Wicked Good Words: Lighthearted Linguistics

Just to lift your mood after this week’s wild economic ride: lighthearted linguistics

Having lived in Boston for some 29 years, I feel a certain affinity to the place – though not a native, Boston feels like home in many respects. One of the things that I’ve always liked about Boston are the distinct neighborhoods. As if, when immigrants disembarked their ships in the 1700′s and 1800′s, they kept a hope of return and established ethnic enclaves to remind themselves of home.

A unifying aspect to the varied and successive waves of English, Scots, Irish, Italians, Portuguese, Greeks is the distinctive Boston Accent. Often illustrated by a pithy suggestion to “Pahk the Cah in Hahvad Yahd”, a Boston accent (in my opinion), is best when peppered with New England regionalisms – wicked pissah, right? My undergraduate work in Celtic Studies and graduate studies in Scotland gave me with a real appreciation for regional accents and dialect. Robert Burns, the national poet of Scotland, wrote in a broad, lowland Scots dialect – and regionalisms represent some of the richest areas to mine for linguistic curiosities and unexpected connections to history.

I always enjoy hosting clients in our Boston offices because I get to play tourguide to the many interesting and historically significant places. For everyone who visits us in the future – I plan to use this book and web article as background for the rich and curious dialect, too.

Device Manufacturers Risk Creating “Super-Competitors” in China

If risk is defined as “probability of occurence x severity of harm” China is looking riskier and riskier for US medical device manufacturers. The reason behind this risk is, paradoxically, current success.

According to industry resource MassDevice, Medtronic plans to double the number of employees in China over the next 4 years – already China is the leading market for Medtronic overseas sales and is growing at 20% per year. Likewise, Boston Scientific announced plans to invest $150 million in the Chinese market over the next 5 years and GE Healthcare took the unusual step of moving its entire x-ray business to China. Together, these substantial industry growth iniatives are laying the groundwork for short-term financial returns, but also long-term problems on a massive scale.

I’ve written before about the long-term threat to US device manufacturers posed by China: including reverse engineered products, government-sponsored IP theft, lessons learned by Cisco and concerns from the US automotive industry. Given the current rate of Chinese investment by US manufactuers, it’s not hard to see that while the short term rewards are tantilizing, the long-term risks of creating Chinese super-competitors are immense.

Lessons Learned From Cisco About the Risk of Chinese Competition

Buried in today’s announcement about a 3.3% rise in sales at Cisco (and 36% decline in net income) was a troubling note:

“The [economic] slowdown has had a severe impact on some kinds of Cisco gear—particularly the switching equipment that is the company’s biggest product line—at the same time that competitors are stepping up their attack on Cisco with low-priced products.”

I picked up on this because, on a recent trip to Hong Kong, I sat next to a supplier to HuaWei Technologies, a major telecom producer based in China. Starting out in 1988 as an importer of PBX phone systems, HuaWei (he informed me) had all but replaced Cisco in Asia. You can read about it here.

You might think that this doesn’t apply to the medical device industry…but you would be wrong. A case study on HuaWei provides a useful illustration of the growth of Chinese competition and its implications for US manufacturers across a broad range of industries – including medical device.

Automakers and Device Makers Face Chinese “Day of Reckoning”

Sergio Marchionne, the hard-charging head of Fiat and Chrysler, warns that automakers face a “day of reckoning” down the road from Chinese competition. Transfer of intellectual property from US manufacturers to Chinese affiliates and subcontractors is cited in a NYTimes article as a substantial risk for creating strong competitors who, in turn, will export to Western markets.

In the current era of slow economic growth, Chinese manufacturers are moving up the value chain and producing more and more sophisticated products. Earlier this year, I cited a WSJ article that described how Chinese manufacturers had reverse-engineered a soviet fighter jet and were selling it at a huge discount…if the Chinese can do this with jet fighters, they can certainly do it with medical devices. In fact, China has a state-sponsored program devoted to “accumulating” IP in targeted sectors like military, communications…and advance medical technology.

Device manufacturers who only look at the revenue upside of the Chinese market may be forgetting one important fact: products sold into China today will most certainly be back (at substantially lower cost) – produced by Chinese companies and displacing revenue of US device manufacturers.

News from Japan!

Crimson has just introduced a free service for medical device manufacturers interested in news from Japan: Crimson’s Japan Medical Device Digest. The service provides news briefs (in English) of the latest Japanese-language medical device news items.

The Japan Medical Device Digest is available on the Crimson website (Publications) in html or pdf format.