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Open Wide: Emerging Opportunities in the Mainland Oral Care Market

Pushed by supportive government policies and pulled by growing consumer demand, prospects are indeed bright for China's oral-healthcare market, although inferior technology and a lack of qualified staff are still hampering the sector.

Photo: Dental technology: The mainland is still playing catch-up with many of the more developed economies.
Dental technology: The mainland is still playing catch-up with many of the more developed economies.
Photo: Dental technology: The mainland is still playing catch-up with many of the more developed economies.
Dental technology: The mainland is still playing catch-up with many of the more developed economies.

One of the key beneficiaries of the State Council's commitment to nurturing the growth of specialist medical-care providers is expected to be the oral-healthcare sector. Indeed, a combination of central-government backing and surging demand among older consumers is expected to usher in a period of explosive growth in the mainland's oral-care market.

Historically, oral care has been somewhat neglected on the mainland. Indeed, it is fair to say that China falls far short of many of the developed countries in terms of both general awareness of the importance of oral health and the number and quality oral-care providers.

Of late, however, demand in the oral-healthcare sector has grown significantly, a development driven by changing consumer priorities, greater emphasis on personal grooming and wider overall awareness of the importance of oral health. According to industry statistics, the mainland oral-care market is worth about RMB100 billion (US$14 billion), while the market value of dental equipment and related products and services is expected to exceed RMB400 billion by 2020.

Photo: Teeth-whitening equipment.
Teeth-whitening equipment.
Photo: Teeth-whitening equipment.
Teeth-whitening equipment.

It is also estimated that some 300 million mainlanders visit dental clinics every year, a figure expected to grow at a rate of 13-15% for the foreseeable future. Among the most in-demand treatments by dental patients are teeth whitening and orthodontic services.

Addressing the future prospects of the sector, Wang Xing, Honorary President of the Chinese Stomatological Association, the Beijing-headquartered body that represents oral-care professionals, said: "The next five years will be a golden age for China's dental and oral-care market. Our present level of service providers, however, can only meet about 20% of demand, a clear indication that there is huge scope for expansion."

Identifying one particular sector where demand is expected to be robust, Li Jialin, a Senior Executive with Beyond Dental and Health, a Beijing-based medical-device manufacturer, said: "Many people in the more rural areas are now far more aware than ever before of the importance of oral health. This is partly because a number of rural dentists have successfully raised awareness of dental health, a development that has driven expectations among local patients."

Private Clinics

As consumer demand increases, the number and size of the mainland's oral medical practices will inevitably grow dramatically. As many of the public dental hospitals will increasingly be focusing on research and teaching, however, it is the private sector that is expected to expand to meet these needs.

Some 20 years ago, public oral-care institutions outnumbered their private counterparts by a ratio of about four to one. Now, however, the number of private operators has surged, with several large chain-operated hospitals coming to dominate the sector.

Attracted by the potentially high returns, a number of investors have now prioritised the oral-care sector. Among the most high profile of these is Legend Holdings, which invested RMB1 billion in the Bybo Dental Group in 2014, while GGV Capital backed the Malo Clinic with a RMB85 million investment in 2016. For its part, the Wanda Group has announced plans to invest RMB9 billion in opening 300 dental clinics in partnership with Sichuan University's West China Hospital of Stomatology later this year.

Overall, it is a shortage of experienced managers and qualified staff that has been hampering the growth of the private oral-care sector. Of late, however, the situation has been eased somewhat by a government ruling that doctors are now free to practice across multiple sites.

Assessing the implications of the central government's supportive policies, Gan Baoxia, President of the Private Oral Medical Care branch of the Chinese Stomatological Association, said: "Given the favourable policy signals, I would expect many of the larger private oral-care companies to open a chain of dental clinics in a bid to meet the growing demand across the country."

Overall, it is believed that an increase in the number of small to medium-sized local clinics would best suit the needs of the mainland market. Highlighting the importance of this, one industry insider said: "People want access to dental care in their own neighbourhoods. They don't want to travel to faraway hospitals every time they have a problem."

Photo: Visitors keen to learn more about oral medicine.
Visitors keen to learn more about oral medicine.
Photo: Visitors keen to learn more about oral medicine.
Visitors keen to learn more about oral medicine.
Photo: Interest in dental hygiene has never been higher.
Interest in dental hygiene has never been higher.
Photo: Interest in dental hygiene has never been higher.
Interest in dental hygiene has never been higher.

Challenges and Opportunities

Despite growing demand and government support, the mainland oral-care market still faces considerable challenges. Most obviously, there is a shortage of both the required equipment and properly trained personnel. There is also a lack of management experience, while many of the existing care facilities are somewhat substandard.

With sustained policy support and growing dental-health awareness among the general populace, it is expected that funding will be available to close this technology and skills gap. This should see the level of available equipment, staff capabilities and overall clinic management brought more closely in line with international norms.

One area that has excited particular concern is the practice of using inferior or counterfeit materials for tooth implants, denture work or braces, with some less scrupulous private dental clinics having deliberately sourced low grade alternatives, which have then been passed off as the genuine article. It is, however, expected that increased regulation and greater awareness on the part of patients will soon see such practices abolished.

In terms of medical devices, Li Jialin sees meeting consumer demand and expectations as the priority for his company. At present, he sees teeth whitening technology and medical devices that reduce damage to teeth as having particularly good prospects.

One of the most pressing issues for many, though, is the lack of formal qualifications among many of those practising in the mainland's oral-care sector. According to one properly qualified practitioner, many people working as dentists in China may have only attended a very brief course prior to setting up in practice.

Assessing the scale of the problem, Li Kai, a Technical Supervisor with the Hong Kong Academy of General Dental Practice, said: "Many such courses only really teach you how to make quick money, while what the mainland dental sector really needs is a higher level of professional technical training.

Photo: Human-resources management: A shortage of skilled staff hampers the growth of China’s oral-care sector.
Human-resources management: A shortage of skilled staff hampers the growth of China's oral-care sector.
Photo: Human-resources management: A shortage of skilled staff hampers the growth of China’s oral-care sector.
Human-resources management: A shortage of skilled staff hampers the growth of China's oral-care sector.

"Overall, China's dental clinics are about 20 years behind Hong Kong's in terms of staff and equipment. In this regard, the sector represents a real opportunity for Hong Kong businesses."

Cheng Gong, Special Correspondent, Beijing

Content provided by Picture: HKTDC Research
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