Taiwan Comfortable in its Role as Manufacturing Powerhouse

Made in Taiwan. Made in China. What’s the difference? Well, according to Taiwanese medical device manufacturers, it’s a big one. The small island off the east coast of China, with a population of just under 24 million, is a global manufacturing powerhouse that rivals even its giant political and commercial competitor next door. The difference between the two nations’ manufacturing industries, according to manufacturers at the annual Medicare Taiwan conference this year, is stability and consistency of quality.

Medicare Taiwan: Taiwan International Medical & Healthcare Exhibition is in its fifth year this year. The conference and exhibition is held in conjunction with SenCare (Taiwan International Senior Lifestyle and Health Care Show), TaiHerbs (Taiwan International Herbs & Functional Foods Expo), and P&B Taiwan (Taiwan International Parent & Baby Industry Show), combining hard scientific medical technology with local Chinese medicines and therapies.

Medical Product Outsourcing stopped by the booth for I-Ming Sanitary Materials Co. Ltd., which makes long distance infrared waist and knee protectors, surgical dressings, ankle guards and other various orthopedic and wound care products. A major Taiwanese company, I-Ming is present at the American Academy of Orthopedic Surgeons Annual Meeting every year, this year’s meeting in New Orleans, La. being no exception. The company provides products to OEMs globally, including the European Union, Japan, and the United States. MPO asked Jason Yu, vice president of I-Ming, why the company continues to source manufacturing on the island.

“We keep manufacturing in Taiwan to maintain stable quality,” Yu said. “Some companies do choose to move manufacturing to China to save money, but raw materials there are not stable. Here in Taiwan, we can guarantee quality 100 percent, and stable raw materials every time. We are more concerned with quality than keeping costs low.”

Yu also noted that I-Ming is registered with the U.S. Food and Drug Administration (FDA) and receives regular visits from FDA auditors.

China is not underrepresented at Medicare Taiwan by any means. In fact, the Zhejiang Province is extremely well represented, with 60 booths (made up of 60 percent medical device companies and 40 percent pharmaceuticals) on the exhibition floor. The province, located on the East coast of China bordering the Shanghai Province to the south, is currently experiencing a medtech sector growth of 20 percent annually.

China should not be written off as an unreliable location for manufacturing. Many major U.S. companies choose to offshore some product manufacturing to China for major cost savings, including medtech powerhouse Medtronic Inc. In March this year, the Chinese government released a revised version of “Regulations on the Supervision and Administration of Medical Devices,” and has been working on a major overhaul of medical device regulation since 2006. Along with reclassification of devices and Chinese Food and Drug Administration (CFDA) approval processes, the new rules further increase requirements for compliance with good manufacturing practices (GMP) and good supply practices (GSP). Manufacturers of medical devices in China will be required to run facilities that are GMP compliant and to provide self-evaluations of GMP compliance to their provincial FDA. Local manufacturers of class 2 and class 3 devices will need to receive approval before applying for a medical device production license. However, as a recent report from Espicom Business Intelligence noted, the country is divided into a relatively wealthy eastern coastal belt consisting of Tianjin, Shandong, Jiangsu, Shanghai, Fujian, Guangdong and of course Zhejiang provinces; and much poorer, underdeveloped regions in the interior and the west. Although the government has undertaken massive development plans to address these imbalances, and new factories are gradually being built further inland, this will be a long drawn-out process in a country of China’s size.

Taiwan’s advantage lies in its more manageable size and the free market economy that enabled the rapid growth of its manufacturing industry in the latter half of the twentieth century alongside Singapore, Hong Kong and South Korea. Their success is so marked that together they are known as the Four Asian Tigers. China’s manufacturing sector has lately “hit a wall,” in the words of Bloomberg, March this year being the fifth month in a row the country’s economy shrunk.

“China has its eyes fixed firmly on its next destination—aiming for higher-quality, more inclusive, and more sustainable growth,” said Christine Lagarde, managing director of the International Monetary Fund, speaking in Beijing at the opening of the China Development Forum on March 23. “The reforms needed to reach this destination … are ambitious. They will require hard decisions and trade-offs.”