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CAPITAL MEDICAL EQUIPMENT

Since its founding in 1981, Chindex has invested in its operations in the marketing and sales of capital medical instrumentation. Chindex is now the largest independent U.S. distributor of healthcare equipment in China.

On the basis of exclusive distribution agreements, Chindex offers manufacturers of top-quality capital healthcare equipment and healthcare consumable products access to the greater Chinese marketplace through a wide range of marketing, sales, technical, and distribution services for their products. Through a matrix of dedicated marketing and technical service departments, local area product and technical specialists, and local area territory representatives, the Company provides comprehensive marketing coverage on behalf of its clients and suppliers on a nationwide basis. Marketing efforts are based on annual marketing plans developed by each marketing department within Chindex for each product, and normally include attendance at a variety of trade shows throughout China, advertisement in leading Chinese industrial, trade, and clinical journals, production of Chinese language product literature for dissemination to the potential customer base, direct mail and telemarketing campaigns, and other product promotions.

The capital medical instrumentation business is managed by the Medical Department, which focuses on exporting top quality Western capital medical equipment to the China market. These export sales are denominated in U.S. dollars and are made to China’s larger hospitals. The Medical Department is organized both by clinical or therapeutic product specialty and by region. Sales representatives are responsible for one or two related product lines, and are assigned to one of six regional Territory Teams. Each Team is headed by a Territory Manager, and is made up of 6-7 sales representatives. The Team’s functions are to establish, maintain, and develop Chindex’s presence in the market on a local level within a region; tap the existing customer base to identify business opportunities; and ensure a high level of support to existing customers.

Product Managers are responsible for determining and implementing the overall market and sales strategies for a product or group of related products. They manage a Product Team, comprised of clinical, marketing, technical, and sales staff. The Product Manager works with the Territory Teams to set goals for each region for their product line(s). The Product Teams then work closely with the sales representatives in the field to follow up with prospects, provide marketing and sales support, and increase business activities.

Product Managers and Territory Managers report to the Department Manager and Assistant Department Manager, as do a small team of administrative and logistical support staff. The Department Managers coordinate the efforts of the Product and Territory Teams, and interface with Chindex’s other business divisions to streamline the internal coordination process and to maximize sales opportunities nationwide. They also work closely with luminaries and cultivate relationships with important leaders in the healthcare field, building strategic alliances which will positively impact business development.

The Medical Department markets its products directly to hospitals, through hospital administrators and the doctors who are the ultimate users of the products. There is virtually no private practice of medicine in China and all physicians are affiliated with hospitals or similar institutions. The Company’s marketing is addressed to all relevant participants in the purchasing decision, including the doctors and hospital administrators. Chindex has sold products to approximately 2000 hospitals in China, many of which have been repeat customers.

The work of the Technical Service unit of the Company is closely tied to that of the Medical Department. Chindex is responsible for the technical support of virtually all the medical equipment it sells. To support its capital healthcare equipment business, the Company owns and operates a full-service technical service center. This service center supports spare parts inventories and factory-trained service engineers on a nationwide basis. It also makes use of a joint venture organization, the Chindex Meheco Technical Service Center, which provides access to bonded warehousing facilities.

Chindex’s Hong Kong subsidiary was opened in 1996 to address the local Hong Kong market. In this market, Chindex offers marketing and distribution services similar to what it provides in the mainland, but tailored to the specific characteristics of the Hong Kong marketplace. On behalf of and in conjunction with its clients, Chindex Hong Kong participates in the tendering process for the sale of equipment to public hospitals. In addition, Chindex Hong Kong also markets separately to the private hospital system in that territory.

Since 1995, Chindex has been utilizing loans and loan guarantees from the Export-Import Bank of the United States (Ex-Im Bank) to help hospitals in China finance their purchases of medical equipment from Chindex. While these transactions are primarily used to promote purchases of the products that Chindex exclusively distributes in China, equipment manufactured by non-client suppliers has also been incorporated. Some of the manufacturers who have participated in Chindex's Ex-Im Bank-supported projects include Siemens, Marconi Medical Systems, Spacelabs Medical, Draeger Medical, ADAC Laboratories, Alcon Laboratories, Stryker Corporation, and PerkinElmer.

Among its many clients, the Chindex Medical Department is proud to represent the following manufacturers of premier healthcare instrumentation and systems:

Acuson Corporation is a leading American manufacturer of diagnostic ultrasound imaging devices. Chindex has been the exclusive Acuson distributor in China since Acuson entered the China market in 1987, and in Hong Kong since 1996. When Siemens acquired Acuson in late 2000, Chindex was retained as the exclusive distributor for the entire color doppler ultrasound platform, including the existing Siemens systems. Chindex believes that Acuson’s high-end color doppler scanners have maintained a dominant market position in China since the early 1990s, due in large part to Acuson’s constant innovation and introduction of new technologies including those utilized in the Sequoia® and Aspen™ product platforms. Acuson is also the market leader for high-end ultrasound in Hong Kong.

Bard Electrophysiology is the global technology leader in the manufacture of products which aid in the diagnosis and treatment of electrophysiology disorders. Chindex assumed the exclusive distributorship of Bard's Computerized Labsystems for China in 2000. The Labsystems are used in cardiac cath labs and complement Chindex's other cardiology product offerings.

Hologic, Inc., is a leading developer, manufacturer and supplier of bone densitometers, mammography and breast biopsy devices, and direct-to-digital X-ray systems. Chindex became the exclusive representative for Hologic's bone densitometry and mammography product lines in 2001.

Nova Biomedical, Inc. is a leading American manufacturer of medical laboratory analysis equipment used in critical care as well as central laboratory environments in the hospital. Chindex has represented Nova Biomedical in the China market since 1986.

Ortho-Clinical Diagnostics, Inc., a Johnson & Johnson company, is the world’s leading manufacturer of the Vitros (formerly Ektachem, a Kodak trademark) dry slide chemistry analyzer system developed originally by the Eastman Kodak Company. This product line was first introduced in China by Chindex in late 1994 and has seen growing acceptance throughout China. The dry slide reagents used in all of these analyzers are supplied to Chinese customers through the domestic logistics distribution network of the Chindex Products Distribution Department.

PLC Medical Systems, a wholly-owned subsidiary of PLC Systems, manufactures The Heart Laser System, a patented and innovative technology for Transmyocardial Revascularization (TMR), a new cardiosurgical procedure with the potential to provide patients suffering from coronary artery disease with a third alternative to angioplasty and cardiac bypass surgery. Chindex began to represent PLC in China in early 1998.

Steris Corporation is a leading provider of infection prevention, contamination prevention, microbial reduction, and surgical support systems, products, services, and technologies. Since 1996, Chindex has marketed the Steris lines of surgical equipment in China. In addition, Chindex markets Steris’ line of Amsco sterilizers – the established leader in infection control and surgical equipment, services, and consumable products for the healthcare and scientific markets.

In its ongoing pursuit of new products and technologies to introduce in the China and Hong Kong marketplaces, Chindex management, sales, and marketing teams are constantly reviewing and evaluating new top-quality products and technologies to complement the existing product portfolio. As the traditional core business of the Company, the Medical Department plays a primary role in furthering the reputation that Chindex has built as an American healthcare company in China.

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