Shimadzu Medical Gets Trampled!
....and they have nobody to blame but themselves!
The following article was found at: http://www.gcis.com.cn/content/new/2000/news_facts/opinions/2000_n_nov_healthcare.html
Elephants Dance in China’s Hospitals [....and Shimadzu gets trampled!]
by Charles Oliver, GCiS Beijing, PRC
In a small 240 bed hospital in Xingtai, Hubei Province, a brand new Shimadzu CT is in operation. The surroundings are bleak, sanitation is marginal, and a faint odor of the hospital’s open latrine leaks in through the open window. The hospital Director smiles faintly with pride as he surveys the line of people outside waiting to be scanned by the new machine. That Xingtai was (still is) suffering from massive unemployment due to the failure of its marginal textile industry was evident in the surroundings. But the line outside the CT room did nothing to reveal that most of the exam cost was being borne by the patients themselves.
A year ago this hospital lost its old CT, a used Picker imported, probably illegally, from the United States six years ago. Without government approval to have a CT, or sufficient resources of its own, the hospital had despaired of ever replacing its old machine. Meanwhile the other main hospital in town was beginning to steal its patients. And the leakage grew by the month. Competition had arrived for the hospitals in Xingtai.
The problem was solved when a local entrepreneur stepped in. Offering a brand new machine and a revenue sharing plan, the hospital jumped at the chance. The fact that the hospital is not authorized to have such equipment under China’s regulations was ignored, as was the minor detail that this type of arrangement is considered illegal by the same authorities.
Shimadzu probably counts itself lucky to have gotten this sale. Like the hospital, Shimadzu is slowly being squeezed out of the Chinese market by the emerging, fiercely competitive nature of the market. Measured by installed base, according to GCiS, a research consultancy in Beijing, Shimadzu is a leader in total revenues in China along with GE and Siemens. But this is changing dramatically. GE and Siemens have been battling it out in a progressively more intense battle that has resulted in significant damage to Shimadzu. Now GE is clearly the new market leader as it has manhandled all competitors in the market with whom it directly competes. Siemens continues to hold on to a significant second place position, and others such as Toshiba, Hitatchi and HP (now Agilent) do well in more limited or specialty markets.
Shimadzu’s story reads like a rags-to-riches-to-rags story in the China market. Early in the market, Shimadzu caught the full first wave of hospital equipment upgrades beginning in the late 1980s and continuing until around 1996. With products offering good performance at low prices, and no credible domestic competition, Shimadzu grew rapidly in China.
Too rapidly. Problems with product quality and service, along with disputes with local partners and poor channel management have done serious damage to Shimadzu’s reputation among China’s hospitals.
Another hard blow is being delivered by the now emerging domestic competition. Wandong, China’s leading domestic producer of X-ray equipment, is enjoying a growing reputation for product quality and service even as it learns the hard lessons of a competitive market. A Shanghai listed A share, Wandong has the support of the government, is introducing 3 to 5 new products per year, reorganizing distribution and opening an overseas research and development center.
Shimadzu puts a brave face on all this, saying that it is moving up the value chain to offer higher quality products that carry better margins. Shimadzu also points to a replacement round for its equipment due to begin this year, apparently without catching the irony implied for its own product quality. But in that direction await GE and Siemens, both fierce competitors with extensive product lines, good reputations and extensive domestic networks. Meanwhile rising from underneath is Wandong. In every direction, in every product line, someone is taking it to task. Sales are reflecting this reality; flat over the last two years, they are expected to decline on both units and revenues this year. Certainly, the fat days are over.
Shimadzu is now in the emerging market squeeze. In most emerging markets all but the top one or two foreign competitors will be squeezed out over time as domestic companies learn the game. For all the talk about China’s meddling bureaucrats, Shimadzu cannot look toward them to carry the blame.
n.b. After recording an $85 million dollar loss for the fiscal year that ended 31 March 2001, Shimadzu's story DOES read like a rags-to-riches-to-rags story worldwide. Want to go with a LOSER.... choose Shimadzu!
n.b. SAME $HIT, DIFFERENT DAY at Shitmadzu: "Problems with product quality and service, along with disputes with local partners and poor channel management have done serious damage to Shimadzu’s reputation among China’s hospitals." And similar observations have been made about Shimadzu product quality and service around the globe.
n.b. And then they have the gall to say that they are "moving up the value chain to offer higher quality products." LIAR, LIAR.... Pants on FIRE! The words "Shimadzu" and "higher quality products" are antonyms. These lowlifes LIE, DENY and CONCEAL! That's the Japanese way!
Shimadzu.... The Wrong Tool for Every Job!
This page was last 
10/31/01