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Thought Leadership | 22nd August 2019

China to become innovation hub: What does this mean for UK health & life science SMEs?

Read Time: 4 minutes


SMEs are often one of the most important drivers of economic growth for a country. Not only do they create employment opportunities at low capital expenditure, but they are almost always at the source of influential innovation from technology to healthcare.  

In China, SMEs have played a very significant role in rapid industrialisation and development, where approximately 99% of the total business ventures are SMEs.1 Today, with thanks to the sheer number of SMEs and?China’s rapidly growing skilled workforce, it is moving away from its manufacturing label to become the next major R&D and innovation hub. 

China to become an innovation hub 

In the past, China’s reputation, created by the West, has focused on cheap labour and low-quality goods. The result of which has branded the phrase ‘Made in China’ as a common byword for cheap goods. However, China’s ambition to surpass global expectations and become an innovation hub has recently been hitting headlines and industry experts are speculating on a new era of ‘designed in China’.  

It seems as though the Chinese government has seen the endless benefits of true innovation and therefore importance of developing IP and patents, not just copying ideas and reducing manufacturing costs.  

With an ageing population and consequently a rapid rise in disease, China’s healthcare system is ripe for innovation. The government is encouraging universities, enterprises, hospitals, and other stakeholders to engage in medical device innovation through government incentives such as favourable policies and tax support. With this, medical device innovation has grown significantly, and subsequently other health-related ventures. 

When it comes to digital health, China is leading the way, with 94% of healthcare professionals using digital health technology, in comparison to an average of 78% in other countries.2 

However, where in the past Chinese investment would often land in the West, China is now realising they no longer have to look to international markets.  

What does this mean for UK innovation and SMEs?  

Investment from china in the UK is high. The UK is the EU’s top recipient for Chinese foreign direct investment (€23 billion in 2016) and has become China’s second largest trade partner in Europe (€62 billion).3  

With China’s innovation ambitions, and with the UK set to leave the EU, Brexit-critics and industry experts alike are concerned about where it will leave UK-China relations and investment in UK innovation. When it comes to Brexit, predicting an outcome is complicated to say the least. On the one hand, Brexit could leave the UK free to make our own deals with China, on the other hand, are we a desirable enough trading partner without the EU?  

It could be that China attracts international investment – but does this have to be a negative thing?  

Innovate UK 

It seems that China is not the only country, however, that understand the power of innovation. The UK appears to have followed in the steps of China’s innovation ambitions, meaning that a global focus on innovation could be on the horizon, with other countries to follow suit. Government-run Innovate UK are set to invest £125 million into UK innovators and SMEs.4  

With the UK’s rich history in medical breakthroughs, it’s no surprise there has been a focus on healthcare investment. Recently, 13 precision medicine projects from UK-based SMEs received a share of £16 million in funding.5  

As part of the UK’s Industrial Strategy Challenge, nearly £7m in Government investment, and a further £10 million from the private sector has been secured to help health-tech companies commercialise their products that focus on preventing cancer along with other chronic conditions.5 

This has been labelled by former business secretary, Greg Clark, as “the biggest boost to R&D funding in UK history”.5  

UKRI said it had invested over £2.2 billion in innovation over the past 12 years, which has included 11,000 projects that have generated up to £16 billion for the UK economy, as well as some 70,000 jobs.5 

Looking to the future  

Admittedly, UK SMEs are in for an uncertain time ahead 

A new report from Bibby Financial Services found that nearly half of UK SMEs (44%), roughly 2.5 million businesses, are struggling with cashflow as they attempt to prepare for Brexit, as a shift in global politics, trading and relations, looms.6 

However, we are becoming increasingly health-focussed as a population. Consumer trends are showing that we are driven by health choices and decisions, more so than in the past, and are constantly striving for better health.  

Could this mean that there is a greater demand for health innovation, now more than ever? If so, it is up to health, pharma and life science SMEs to deliver it. 

As China is setting out on their mission to become the next innovation and R&D hub, UK SMEs do not have to fear this or see this as a potential negative for their business and investment opportunities. What the UK government has shown us recently, is that it could mean quite the opposite.  

UK health and lifesciences SMEs must of course be ready for the challenges ahead, but also, for the opportunities.  

Get ready with Onyx Health

As a leading healthcare communications and marketing agency, Onyx Health are perfectly placed to help UK SME’s and start-ups from pharma, medical devices and life science get noticed.


1. IQualify. (n.d.).?The impact of SMEs in the global economy – iQualify UK. [online] Available at: [Accessed 19 Aug. 2019]. 2. World Economic Forum. (2019).?How global tech can drive local healthcare innovation in China. [online] Available at: [Accessed 19 Aug. 2019]. 3. Corre, P. (2018).?Brexit: What’s Next for the China-UK Relationship?. [online] Carnegie Endowment for International Peace. Available at: [Accessed 19 Aug. 2019]. 4. GOV.UK. (2019). £125 million cash injection will support UK business innovators. [online] Available at: [Accessed 19 Aug. 2019]. 5. Digital Health. (2019).?UK SMEs to receive £16m injection for precision medicine projects. [online] Available at: [Accessed 19 Aug. 2019]. 6. (2019).?SME CONFIDENCE TRACKER. [online] Available at: [Accessed 19 Aug. 2019].
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