Here's a Chinese Company Using its Offshore Fund to Invest In U.S. Companies

Go to a medtech conference these days and you will hear that there are foreign investment firms keen to invest in U.S. companies.

 But who are they?

I caught up with one recently-formed Chinese company at the annual Lifescience Alley conference in Minneapolis on Wednesday that has a $20 million fund.

Emerging China Capital was founded in late 2012, says Melody Sheung, Partner, who was exhibiting the company's capabilities in the conference in Minneapolis.

Aside from an offshore fund, the company has the ability to match U.S. companies seeking to enter the Chinese market with a local partner, local knowledge that can help in navigating the Chinese device registration process and connections to hospitals where products will be hold.

"We bring in not just capital but we bring valuable local partners with established distribution channels who are reasonably successful in China,” Sheung says.

The company has also entered into a $30 million partnership with a local governmental entity - Changzhou International Investment Promotion Centre - to help U.S. companies set up shop in Changzhou, a satellite city close to Shanghai, she says.

As for the fund, the company is close to inking two deals in the orthopedics market. Three more are targeted in the next six to nine months.

But right now, there are only certain types of medtech companies that Sheung and her limited partners in Hong Kong, Singapore, U.S. and Canada are interested in investing.

The startups need to have regulatory clearance in the U.S. or Europe, preferably be Class I or Class II devices in the orthopedics, dental, general surgery, disposable and operating room products area. For now, Emerging China Capital is focusing on companies in San Francisco and Minneapolis,

But as mentioned previously, the company intends to be more than an investment firm offering funding and advisory services. It also aims to help U.S. companies enter the Chinese market. The partnership with the local governmental entity underscores that intention. Changzhou has an industrial park with two well recognized medtech entities - Trauson, acquired by Stryker and Kanghui acquired by Medtronic, both in the orthopedics space.

The goal of the partnership is to accelerate the market entry of U.S. companies eager to tap into a rising middle class demanding quality healthcare.

“We get people telling us, ‘You Chinese people are crazy’ and ‘I don’t know how to enter the market,” Sheung says, laughing out loud. “I take that as a compliment.”

And of course, a business opportunity for Emerging China Capital, her nascent company.

-- By Arundhati Parmar, Senior Editor, MD+DI
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