President Barack Obama says China is Gov. Mitt Romney’s favorite labor source. Gov. Romney says President Obama has not been tough enough with monetary policy.
Both candidates have been using the country as a convenient villain during the debates especially, and the subject will undoubtedly come up during tonight’s debate.
While the candidates are trying their best efforts to vilify the communist nation, businesses — especially med tech companies — are looking to China for their salvation. As growth has stalled in the U.S. and Japan, and austerity measures in Europe are slowing sales there, companies are looking eastward for any sign of meaningful growth. In fact, the way Medtronic, the world’s biggest medical device manufacturer, approaches China is a much truer reflection of how many American companies see the world’s most populous country.
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Just last week, Medtronic (NYSE:MDT) announced that it is taking a 19 percent equity stake in cardiovascular device maker Lifetech Scientific Corp., worth $46.6 million, and will also buy a $19.6 million convertible note that amounts to another 7.4 percent equity stake
“China is key to our global strategy as we continue to expand our geographic footprint and strive to meet the needs of local cardiovascular patients, and this agreement reaffirms our commitment to this important market,” said Mike Coyle, executive vice president and president of the Cardiac and Vascular Group at Medtronic.
Last month, Medtronic bought orthopedics company Kanghui for $755 million in its first Chinese acquisition.
In August, the medical device manufacturer opened a research center in China, the first one outside Europe or America.
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Over five years, Medtronic will hire and train an additional 1,000 skilled workers, several hundreds of who will develop new medical technologies within the Innovation Center.
The center will also function as an incubator for Chinese physicians to commercialize novel ideas into clinical solutions.
Covidien also has a research center in Shanghai.
Also, China should soon be entering the vaccine market soon with its vaccine against Japanese encephalitis, a mosquito-borne disease. Made by China’s top vaccine maker, China National Biotech Group, the vaccine is likely to win so-called prequalification status from the World Health Organization.
China’s consumer market is important to American device companies as well. As more Chinese people adopt a Western diet, there will be a market for devices related to obesity, like CPAP machines.
Nuance is not the most popular campaign tactic, but both candidates should recognize the reality of China’s huge role in all aspects of the world economy. Medtronic is not the only American company building partnerships like this, and supporting American companies means supporting their strategic decisions in regard to China.
{Image from flickr user flickr.Marcus}
