UPMC near deal to expand to China, assist Shanghai lab

Joe Napsha
| Saturday, Nov. 6, 2010

The University of Pittsburgh Medical Center is close to an agreement that would bring its health-care expertise to China.

The Downtown-based global health enterprise is opening an office in Shanghai and expects to announce in about a week that it has a deal to lend its expertise to the largest pathology laboratory in Shanghai, said Dr. John Williams, associate medical and scientific director of UPMC's International and Commercial Services Division. It would be the medical center's first business deal in China.

This is the type of business cooperation that the fledging Pittsburgh China Chamber of Commerce wants to promote, said Frank Li, a local financial adviser and one of the organization's five founders. The chamber held a kickoff event Thursday night at the Diamond Run Golf Club in Ohio Township.

UPMC has a tentative agreement to provide second opinions on tissue samples viewed from Pittsburgh using digital imaging, said Charles Bogosta, president of UPMC's International and Commercial Services Division. UPMC has partnered with GE Healthcare for the viewing system.

The health-care system is close to signing a nonbinding agreement with the Chinese laboratory, Bogosta said. It also has considered providing expertise in hospital operations to Chinese hospitals, he added.

UPMC has clinical operations and consulting relationships in Italy, Ireland, the United Kingdom, Cyprus, Qatar and Japan. UPMC last fiscal year reported $8 billion in revenue.

The Shanghai agreement has not been finalized, and financial terms were not disclosed, but it is expected to "bring those dollars back to Western Pennsylvania," Williams said.

Major Pittsburgh corporations such as Westinghouse Electric Corp., PPG Industries Inc. and Allegheny Technologies Inc. long have done business in China, but it is more difficult for smaller companies without foreign expertise.

"We want to help small- and midsized businesses expand into the Chinese market ... to help them tap into a market with 31 provinces, each with very different dynamics," said Li, who works for Merrill Lynch in Pittsburgh.

Opportunities exist not just in large coastal cities like Shanghai, but in what are considered the second-tier or inland cities, said Li.

"The wealth being created in China can be used to benefit Western Pennsylvania," Li said.

To do business in China, the Chinese government requires foreign companies to share the technology of their products.

Justin K. McElhattan is CEO of Industrial Scientific Corp. of Robinson, which makes gas detection equipment and safety devices. His company partnered with a Chinese mining agency in 1986. Even if Chinese firms make identical copies of U.S. designs, he said, his company can offer customer service that the Chinese firms cannot.

As U.S. companies try to gain a foothold in China, Americans should not be alarmed if Chinese firms try to buy into companies here. The specter of a large Chinese company, Anshan Iron & Steel Group, taking a 14 percent stake in a $168 million Mississippi reinforcing steel bar mill in September raised congressional concerns over national security.

"We must break down the barriers about China. I really believe that in the future, we must be willing to consider Chinese firms wanting to buy or invest in the U.S., " said Mark Stulga, head of the China-U.S. Strategic Development Group, whose firm is involved in a solar power project in China.

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