The Great Wall of Regulations: Overcoming Import Challenges for Clinical Trials in China

23 Feb 2023

Exploring the Challenges and Solutions of China’s Clinical Trial Landscape

China’s viewpoint tends to oppose the sensibilities of the western world, often prompting tensions, disputes, sanctions, and trade embargoes. Furthermore, its complex bilateral relationship with The United States fuels periods of tension and cooperation between these giants. Consequently, the stage is set for tangled global trade relations with China.

The increasing desire to conduct clinical trials in China is driven primarily by the opportunity to sell into the Chinese market and for collective global data. Additionally, large pools of patients and the evolution of regulations attract sponsors and encourage clinical trial interest in the region.

Image illustrating Scientist with a Petri dish conducting clinical research

The clinical trial arena in China is a complex and multifaceted landscape driven by various interrelated factors. Key driving forces for this rocky landscape include the country’s insular market, complicated bureaucracy, language barriers, tight timelines, and unique duties and taxes.

In addition, operational challenges, such as patient recruitment and regulatory compliance, can also pose significant obstacles to conducting clinical trials in China. Finally, the country’s trade agreements with other nations can further complicate matters, as different regulatory regimes may apply to certain aspects of the clinical trial process.

Overall, navigating the clinical trial arena in China requires a deep understanding of these and other key factors. It also requires a willingness to engage in careful planning and strategic decision-making at every stage of the process.

This article explores the challenges and solutions to navigating the import complexities of clinical trials in China.

The Challenges:

1. An Insular Market

Despite China’s massive shift over the last several decades towards economic reform, tense trade relations and surfacing protectionist trends contribute to a somewhat insular clinical trial market. Aggravated by deeply entrenched local distribution networks and complex regulatory requirements, China is a challenging market for foreign companies.

Data reveals that clinical research in China remains relatively isolated, with only one in four commercial clinical trials in China sponsored by an overseas company. This segregated outlook has informally been dubbed the “Great Wall” within the clinical trial space and has emerged from China’s inward-looking clinical trial resources. Consequently, breaking into the market can be extremely difficult.  

2. Bureaucracy

Bureaucracy takes the form of Intellectual property(IP) protection gaps, cultural nuances, structural subtleties, lack of transparency, laborious processes, and corruption, which make navigating the import process challenging without assistance.

Coupled with the need for a series of medical import licenses, permits, and certifications, importing into China can be highly time-consuming and complex.

These hurdles are compounded within a market that seems almost entirely detached from other markets and can be difficult for foreign companies attempting to set up trials in the region. The bureaucratic challenges are also heightened by strained trade relations, particularly with US or US-backed companies.

3. Language Barriers

Language barriers are a significant limitation for international clinical trial deployment that can trigger data interpretation, collation, and collection obstacles.

Product labeling is another considerable roadblock related to language barriers because of the challenges of multilingual data. In China, marked samples and labels will likely be in Mandarin. Consequently, collecting and interpreting regional data can be costly and time intensive.

Additionally, site compliance, misunderstanding regulatory requirements, and general communication gaps are well-documented complexities for expansion into the region which pose fundamental limitations for clinical trials.

The best resolution for the language barrier is employing third-party assistance with local entrenchment and access to skilled language resources that would otherwise be an intensive task.

4. Regulatory Processes and Trade Constraints

Clinical trials in China face several challenges, including lengthy approval procedures that can stretch timelines and become unpredictable.

Complicated trade relationships can also give rise to delays that can devastate clinical trials. This includes intricate and region-specific labeling, permits, and license requirements, which can complicate clinical trials and contribute to interruptions if incorrectly executed.

In addition to these challenges, trade agreements, sanctions, and embargoes imposed on China by the US and its allies can significantly impact clinical trials, particularly those conducted by foreign sponsors.

The US and other countries have placed strict export controls on various products, including technology, to China. These restrictions can make it challenging to return samples, clinical trial data, and clinical trial goods to the sponsor for trial completion. For example, the US Department of Commerce’s Bureau of Industry and Security has placed export controls on certain technologies that may be used in clinical trials. This can considerably impact the ability of sponsors to conduct trials in China.

5. Shifting Duties and Taxes

As China’s trade and commerce landscape shifts, so can the duty and tax rates. Based on trade agreements and economic partnerships, these details may change. For example, in 2018, China imposed additional tariffs on a range of US goods, including medical devices and equipment, in response to US tariffs on Chinese goods. These tariffs significantly impacted US companies exporting medical products to China, and many had to reevaluate their supply chains and pricing strategies to remain competitive.

China has specific trade agreements and economic partnerships with different countries that can hugely affect duty and tax rates. The government maintains 17 Free Trade Agreements (FTAs) with various partners, and eight FTAs are in the negotiation or implementation phase. China, for example, signed a free trade agreement with Costa Rica, which reduced import tariffs on goods traded between the two countries. This agreement could benefit companies exporting medical products to or from Costa Rica.

The HS code can also affect duty and tax rates for medical products. For example, specific medical devices may have a lower tariff rate than other types of medical equipment. Because the tariff directory is vast and classification can be confusing, determining accurate tax rates can be highly demanding without experience.

6. Operational Challenges

Companies may face various operational challenges when importing medical equipment or products for clinical trials into China.

One primary concern is ensuring the necessary resources and capabilities, such as proper infrastructure, transportation networks, and storage.  

Sourcing constraints may also be an issue, as certain products may not be readily available in the quantities required.

Regional supply shortages can further aggravate these challenges, especially in less developed areas where demand may be high, and infrastructure may be lacking.

Companies must also carefully consider the shelf life of their products and ensure that they have sufficient storage or warehousing facilities to maintain product quality.

Temperature requirements and cold chain management are also critical factors to consider, particularly for medical products that are sensitive to changes in temperature or require specialized storage and handling.

The multiple stages of a trial in China can take several months to complete, with lengthy approval procedures which can stretch timelines and become unpredictable.

Ultimately, processes must be completed with technical precision to avoid delays in clinical trials. These operational challenges are all compounded by language barriers, bureaucracy, and complex logistical constraints that can have significant time and cost implications.

The Solutions:

1. Local Representation

One solution to overcome the challenges of bureaucracy and shifting duties and taxes is to work with a local Importer of Record (IOR) and Exporter of Record (EOR). These representatives can help foreign companies navigate customs, compliance roadblocks, and audit risks. Having a local partner with experience and knowledge of the regulatory landscape can save time and money and help ensure that import and export processes are executed smoothly.

2. Compliance Specialists

Having the correct HS code for your products and understanding how these changes in duty and tax rates affect your supply chains and pricing strategies is important. To address these challenges, and those of regulatory processes and trade constraints, working with compliance specialists who are up to date with the latest changes and have expert experience can help companies stay compliant and avoid delays.

3. Proper Planning

Proper planning is essential to mitigate the challenges resulting from operational issues and lengthy approval procedures. This includes anticipating potential challenges and budgeting for extra time and resources. Companies should also consider creating contingency plans to address potential supply chain issues, such as sourcing constraints, regional supply shortages, or insufficient storage and warehousing. Effective planning can help companies stay on schedule and avoid costly delays.

The TecEx Medical Solution

Partnering with a company that navigates these concerns is essential to avoid delays and constant struggles. TecEx Medical is a specialist Importer of Record (IOR) that can distribute clinical trial supplies into and out of China. As a dedicated IOR and compliance specialist, TecEx Medical takes on all the responsibility, from taxes and duties to documentation and project management of the shipment, to ensure your commodities arrive safely and on time.

Reduce the risk of stuck shipments and ensure seamless clinical trial deployment by contacting TecEx Medical today.