Elscint starts strong in Chinawith $23 million scanner order

Firm to use sale as springboard for growth

Elscint is ramping up its effort to penetrate the market for medicalimaging equipment in China. The Israeli vendor plans to use itssale of $23 million worth of equipment to China as a springboardto increase its presence in the country, according to Dr. ThomasSpackman, president and CEO of Elscint's U.S. subsidiary.

Elscint Ltd. has identified China as one of two markets thecompany will target for growth in the coming years, the othermarket being the U.S., Spackman said.

"There will be a focus on the U.S. as one of the sophisticatedand mature marketplaces where we want to do business and Chinaas one of the major emerging markets," Spackman said. "This(order) is our kickoff in terms of the mainland Chinese market."

The deal includes MRI, CT and nuclear medicine systems (SCAN6/7/95). The order was arranged by Elscint's Hong Kong subsidiary,working in conjunction with a Chinese government ministry. Thesystems will be installed in hospitals run by the Chinese army,according to Spackman.

Some medical imaging companies operating in China have reporteddifficulties in receiving full payment for systems they've soldin the country, but Elscint does not expect any problems. Thesale is being financed by a line of credit issued to China InvestmentBank by Bank Hapoalim of Israel. The line of credit is backedby the Israeli government as part of its program to promote Israeliexports and support Third World development.

"The ultimate risk (for the loan) has been accepted bythe Israeli government," Spackman said. "We will beable to book the revenues by the end of this year."

The sale gives Elscint the critical mass needed to expand itssales, service and distribution operations in China. Elscint hasbegun setting up distributorships in the country and may establisha direct service organization. Elscint is also examining whetherto manufacture equipment in China, according to Spackman.

"We have begun to consider the possibility of doing somemanufacture or assembly or both in mainland China to solidifyour relationship with the Chinese market," Spackman said.

If it does set up a Chinese facility, Elscint will join Picker,GE, Siemens and Shimadzu as a medical imaging company with home-grownmanufacturing (SCAN 8/11/93 and 5/22/91). Most of those companiesbuild CT components in China.