Page 320 - 2017 White Paper
P. 320
7 White Paper on the Business Environment in China
constraints on the registration, operation and funding of liberalize the sector in hopes of expansion. Confronted
foreign NGOs in the name of protecting national security. by a rapidly graying population, the government aims to
This recently released law to regulate the activities of expand its health-care services industry to 8 trillion yuan
foreign non-governmental organizations (NGOs) has by 2020, and double that size by 2030, the State Council
raised fresh doubts regarding foreign investment into has said. Private capital, both foreign and domestic,
China’s higher education industry. Set to come into effect is indispensable. Apart from actual funding needs,
in January next year, the law contains provisions that will increasing demand from Chinese consumers, concerned
further regulate education institutions with operations in about corruption and being over-prescribed for medicine
the country and affect the entry strategy of new players in public government hospitals and demanding better
looking to enter the market (Liddle 2016). services are also enabling the need for private investment
(Ho 2016).
As of March 9, 2015, there were 60 Sino-foreign
institutions and 1,052 projects active in China’s Foreign players are increasingly stepping into the
higher education industry, with a total of 30 countries picture, such as Parkway Pantai under Kuala Lumpur-
contributing to foreign education resources in the based IHH Healthcare, and United Family, a U.S.-Sino joint
market. According to the Ministry of Education (MOE), the venture, both of which already compete at the very high
UK is the biggest source of foreign education investment end in the Chinese healthcare market. Singapore’s state
with 233 joint programs with Chinese universities, investment firm Temasek Holdings pledged $250 million
while the U.S. takes second place with 169 programs. in a joint venture with the Chinese arm of Columbia Pacific
Approximately 94.5 percent of foreign investors chose Management, a Seattle-based health-care provider. This
to form education projects in Chinese universities, followed a deal in March 2016 by Bain Capital, which
within which computer science, accounting, and global bought a large majority stake in Asia Pacific Medical
economics are the three most popular undergraduate Group for $150 million as the hospital operator, founded
programs. Provinces with a high GDP per capita, such by a group of U.S.-based physicians, looking to expand in
as Beijing, Shanghai, Zhejiang and Jiangsu province, China’s tier-one cities (Ho 2016).
rank highest for the number of Sino-foreign education
programs. Sino-foreign education institutions have long Still, China’s health-care sector has yet to be fully
been subject to special scrutiny in China, resulting in 70 liberalized as the government is still careful “to keep
percent of applications for establishment being rejected the most profitable part within the public hospitals”. For
in 2011, and the new law is set to further complicate the complex, expensive procedures, such as cardiovascular-
industry for foreign education providers (Liddle 2016). related treatments, foreign players still can’t get the
permit, prompting those Chinese who can afford it, to
While Sino-foreign education institutions are not the bypass the regulations and their own country altogether,
direct target of China’s new NGO Management Law, the and seek treatment in countries such as Japan, Hong
law contains provisions that will further restrict their Kong, the United States and the United Kingdom.
involvement in educational exchange in China. According
to the new management law, the entry of for-profit foreign Notable Policy Activity
schools will be strictly prohibited. Due to the vague
definition of“non-governmental”and“non-profit”foreign Ongoing Attempts to Accelerate the
NGOs, there is also a risk that the marketing and funding Development of the Service Sector
activities of not-for-profit education providers will also
be affected, as the law requires all financial documents In November 2015, The State Council announced
remain available to the State Council. The law states that, plans to promote the development of the retail, health,
in addition to receiving supervision from local authorities, travel and sports sectors in a bid to boost domestic
foreign NGOs will also be reviewed by the Public Security consumption. In a statement on its website, the State
Bureau. This will extend to foreign education providers, Council said it will encourage financial institutions
with activities such as registration, licensing, recruitment, to accept a broader range of collateral for extending
operations, and education programs all needing to be loans to “lifestyle-related businesses”, in addition to
disclosed (Liddle 2016). services related to families and the elderly, culture, law,
accommodation and catering as well as education and
The Chinese healthcare industry is experiencing a
boom recently as the Chinese government seeks to
320
constraints on the registration, operation and funding of liberalize the sector in hopes of expansion. Confronted
foreign NGOs in the name of protecting national security. by a rapidly graying population, the government aims to
This recently released law to regulate the activities of expand its health-care services industry to 8 trillion yuan
foreign non-governmental organizations (NGOs) has by 2020, and double that size by 2030, the State Council
raised fresh doubts regarding foreign investment into has said. Private capital, both foreign and domestic,
China’s higher education industry. Set to come into effect is indispensable. Apart from actual funding needs,
in January next year, the law contains provisions that will increasing demand from Chinese consumers, concerned
further regulate education institutions with operations in about corruption and being over-prescribed for medicine
the country and affect the entry strategy of new players in public government hospitals and demanding better
looking to enter the market (Liddle 2016). services are also enabling the need for private investment
(Ho 2016).
As of March 9, 2015, there were 60 Sino-foreign
institutions and 1,052 projects active in China’s Foreign players are increasingly stepping into the
higher education industry, with a total of 30 countries picture, such as Parkway Pantai under Kuala Lumpur-
contributing to foreign education resources in the based IHH Healthcare, and United Family, a U.S.-Sino joint
market. According to the Ministry of Education (MOE), the venture, both of which already compete at the very high
UK is the biggest source of foreign education investment end in the Chinese healthcare market. Singapore’s state
with 233 joint programs with Chinese universities, investment firm Temasek Holdings pledged $250 million
while the U.S. takes second place with 169 programs. in a joint venture with the Chinese arm of Columbia Pacific
Approximately 94.5 percent of foreign investors chose Management, a Seattle-based health-care provider. This
to form education projects in Chinese universities, followed a deal in March 2016 by Bain Capital, which
within which computer science, accounting, and global bought a large majority stake in Asia Pacific Medical
economics are the three most popular undergraduate Group for $150 million as the hospital operator, founded
programs. Provinces with a high GDP per capita, such by a group of U.S.-based physicians, looking to expand in
as Beijing, Shanghai, Zhejiang and Jiangsu province, China’s tier-one cities (Ho 2016).
rank highest for the number of Sino-foreign education
programs. Sino-foreign education institutions have long Still, China’s health-care sector has yet to be fully
been subject to special scrutiny in China, resulting in 70 liberalized as the government is still careful “to keep
percent of applications for establishment being rejected the most profitable part within the public hospitals”. For
in 2011, and the new law is set to further complicate the complex, expensive procedures, such as cardiovascular-
industry for foreign education providers (Liddle 2016). related treatments, foreign players still can’t get the
permit, prompting those Chinese who can afford it, to
While Sino-foreign education institutions are not the bypass the regulations and their own country altogether,
direct target of China’s new NGO Management Law, the and seek treatment in countries such as Japan, Hong
law contains provisions that will further restrict their Kong, the United States and the United Kingdom.
involvement in educational exchange in China. According
to the new management law, the entry of for-profit foreign Notable Policy Activity
schools will be strictly prohibited. Due to the vague
definition of“non-governmental”and“non-profit”foreign Ongoing Attempts to Accelerate the
NGOs, there is also a risk that the marketing and funding Development of the Service Sector
activities of not-for-profit education providers will also
be affected, as the law requires all financial documents In November 2015, The State Council announced
remain available to the State Council. The law states that, plans to promote the development of the retail, health,
in addition to receiving supervision from local authorities, travel and sports sectors in a bid to boost domestic
foreign NGOs will also be reviewed by the Public Security consumption. In a statement on its website, the State
Bureau. This will extend to foreign education providers, Council said it will encourage financial institutions
with activities such as registration, licensing, recruitment, to accept a broader range of collateral for extending
operations, and education programs all needing to be loans to “lifestyle-related businesses”, in addition to
disclosed (Liddle 2016). services related to families and the elderly, culture, law,
accommodation and catering as well as education and
The Chinese healthcare industry is experiencing a
boom recently as the Chinese government seeks to
320
