• Preferential Treatment for Hong Kong Investors in China’s Healthcare Sector
  • March 9, 2012 | Authors: Edward J. Epstein; Olivia Lee
  • Law Firms: Troutman Sanders LLP - Shanghai Office ; Troutman Sanders LLP - Hong Kong Office
  • CEPA is the first free trade agreement ever concluded between the Central Government in China and the Hong Kong SAR government. In general, CEPA permits preferential access of qualified Hong Kong goods and services to markets in the mainland PRC and came into effect in June 2003.  It has already been through seven previous amendments and on December 13, 2011, the 8th amendment (“Supplement 8”) was signed.

    Supplement 8 offers additional opportunities for Hong Kong investors to invest in the PRC medical services sector.  Under Supplement 7, the previous amendment, qualified Hong Kong investors were permitted special permission to establish wholly-owned hospitals in Shanghai, Chongqing, Guangdong and Hainan.  Supplement 8 goes further, enabling qualified Hong Kong investors to set up wholly-owned hospitals in all municipalities directly under the Central Government and in China’s provincial capitals.

    Supplement 7 stipulated that Hong Kong investors would not be subject to any total investment restrictions in investments in equity joint venture or contractual joint venture hospitals set up in Guangdong province.  It also freed up restrictions on capital ratios for Hong Kong investors investing with Chinese partners in Shanghai, Chongqing, Guangdong, Fujian and Hainan.

    Supplement 8 also relaxes the pre-existing restrictions on qualifications of personnel. The majority of medical personnel employed by Hong Kong-Mainland joint venture hospitals or clinics can be Hong Kong permanent residents. Healthcare professionals who are registered to practice in Hong Kong are permitted to provide short-term services of up to 3 years in the Mainland. Licenses for these short term practice arrangements are renewable.

    Furthermore, Hong Kong permanent residents who are licensed to practice western medicine and dentistry in Hong Kong can now seek accreditation in the mainland PRC.  They may take qualification examinations leading to being licensed to practice in the mainland, with the exception of Chinese traditional medicine, which remains closed to Hong Kong practitioners except as explained below.

    Chinese traditional medicine

    Hong Kong permanent residents who have acquired a Chinese traditional medicine degree from the University of Hong Kong and are legally eligible to practice in Hong Kong are allowed to take the Mainland's qualification examination provided they meet the following minimum criteria:

    1)    completed 1 year's internship in a level 3 traditional Chinese traditional medicine hospital in the mainland and pass a test of practice competency or,

    2)    They have been licensed to practice in Hong Kong for more than one year.

    A mainland PRC Chinese traditional medicine practitioner's qualification certificate will be issued to practitioners who pass the examination.

    Solo clinics

    Qualified solo medical practitioners who have already obtained a medical practitioner's qualification certificate in the mainland PRC shall be subject to the same requirements as mainland practitioners when seeking approval to open solo clinics in mainland China.