Trade wars and peace? The radiography market’s reaction to Chinese-US tariffs

Trade wars and peace? The radiography market’s reaction to Chinese-US tariffs

November 21, 2019
Business Affairs X-Ray
By Imogen Fitt

Despite recent whispers that Chinese – US trade relations could soon be moving toward resolution, tensions and the threat of further tariff hikes remain high. The Asia-Pacific Economic Cooperation summit, which was rumoured previously to mark the beginning of negotiations, has now failed to deliver a meeting point for both country’s leaders. And moving into December it’s almost a guarantee that tariffs will not be reduced anytime soon.

Since January 2018, when tariffs first began to be implemented by the U.S., medical imaging companies have been commenting on the negative impact upon the healthcare market. While some appeared to have shouldered the burden admirably, with minimal effects on overall reported sales, the true trends beneath the surface are more complex.


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One category of imaging systems was always likely to be harder hit — because it was already experiencing a war of its own. Both the general radiography and flat panel detector markets are saturated with numerous vendors vying for market share, and it’s no industry secret that prices remain highly competitive while market growth is relatively low. The Chinese and the U.S. markets combined account for ~50% of the world digital general radiography market revenue per year, making sure tariffs would have widely-felt effects.

Flat panel detectors have been arguably the most affected. This is because competitive pressure from Korean vendors has been increasing over the last few years as these vendors began to drive prices down in order to gain market share. To compound this, a number of Chinese vendors, previously restricted to producing gadolinium oxide panels made of a cheaper material, in recent years began to develop and market lower dose caesium oxide panels. The effect of this was especially pronounced within the US market, where larger vendors like Varex Medical Imaging and Trixell-Thales were previously losing market share as the quality of competing products increased and prices dropped. The introduction of Trump’s tariffs, however, has helped to reverse some of this gain. Because of the increased tariffs on Chinese imported products, Chinese vendors have begun to struggle to reduce already stretched profit margins to absorb the tariffs and retain their price advantage. Despite this, the average price of flat panel detectors continues to experience a steep decline as larger corporations absorb the tax hikes. Chinese flat panel detector vendors are increasingly being put on the back foot and pushed out of the US market.

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