A few days after President Trump’s trip to Asia, I made my own business trip to the region. While President Trump hailed his trip as a big success, as someone who has been doing business in Asia for 35 years, I have to disagree. My discussions with Asian executives and the news that I read during my trip echoed my thoughts. Let me talk a bit about this and then comment on the China medical device market.

Before President Trump took office, the United States was a lot more focused on the Asian region and leadership in the world. Now that the country has decided to bag the Trans-Pacific Partnership (TPP) trade agreement, where do we stand in Asia? First, the other 11 members of the original TPP Agreement have now decided to forge a regional trade zone where tariffs will be lowered—without us. In the past, many Asian countries looked to the United States to counter China’s potential bullying and threat of invasion, but now some Asian countries are no longer tied to us and are tilting toward China. Of course, this tilt to China currently does not include Korea and Japan, who need the assistance of the U.S.’ military might to defend against North Korea. The leaders of these two countries rely on the United States for protection and have been happy to play to President Trump’s ego. Whether Japan’s President Shinzo Abe is really close to President Trump is anyone’s guess. However, on the other extreme, during and right after the Asia-Pacific Economic Cooperation (APEC) summit in Vietnam, a number of countries that were historically anti-China have now chosen to cozy up with them. For example, after this summit, China made strong overtures to help and invest in Vietnam, the Philippines and Laos.

With respect to China, the Chinese really laid out the red carpet for President Trump’s visit, providing more hospitality than for any other U.S. president. President Xi Jinping and top Chinese bureaucrats are very smart and are now further penetrating many of the world’s international markets. It helps them to have an America-First president in the United States who is ceding global leadership to the Chinese; so they, too, are more than happy to play to Trump’s ego. If Trump likes President Xi, there may be less resistance from the United States to Xi’s domestic and global agendas.

China continues to push forward its very strategic Belt and Road Program connecting China roads and rails (and in some cases air travel) to Europe, the Middle East, Africa and Southeast Asia. Building strong economic ties to the ASEAN countries allows China to also increase its military build-up in the South China Sea. As for the North Korea problem, China’s interest in curtailing aid to North Korea is very limited. For China, having the United States focus on North Korea is a great drain on America’s strength, and thus furthers China’s ability to expand its presence globally. Is there a better way to keep the United States busy and scared than North Korea, while China builds more connections to the world via trade, investment and infrastructure?

Enough politics. In previous column posts, I have mentioned several times that the biggest threat to the Western domination of the medical device industry is China. China now makes Class I–III products and exports their products all over the world. How long will it take for China’s medical device market to catch up to the United States? With massive medtech spending on R&D increasing quickly (via the Chinese government and other sources of capital), the enormous wealth and venture capital now available to support China’s medtech businesses, and the payment of large sums of money to overseas Chinese medtech executives to return to China, Western medtech businesses cannot ignore China’s desire to dominate this market in the future. For example, Chinese drug-eluting stent makers are already selling globally, and in 10 years if not sooner, those same Chinese drug-eluting stents will be sold in the United States and Western Europe. Western device makers must realize that this is no longer a cozy U.S. industry, and that they are facing a full frontal attack by Chinese medtech companies.

On the regulatory front, on November 8, 2017, new regulations from the Chinese government will help Western medical companies have more success in China. The main impetus of these new regulations was to help the Chinese get more Western drugs, which is also good for the global drug manufacturers. Since it will be easier to conduct clinical trials in China for global use, this will surely lead to a sea change in the international drug markets.

On the device front, it is less clear how the new regulations will affect the entry of Western companies into China. In October 2014, the Chinese government stated that all Class II and III devices that are not on the exempt list must be tested in local clinical trials in China to be registered. For U.S. device makers of Class II and some Class III products that never required clinical trials in the West, this was a huge burden that added a great deal of time and cost-to-market entry in China. Now it appears that the CFDA will accept more overseas data instead of almost always requiring local clinical trials in China. The exact changes regarding acceptance of foreign clinical data in the device area are not well defined yet, but many believe that the new regulations will make medical device registration in China easier with the use of more foreign clinical data. However, even with the new regulations, medtech experts in China believe that local clinical trials will still be required for implantable products and possibly other devices—no one is quite sure since there are a lot of unknown details on the issue at this time. I expect that while device registration in China may get somewhat easier, they will continue to be costly and take a long time to obtain approval.