In 2002 when Joe Hogan took up the reins he faced a difficult situation of having to decide whether GEMS should continue its policy of being a Global Products Company (GPC) or modify the concept to ‘In China for China’. GPC required that the manufacturing activity of the entire range of products be concentrated in places, including China, where this could be done at the lowest cost while maintaining standards and supplies made to the entire global market. The alternative would mean that the production in China would be meant exclusively for the Chinese markets.
GEMS also had to decide whether it would continue concentration on excellence in engineering or move to new areas of genomics and healthcare information which would bring it into competition with smaller software companies but has to be done if GEMS has to be part of the emerging technologies that might, one day, make its existing lines of business obsolete and redundant.
Analysis of the market situation revealed that the population of advanced countries was increasingly becoming older needing higher spending on healthcare making double digit growth in healthcare related industry possible. However the low per capita spend on medicine and diagnostics in emerging economies like China and India opened doors for a huge opportunity for GEMS both for new equipment as well as for reconditioned equipment marketed under its Gold Seal program. Other countries in Eastern Europe and Latin America were also emerging as large markets with opening up of their economies and development of their soft infrastructure.
China was predominantly a low-end equipment market and had allowed the use of used equipment also. The market segmentation was high-end products, sold mainly in the US, Japan and other developed countries contributing 45%, mid-tier products 35% and the low-end making up the balance 20%. However it was the cheaper products that had the maximum potential for growth due to