CHINA Trends and Developments Contributed by: Gil Zhang, Diana Li, Muran Sun and Huihui Li, Fangda Partners
Foreign investment: opening of value- added telecom services catalyses strategic transformation Foreign medical technology companies are leverag - ing China’s evolving regulatory landscape to achieve strategic transformation, shifting from traditional hardware vendors to core participants in the medical data ecosystem. A pivotal driver of this shift has been China’s gradual liberalisation of value-added telecom services (VATS), particularly the operation of internet data centres (IDCs), which were historically closed to foreign entities. Recent policy breakthroughs have enabled select international firms to operate wholly owned IDCs and offer AI computing and cloud-based services directly in China, substantially reshaping the medical value chain. In early 2025, Siemens Healthineers obtained pilot approval for VATS from the Ministry of Industry and Information Technology (MIIT), becoming the first for - eign medical technology company in China to secure such qualification. This landmark approval grants the company full operational rights to establish and man - age an IDC under a wholly foreign-owned structure. Through this, Siemens launched its Virtual Medical Imaging Center (VMIC), a platform that enables real- time collaboration between top-tier radiologists and primary-level hospitals nationwide, promoting equita - ble access to diagnostic expertise. This breakthrough stems from the implementation of the 2025 Action Plan for Stabilizing Foreign Invest - ment, which explicitly supports foreign participation in pilot openings for VATS, biotechnology, and wholly foreign-owned hospitals. Shanghai, as one of the pilot regions, has maintained an average annual growth rate of 15% in foreign investment in its telecom ser - vices market over the past three years. On 28 Febru - ary 2025, MIIT approved 13 foreign-invested enter - prises, including four headquartered in Shanghai, for pilot participation in VATS across Beijing, Shanghai, Hainan and Shenzhen. As foreign companies gain deeper access to China’s AI healthcare infrastructure, the domestic market is poised for greater international collaboration in areas such as cross-border data processing, real-world evi - dence generation and AI model localisation.
Capital markets and investment landscape: from concept to commercialisation Following the huge popularity and success of Deep - Seek and Unitree Robotics, there has been a surge of interest in investing in AI and robotics in China. In the AI sector, following investments and financing by various Chinese tech giants and the so-called AI Six Little Dragons, the huge interest in and uptake of DeepSeek by the public has led various investors to seek out sector-specific AI application businesses. Specifically, China’s AI healthcare sector has shifted from concept-driven valuation to a more clinically vali - dated, investment-ready ecosystem. According to industry tracking, more than CNY30 billion in new funding entered the Chinese “AI+Healthcare” sector in the past year. Key investment trends include the following. • Vertical integration: Start-ups offering end-to-end AI solutions, from algorithm development and data pipelines to cloud deployment, are attracting larger institutional investors. • Hardware/software synergy: Firms combining proprietary AI with in-house devices (eg, diagnostic scanners or surgical robots) command premium valuations. • IPO momentum: United Imaging Healthcare, known for its AI imaging systems and smart-hos - pital platforms, raised CNY10.99 billion (approxi - mately USD1.6 billion) in a record-breaking STAR Market IPO in August 2022. Meanwhile, firms like Deepwise Healthcare closed a CNY 500 million (approximately USD69 million) round in January 2025, co-led by Legend Capital and industrial funds. • Foreign capital participation: Global investors, including Sequoia Capital China and Roche Ven - ture Fund, are increasingly backing Chinese AI startups focused on diagnostics, clinical decision support and cloud health platforms. This trend fol - lows regulatory relaxation around telecom infra - structure and data access. Investors are also paying closer attention to regulatory readiness and compliance strategy – particularly with regard to algorithm updates, data governance and medical device registration. This evolving capital envi -
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