Posted By Damjan DeNoble

China’s parallel markets are familiar to anyone who’s done business here.

For those who haven’t been on that adventure, China’s rural market is characterized by small mom and pop shops, outside bazaars where farmers sell all manner of goods,  local made products such as three wheeled vehicles fitted with tractor motors, and back-room electronics brands that  imitate the design of famous best sellers like Ipods.  In short, its a combination of neighborhood businesses with few further aspirations for growth, and ambitious businesses with hopes of one day going international.

The other market is the international one where China’s top business ventures compete with Fortune 500 companies from all over the world.  Clearly segmented from the rural markets, the dealers of these international quality services tend to bunch together in centers of wealth like expansive malls, and glassed-in car dealerships - if all the people and Chinese signage were to disappear from these places it would be impossible for a person to guess what country she was in.

From marketing houses to coffee houses, this partitioned competition is everywhere and can spell trouble for businesses that don’t understand it well – just ask Wal-Mart.  Meanwhile, some of the most succesful businesses in China, Yum! Foods, and 7-11 come to mind right away, are able to offer international market standard service and product, at local market prices, operating at or near the ‘middle of the parallel’, thus cashing in on both expat and rich Chinese dollars, who tend to shop international; as well as lower middle class Chinese, who tend to shop local.  When it comes down to it, these innovative businesses are what travelers write home and facebook about, “Facebook Sweetpee is… Whoaah! 7-11 is so much better in Beijing than in Durham!  It’s really crazy guys, you gotta come out here!”

(Jack Perkowski, author of the stellar book Manage the Dragon and the blog of the same name, as well as mythological China expat force, explains this much better than I could, because I…well…learned how to see and describe this phenomenon by reading his books and his blog- so start here to get a fuller explanation of parallel markets, otherwise buy his book)

If this is the case, then where are the ‘middle of the parallel’ health industry innovators?

If this is the case, then where are the ‘middle of the parallel, health industry innovators? China has the high end hospital chains – (Parkway Health and United Health Systems); it has the private clinics offering proven international standard outpatient care (International SOS); and, it has the private clinics that offer services specialized to the needs of the local high income populations, like vamped up physician and OBGYN services.

But,  why is there nowhere I can go for a basic consultation that offers me local health care rates (20-100 RMB per consultation) yet provides me with a clean environment and an english speaking medical staff ?   If scaling up 50RMB (about $7) check ups to a profit is possible anywhere in the world, it should be possible in China.

For the sake of example, here is a brief outline for how it could be done:

Set up ‘retail clinics’ which offer a limited range of services, such as check ups for non-serious conditions, and are linked to larger health care providers through a referral systemf for instances when a patient has something that needs more serious attention, like a suspect heart murmur.  Go here for more information on the concept (it’s a .pdf).

Base your geographic strategy off a successful model like Minute Clinic.  Partner with a Chinese pharmacy chain, or any other modern Chinese neighborhood staple, like 7-11, to have private clinics inside the store.

Strive for a quick entry and exit model of 5 minutes per check up, and no more than 5 minutes of paperwork (billing and prescriptions), and just make sure that medical staff smile at the patient, and even encourage them to softly push 7-11s products,  “The new triply fudge KING ice-cream bar is now available at this 7-11 location.  It will help bring down your fever.”

Brand the clinic through an innovative social media strategy because the concept would be very social media friendly, sharing, as it does, many common characteristics of popular social media tools like twitter – namely, that it is fast, friendly, cutting edge, and easy to use.   As I wrote about here, this could quickly ramp up the business.

Final bill for the consultation should be no more than a movie ticket (35-80 RMB) and the process just repeats throughout the day.  Insurance is not accepted so that the clinics compete on a purely retail basis, which happens to be a familiar concept to all Chinese consumers (as opposed to private insurance, which is still very murky territory for most of the country).

The rent for the clinic space, and medical instruments (no more than 80 square meters needed) would be minimal and even at 50 patients per day (cold sufferers mostly) the gross revenue for one location could be between 45,000 RMB ($6700) and 104,000 RMB ($15,294) per month, not counting referral and pharmacy bonuses.  With multiple locations throughout the country this model could become very profitable for anyone who decided to run with it.

Why are there not more health firms and entrepreneurs jumping all over this concept?  I mean, its a very basic, Base of Pyramid concept.  If this existed in Beijing, it would take a lot of stress away from being sick for me and many of my uninsured friends.  I would even be willing to pay up to 150 RMB for a check up, as long as it was good and I could get ice cream afterwards.

Affordable, available, fast, and reputable, private health care with Chinese characteristics.

I would love to hear some ideas on this from people.