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Mindray Case Analysis

Essay by   •  March 3, 2019  •  Case Study  •  1,304 Words (6 Pages)  •  22 Views

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Mindray Medical: Going Global from China

  1. How did Mindray achieve its top position in the domestic (China) medical devices market? What were its strengths/core competencies?

Mindray Medical was the second largest medical device manufacturing company in China by 2007. This was not an easy task since they had to compete with industry giants such as GE, Philips and Siemens. To avoid direct competition with international brands, Mindray targeted mainly second and third level hospitals, township health centers in rich regions and secondary hospitals and large private hospitals in less affluent areas. Since their target audience was primarily focused on product cost, functionality and performance, Mindray adopted the following strategies:

First, they focused significantly on R&D. Approximately 10% of total revenue was spent on R&D which is significantly more than few big companies. They pushed for adoption of “mid-Cut” R&D strategy which is to develop the core technology for mid-market products giving them the opportunity to develop in two directions- gain low-end market to expand and cover the market, as well as move up market to be part of the elite group and grow their current technology. But, this strategy was difficult for a company with capital constrains. Although the company was facing financial crunch, its potential for growth was not overlooked by investors. The US$2 million investment helped Mindray to focus on their R&D strategy. The municipal government played a critical role in recognizing Mindray as the leading player in medical equipment manufacturing in China and provided financial support to undertake government sponsored research project, thus enabling Mindray to focus on developing core medical technologies and boost R&D. By 2007, they expanded their R&D centers all over China providing a distinct competitive advantage. This enhanced focus on R&D led to the development of DP-9900 black and white ultrasound machine with performance comparable to mid-high-end machine sold by major players. Since it was priced below the mid-range it broke the monopoly of imported products and enabled Mindray to compete in China and abroad. This was considered as a Cash-Cow to further support R& D efforts.

Secondly, Mindray’s personnel selection and training system was designed to boost its R&D efforts. They would hire fresh graduates from China’s top colleges and universities and offer lucrative salary compared to local firms. Mindray trained these fresh graduates in specific topics and companies culture. They also provided one-one tutoring sessions which enhanced employees experience and motivation. These employee selection and training strategies helped Mindray in achieving the most skilled R&D team in the domestic medical equipment industry.  Due to this R&D driven skilled labor and management techniques, Mindray launched more than 60 new products based on intellectual property.

Lastly, Direct Sales method enabled Mindray to get a firmer grasp of needs of their target customer. This distribution system, allowed Mindray to pick strong local players who within their area offered good service. This method also allowed them to appoint specific distributors for specific product line, thereby avoiding the problem of favoring profitable products. Also, this approach brought Mindray closer to the end client thereby enabling them to build a rapport with the company and since the staff cost was lower, Mindray could offer attractive margins to distributors.

Due to these strategic decisions, Mindray’s marketing network consisted of more than 800 dealers. They had customer service centers in 30 cities, 24/7 toll free telephone service as well as highly specialized engineers and professional service to deal with customer needs. These customer centric advancements led to acquiring the top position in domestic market.

  1. Evaluate Mindray’s global expansion strategy so far?

First step towards global expansion was acquiring certification to do business, as well as portray its high quality in all markets. Mindray invested in a quality system and acquired CE certification for its patient monitors.

Next, they began prioritizing which markets to enter. They wanted focus on countries with fewer regulatory agencies and fewer legal permission requirements such as Asian countries (expect Japan) and Africa, since customers in these areas were very price sensitive like Chinese customers. Mindray decided to enter these markets since competition was relatively less intense in Africa and Asian markets were similar to domestic market. Mindray launched a low end portable black and white ultrasound and priced it very competitively.

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