Profit margins

While technological advances may improve patient care, their profitability remains to be seen.

"Sales at grassroots medical institutions are expected to be about equal to those at major hospitals, since the majority of products sold to rural and community institutions are low cost," said Hu.

Guo predicted the growth in sales to the grassroots market will be higher because of the size of the market and strong government support. However, the government is expected to try to reduce medical care costs, which in turn "forces hospitals to decrease examination charges and purchase equipment... at affordable prices", Guo said.

Rachel Duan of GE Healthcare China said that expansion into the grassroots market will not affect her company's performance, since quality and high cost-efficiency will help guarantee better profits.

"The profit margin of these products will not be lower than that of high-end equipment due to the cost savings brought about by technological development and integration of products and solutions," she said.

Thirty percent of components used by GE Healthcare are purchased from domestic suppliers. The company has three R&D facilities: in Beijing, Wuxi and Chengdu.

Advances in technology will lead to new products and help reduce the cost of traditional equipment, added Bernd Montag of Siemens Healthcare.

Japan-based Toshiba is another of the pioneers to tap China's rural areas. Sales of equipment from Toshiba Medical System (China) Co Ltd in China have been growing at 35 to 40 percent annually since 2007, contributing about 10 percent of Toshiba's global business last year.

"I believe the greatest headaches for multinational companies are distribution, relationships with grassroots government, qualified sales staff and cost reduction," said Li.

liujie@chinadaily.com.cn