The third option will be open up their market to used medical equipment.

Book mentality

Lest it be forgotten, the import ban isn't the only obstacle in the way of creating a lively, active market for used medical equipment in China. Even if the ban were overturned tomorrow night, there could be problems. For instance, the sale of domestically recycled, reused products is permitted. But it's not a particularly big activity.

That's partly because of how the Chinese look at their assets. They're more inclined to really attribute a book valuation rather than a market value: trading in a system, reselling a system for market value, for below their book value, is still difficult in their accounting approach in most cases.

For example, if a hospital buys a million-dollar piece of equipment, and it has a book value of $300,000, and the hospital wants to turn around and resell it a few years later, nobody's willing to pay for the real market value of say $100,000 or $150,000. In fact, the hospital is not legally permitted to sell it at that price, because it's an asset of the state government of China. They have to declare it obsolete or unusable. This is all part of safeguarding the state assets from corruption. For instance, if an official sells the equipment for under the book value, for, say, $150,000, they could get a kickback from somebody for $50,000 - and that's ultimately government money going into somebody's pocket.

The consequence of all of this is fewer systems in China are trade-in eligible, and the mechanism for selling used systems isn't as mature as elsewhere in the world.

Petitioning for change

Setting these structural problems aside, could the medical equipment industry convince China to drop its import ban?

Other industries have challenged China's refusal to import certain used products-and won. For instance, refurbished heavy equipment imports were forbidden, but Caterpillar fought them. They went to the World Trade Organization and went to the U.S. Department of Commerce, and enlisted some help overturning China's restrictive trade barriers against refurbished parts.

Accordingly, Caterpillar has some importation of used or remanufactured heavy equipment and they do some local remanufacturing.

But there's a difference between that and medical devices, because people will always throw up the safety flag on medical devices. For bulldozers, there may potentially be a risk to the operator, but the risks are obviously much lower than for a medical device.

The WTO requires open markets and absence of trade barriers. But nothing in the WTO charter prevents countries from regulating import and movement of goods for safety reasons.

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