffs as harmful to its business. What does this tell us about the global nature of today's auto industry? Well, I think today the whole global automobile industry has become very, very intertwined and globalized.
If you want to catch up, if you want to really champion this whole market, well, the number one thing you need to do is to open up. You need to have international cooperation. Tesla is not an American company. They're the largest workshop as in China. And also their largest supplier for the battery is the CATL. It's a Chinese company. And their ECU supplier, many of them are actually coming from China, coming from China.
Malaysia coming from Japan coming from South Korea and some coming from European Union. So actually that's the reason why Tesla are doing so well in the Western Market. The same story happened with the BYD same story happened with the CATL. CATL are making so good is not only because they're supplying with Chinese Market, but also they're helping the global partners so they can benefit from the
global market as a learn the latest know-how and knowledge from international market and also these profit this knowledge helps them to have a stronger R&D investment in human resources and technology and everything to make them better and better and because this kind of what we call the benign circle
So the local market will see, okay, CATL going abroad and become very internationalized. And BYD has been going global. They've been doing very well. So we need to support them. So the policy from the local government also started to support them. And the people will see, okay, this company is providing us lots of taxations. We need to support the government.
We need to support this company to go global and cooperate with each other, with other competitors even. So it forms a very good circle and make the spiral going up. But if you try to reverse the trend and doing the thing in the wrong direction, you will see what happens right now in European Union. People are thinking, OK, people are the other country are taking away our job, taking away our taxation. So let's shut down those factories. Let's put tariff on them.
Let's stop international cooperation. And the whole thing will form what we call the bad circle. Everything is just a spiral down, worse and worse. So I think that's just something we really need to remind those policymakers. And also, they need to talk to people to tell them what the truth is, and then to find a right way and solution to solve this problem.
Thanks for your insightful analysis. That was Professor Qu Qiang, fellow of Belt and Road Research Center at Minzu University of China. This is World Today. Stay with us.
You've been listening to Road Today with Mika Anna in Beijing. Most Greenland residents do not want their island, a semi-autonomous Danish territory, to become part of the United States. According to a survey by Varian for the Danish daily Berlinsk, 85% of Greenlanders oppose U.S. President Donald Trump's vision for the island. Only 6% favor the idea, with 9% undecided. Earthquake-related
Earlier this month, President Trump declared Greenland vital to American security and insisted Denmark give up control of the strategically important island.
Since then, he has repeatedly pushed for Washington to acquire Greenland and has not ruled out the possibility of using military force. So for more on this, let's bring in Dr. George Tsougopoulos, director of EU-China programs and a senior research fellow at the European Institute of Nice.
Great to have you on the show, Professor. Thank you for having me. Professor, the poll shows that 85% of Greenlanders oppose becoming part of the US. What do you think are the key reasons behind this overwhelming rejection? Yes, I also looked at this poll result with high interest. I believe that the majority, dominant majority of Greenlanders is quite satisfied and happy with
their current living conditions and they are concerned about changes which could affect the status quo. So on these grounds I could explain the poll result by suggesting that they would rather favour continuity than to see Greenland entering an unknown adventure that will affect not only Greenland itself but also themselves, their families and their work conditions on Greenland.
But Professor, US President Donald Trump said earlier that Greenland was vital to US security and he refused to rule out military force to acquire this island. How serious should Greenland, Denmark and the international community take such a threat? Well, to start with, President Trump had already started to
talk about such a possibility during his first administration. And now he seems more adamant on his position. It is not very easy to predict or anticipate how President Trump will practically act.
as his presidency, as his second president just started. But certainly from the moment the American president is making such a call and is threatening, this should be taken seriously by the international community. I would personally not expect
the United States to use military force. I would rather see it as a bargaining tactic of President Trump, but certainly it is an issue that should be on the agenda of the international community. Denmark said it would spend about 2.04 billion US dollars on boosting its military presence in the Arctic and rallying European support. Do you think this will be enough to deter further US pressure?
Well, Greenland, as it is part of the Danish territory, is a territory which is quite significant for NATO. And within this context, Denmark is deploying more military forces there. And it has been prepared also to spend more defense on this territory. I would say that this is significant in terms of
NATO's policies, which are focusing on the Arctic. But at the same time, obviously, it wouldn't be enough in order to restrain a potential American military-led effort to take the island.
Speaking of that, according to reports, Greenland's prime minister has been pushing for independence while also seeking a meeting with President Trump. What key demands do you think he would bring to the table? How would this meeting shape Greenland's future trajectory? Well, independence is a key word because also the poll that you mentioned before suggests that the majority of Greenlanders do not want Greenland to be part of the U.S. territory. At the same time, they could favor independence.
But the American concern is that an independent Greenland would perhaps be more autonomous in reaching different types of deals with several countries in the Arctic. Therefore, I would expect
that the bargain will be placed in this context and that Greenland will attempt as much as possible to sow to the other side. It is not prepared to enter talks concerning potential membership or a potential acceptance of President Trump's terms. Professor, we know Greenland is rich in natural resources, from rare earth minerals to fisheries.
Could this situation lead to greater international investment in Greenland or even economic pressure from external powers like the United States? Well, the geographical position of Greenland itself is the one which is currently igniting this debate about the future of the territory for security and economic reasons. So I would see a combination of these two interests, which are currently
bringing Greenland into the epicenter of the United States and also of the international community. Obviously, different types of investments, especially in extracting minerals, will be on the agenda. But of course, this will depend on how Greenland
Greenland itself will make decisions and how also the relationship between Greenland and Denmark will evolve in the medium and long term because it's also a key feature that needs to be taken into account irrespective of what President Trump attempts to do.
Professor, if Trump were to pressure a sovereign country like Denmark to cede Greenland through threats of increased tariffs or even by not ruling out military force, what kind of impact would this have on the existing international legal system?
Well, I would say that this is a standard policy of President Trump to threaten either with economic coercion or with the use of military force. The question is up to what extent this can bring results according to
to his political agenda. I would say that it largely depends on his interlocutors because it is certainly different to talk to different countries in order to implement his agenda. But certainly, if he manages to achieve what he
he has promised to do, it will create a precedent in international affairs that it will be better to be avoided in order to guarantee as much as possible calm and stability in a turbulent world order.
On the level of great power competition, how might this move reshape U.S. relations with its European allies as well as major powers like Russia? Well, as far as transatlantic relations are concerned, they have already started to enter a new phase of tensions. The European Commission is certainly expecting
that. But the question is up to what extent it is prepared to deal with the new policies of President Donald Trump. So I would expect that transatlantic relations to further enter this trajectory of disagreements, not only about Greenland, but also about other issues.
As far as Russia is concerned, President Trump has connoted that he is prepared to talk to President Vladimir Putin. So it will depend on a potential meeting or on the future course of American foreign policy vis-a-vis Russia, also to deal with the issue of Greenland, because Russia is an active player in the Arctic. And obviously, it will not be prepared to accept a change in the status quo.
That was Dr. George Zougopoulos, Director of EU-China Programs and Senior Research Fellow at European Institute of Nice. You've been listening to World Today. We'll be back after a short break.
Welcome back to Road Today, the Spring Festival Edition. I'm Ge'anna in Beijing. China's decision to broaden access for foreign investors in hospitals has sparked considerable interest among global health care providers.
While this increased openness is welcomed, there are also some concerns that need to be addressed. What factors contribute to a cautious approach among investors as they consider committing their resources to the Chinese market?
And how can China establish a strong presence in the global medical tourism sector? To explore these questions further, my colleague Tu Yun engaged in a conversation with Professor John Tsai, Director of the Center for Healthcare Management and Policy, China-Europe International Business School, Shanghai. I entertained him, a senior fellow at Taihe Institute.
and Professor Liu Baocheng, the Director of the Center for International Business Ethics, University of International Business and Economics. Do you use any healthcare services from a foreign-funded hospital? And can you compare the services provided by public and foreign-funded hospitals?
John, so shall we begin with you? Okay. So I haven't used the foreign-invested hospital yet because I don't use hospital very often. Good for you. Then maybe Einar. Yes, I've both used the Japanese Friendship Hospital. I've used private clinics.
and also beijing united they are all originally funded by in part foreign obviously the japanese sino japanese chinese friendship hospital has been around for a long longer beijing united has been around for many years it was founded by uh foreigners
I know one of them. And then these clinics, SOS Clinic and Raffles and things like that. So I have been there. Then have you been to any public hospital? I mean, Chinese public hospital? Never? Yes, I have. I've been living in China since 2005. And I have sampled everything that Beijing has to offer. Wow.
And unfortunately, because of a situation very close to me, I spent a lot of time in hospitals for about five years, seven years ago. Not related to my own health, but the health of somebody. I understand that. But can you compare them to any extent? Yeah. I mean, it's an evolution. When I first came to Beijing, every expat would tell me that I had to go to Beijing United Hospital.
or the Sino-Japanese hospital, you'd say, "Oh, you can't go to local hospitals."
But I did go to the local hospitals for some minor things, like a sprained foot or something like that, or a stomach upset. I really wanted to see. It was interesting because I was not used to this idea that I would show up at the hospital. It was fairly crowded. Family members were there with the patients. And you would sign up, get a card, some identification, show your passport as a foreigner, and
And then they'd give you a slip of paper and you'd stand in line and you go to see somebody and then they recommend a test and you get in line again to pay for the test and then you get the test and you keep doing this. It was kind of like a spoke and hub situation where you're always running back to pay it. Obviously, things have changed fairly dramatically since then. The foreign funded hospitals tended to operate more like on the
the US model. You had to show some sort of insurance or put down some sort of deposit, show that you could pay, and then they would do a series of tests and you would just receive the treatment from doctors.
I noticed that there was a massive differential in price between the local hospitals. As in, it might cost me 5 to 20 yuan for the basic visit and then a few yuan here and there and then some medications.
the whole thing would cost less than 150 kuai and that included getting the card from the hospital. If I went to Beijing United, I could expect minimum, minimum, even if it was a short stay, 1500 kuai. So literally a 10 times difference. So basically, crowdedness and this price
are the most distinct differences between these two kinds of hospitals. Yeah, but I mean, fast forward to today, and the situation has changed dramatically. You still have to pay and things like this, but things have been streamlined. They've made things much more efficient. The hospitals are much more modern. They have the latest equipment. I'm always shocked.
to see what they've done. I've been to a neonatal hospital in Xinjiang, which I could not believe. I mean, it had just been built at that time. It was over a year ago. It had been built. It had just opened about three or four months before Xinjiang.
And it was better than any hospital that I'd ever seen in Beijing. And quite frankly, I mean, the doctors there were in charge. They wouldn't even allow it. We were trying to do an interview with somebody who had just given birth. And they insisted that we shoot it through the wired glass because we were not getting into it.
Anywhere near the patients. So, yeah, I mean, I've seen a lot of different parts of the health care system here. And I can tell you, it's been an evolution. I started coming here in 2000. I think the first time I went to a hospital was around 2005 or 2006.
And since then, it's just been a complete change. - Right, quite impressive. I only have the experience of a public hospital, so I can't say no more. What about Bao Cheng? - Fortunately or unfortunately,
I very seldom visit hospitals. I was never hospitalized. Well, unless I had my teeth fixed. But seeing that the Sano Japanese Hospital, which is state-owned, although it's the Japanese sponsorship, it's not really a drug venture or foreign hospital, though.
It's so much overcrowded, it's so scary. I would rather spend my own money instead of going for reimbursement to go to a dentist nearby run by private enterprises. And so because I work for the Chinese public institutions and they also have their own clinic or smaller hospitals over there and
entire medical expenses can be fully reimbursed. So therefore, virtually there's no need for me to visit any foreign hospitals here. But you can see that there are a number of hospitals involving foreign investment here in Beijing, and they are more reserved for elites like Anna Tangen. Thank you for that.
It's good to have friends. And high-worth people. So, you know, honoring people is very difficult to really...
to tap into their pocket for such sort of service. They are pretty polite and there are many professionals and the environment is really clean. So I paid some visit as a consultant for some companies in such industry, but I was not really a victim or beneficiary of foreign hospitals here. That's totally fortunate.
And so let's turn to the new policy of the world. China is obviously opening its health care service market wider to the outside world, greening lighting, wholly foreign-owned hospitals in eight key cities and the island province of Hainan.
And some reports call it a policy shift. So, Bao Cheng, do you see it the same way? I think it's a shift of orientation. Because in 2014, there was already a public announcement to allow foreign investment in the industry of health care, and particularly to build hospitals.
But of course, that was primarily focusing on joint ventures. But now this shift is fully wholly owned. The foreign investment, the hospitals can be permitted in eight cities.
But at the moment, I could see that there's not much enthusiasm from this particular industry because, you know, the health care industry is highly regulated and there are many hurdles that need to be tapped before the investors can really plunge their money into China.
And now the major issue lies in that policy alignment, because, you know, in 2014, we had that policy. And then in 2015, the NDRC, I mean, the National Development and Reform Commission issued a list of foreign investment and then in which they restrict foreign
the foreign investment into the Chinese hospital industries. So therefore, different ministries have different attitudes towards that. I hope this time China is getting more serious and we have the cross-cutting ministerial efforts
really policies that fully support such, because we do really need that for whatever reason, for the Chinese consumers, for the Chinese market, and also for the growing Chinese economy and bring China onto a more of a high-end service industry. So these are really critical needs, but there's still a lot more homework for the regulators, particularly to takeaways.
We'll tap into such kind of homework later on. But maybe it's not that China was not basically not serious last time when it introduced a similar policy. It's just maybe the conditions were not that right at that time. John, what's your interpretation of that?
Right now I'm thinking this time the policy seems a bit more seriously considering the international the conflict by the
the country and the country also considering the macro economic situation in China. So the government right now it's really want to open the door more widely to the foreigners
Also, we see the last few years we already wavered the visa for many countries from the 15 days right now to the 30 days where welcome more foreign visitors to China. Also, I'm thinking this is in line with this general policies. We want to attract more foreign investment.
Also, we want to provide more better healthcare service to the foreigners in China, also to the more affluent, more rich Chinese people, because especially before the COVID-19, we see a
Quite more and more rich Chinese people, they seek better healthcare in foreign countries if they have some kind of more serious problems. So this is general intention government try to open the door, try to attract foreign investments.
However, I'm thinking the general situation right now, Chinese healthcare market is still quite highly regulated. Also, public hospital right now still account for about 80% of the healthcare services in China. So the situation right now is still quite tough for foreign investors to open the fully
old hospital in China, the major problem is best doctors, the experts. Right now, most doctors, they stay in the public hospitals. For the foreign hospital in China, they need to have a good doctor, good expert in order to attract patients. It will be
quite difficult to let the foreign doctors to work in China for longer times. Maybe you could have some, a few foreign experts come to China, work maybe a few weeks, a few months. I'm thinking still, if
if we have a better doctor for this kind of foreign-invested hospital, if they could attract better doctors, they will make things much better. But anyway, this policy, because hospital investment is taking a really longer time, many years, so this policy at least have a good intention, have a good start. Maybe gradually, when the situation is better and better, maybe that's
It could be potentially a good movement. It takes time to sort all those things out. Talent issue aside, and then there comes this question of how attractive it is to foreign investors, right? I know, you know, whether you want to go into a market, one deciding factor is how big the market is.
China actually already got more than 60 jointly funded hospitals serving the high-end healthcare market, like elites like you. But how big of a gap is there in market demand that needs to be filled? And, you know, how attractive is it for foreign investors to just throw their money into China's healthcare market?
So from a business model, if I'm looking at the United States where I can extract huge amounts of money, I mean, 16% of the world of the nation's GDP is devoted to health care. But that's not going to happen in China because you have a national health care. You get an idea. There are about 13,000 hospitals that serve. That becomes an obstacle. Yeah.
At service, 83.5% of the population. And those are government hospitals. The rest of the hospitals are smaller, they're divided up. But what you're really talking about here is about a market of about 300 million people. Well, let's put that in perspective. That's almost the entire population of the United States.
And these are people who have the funds to expend a lot of money. So why is the Chinese government doing this now? And have there been efforts in the past? I've experienced it from a slightly different point of view. I have a friend who has a medical facility on Hanching Island.
This is near Hong Kong, Macau. It's kind of jointly put together, but it was allowed that they can actually have medical therapies there that would not necessarily be approved in China, but that have regulatory approvals by either the EU or the US. The FDA, Food and Drug Administration type of organization said, "Okay, this is safe."
So it's kind of an in-between. And they've been trying this for a while. Now, why would the Chinese government do this? Well, there's some concern about Chinese going abroad and getting therapies. It's unregulated. You don't know what they're actually getting. It would be much better to have it onshore, nearshore, where things can be, in fact, monitored. Because there's a genuine concern about Chinese getting medical care because they may not be
You know, they can easily be talked into things because they don't have the medical knowledge. And so the government is acting to, in essence, protect them to make sure that, you know, nothing untoward is happening. I mean, I had a situation where my wife was dying of cancer and people would come up and say for a million dollars. All right. And money back guarantee. I'll give you a magic pill and this pill will cure the cancer. And if it doesn't cure the cancer, we'll give you your money back.
Well, obviously they're playing the law of averages. They were not going to give anything that had any medical value or anything like this. That happened in China? Yes, it happened in China. They were using intermediaries. This was a Taiwanese group.
But it's not, you know, there are groups coming in from Hong Kong. Everyone was, you know, just let's pray on this group of people who don't have the medical knowledge and tell them that we have magic and we can solve this. Or, you know, they'd say some long story about how this was secret research by an independent, brilliant physician from, you know, Switzerland or something like that. They always had some sort of story.
When you're desperate, and we've seen this in America and throughout the world, when you're desperate, you'll do almost anything for those you love. In China, medical situations involving something very serious, the tendency is to send them to Beijing because Beijing has the best hospitals.
They're not really knowledgeable about the doctors and things like that. But they say, well, if I've sent my relative to Beijing and paid whatever is necessary, I've done everything I can and I've fulfilled my duty.
And this is very important. I mean, for the Chinese in America, when you have a medical problem, you might have, depending on your situation with your relatives, you might have not a very welcome. They might not even come and visit you. In China, I mean, they literally bring you food every day. Try to make sure that you're comfortable. So there are different cultural aspects to this. There's also, you talked about
the funding. Yeah, Chinese firms are split on this. There are insurance firms within China that provide additional care. Even in America, there are a number of insurance programs who said that they would not cover
Beijing United, because they said the costs are so beyond anything, even in the United States. And they wouldn't give any discounts and they wouldn't work with insurers. So some insurers said, we won't cover it or we'll only cover up to a certain amount.
But there are a lot of insurance programs that are kind of sitting offshore. For instance, most expats get insurance through Hong Kong or from their home countries. And this gives them access to these kind of international clinics and things like that. So it's not very few people are actually paying out of pocket for them. In terms of the doctors, you have to understand, I think what China is trying to do is leverage their understanding of
how their approaches and protocols. I mean, most people think that doctors are some sort of magic. Doctors have good memories. It's required. Every time you engage, you find a set of symptoms, what you have to do is go through the protocols that you were taught in medical school.
And what those mean is say, okay, this person has these six symptoms. Protocol one for these six systems is do these things. If that doesn't work, go to protocol B, and then you go down the line. It's wasteful. AI can probably change some of that, but not all of it. There still has to be some sort of diagnostic input by human beings. And of course, the robots aren't doing the tests and things like that.
So China, I think, is trying to do what they did with the legal system. China was in need of understanding international law. But as a foreign lawyer, you cannot practice in China. But you can be an advisor, an expert.
and then the Chinese lawyer can actually execute whatever is necessary. And I think, if I'm not mistaken, I think this is what they're looking for. They're looking for the transfer of understanding, protocols, knowledge into the Chinese market. And they will pay for that. And I do not think that that is a huge thing because the doctors are not actually practicing, they are consulting. And there's a long history of this in China. In fact,
When I was chairman of the States International Trade Council for Wisconsin, I learned that many of our leading doctors in the United States were actually coming to China
to learn microsurgery because in Shanghai they had the best microsurgery practicum there because these doctors were doing these microsurgery you know like five six times a day whereas our doctors would do them five or six times a year so they're the amount of knowledge that they were able to get from that was very useful so this idea that it's just China you know
kind of getting knowledge from everywhere else. It's not true, especially today. I know people who are doing drug testing here because, you know, we're to qualify for FDA or the EU or even in China, you have to put your pharmaceutical, your drugs and your procedures through their paces. And it's cost a lot of money. It takes a lot of time. A lot of it has shifted to China. Now,
because of regulatory issues, geopolitical issues, basically. A lot of these procedures have been reversed. For instance, any procedure that had involved a military hospital in China has now been said, well, that could be subject to being disqualified.
They don't really say why, they just say, well, you know, international intelligence and all the usual nonsense. But at the end of the day, this is going to create more work in China. And China has become a kind of testbed for experimental procedures and things like that because of the huge data set that's involved. Hmm.
There are several outstanding issues from the investors' perspective. One is that because the state-owned hospitals are heavily subsidized by the Chinese government, and so there's no expectation that they're going to receive the same preferential treatment from the Chinese government. So therefore, you can hardly expect a level playing field of competition. And
for investment here in China for hospitals. Second is that existing Chinese hospitals, their return on investment is pretty much dependent on selling drugs, you know, the pharmacies within the hospital. So the medical service does not really acquire
really a lion's share in the entire revenue portfolio. So that's another consideration. The third is that because of the getting more and more stringent government procurement program, whether those foreign hospitals will be able to enter into the
government procurement program or certain institutions like my university, we sign up with three hospitals and only the medical bills from these identified hospitals from our university procurement program can be reimbursed by all universities. So all these issues are really some of the major considerations for investors to calculate before
they are ready to put up their investment. - Right, like you all mentioned, maybe there are all kinds of reasons dampening their enthusiasm entering the Chinese market, but what China now is doing is just trying to prepare itself, right? That doesn't mean it's the same case in the future, right? Preparing itself- - It's a good beginning. - Right.
put itself in a condition more in line with international practices. Yes, not many of them are interested, but there are some, right? Because I know there are some jointly funded hospitals under construction in Hainan.
And also, there are 60-plus jointly funded hospitals also running pretty well, actually, on the Chinese mainland, like the United Family, mentioned by you all, and Xiamen Changgeng Hospital, invested by Taiwan Taikun.
So, wondering, maybe John, you can explain a little bit, what do you see those hospitals doing right to succeed, at least, you know, for the present in China?
And maybe they can be a good lesson for others who want to enter the Chinese market in the future. Yeah, these hospitals, they do bring some kind of a new hospital management. Also, the service quality is much better. They have a better environment. Also, the doctors, they are more professional. So all these kind of things, they will bring some new
new things to China, the healthcare sectors. So for the public funded hospital, they do could learn something from these foreign funded hospitals. Also, for example, in Shanghai, the government start to open the door for the public insurance reimbursement for some of these kind of foreign funded hospital. So even the money is...
not a lot, but still this kind of new policies, they will attract more patients to these hospitals. So that's why these foreign-invested hospitals, they really want to government could allow them to the public, the insurance could reimburse them for their hospital. I'm thinking this kind of policy could be
That was Professor John Tsai, Director of the Center for Healthcare Management and Policy, China-Europe International Business School, Shanghai, Einer Tengen, Senior Fellow at Taihe Institute, and Professor Liu Baocheng, the Director of the Center for International Business Ethics, University of International Business and Economics.
And that's wrap up for this spring festival edition of World Today with me, Anna. Thank you so much for listening. Bye for now.