In the wake of a rash of tainted Chinese-made products such as the blood-thinning drug Heparin, Beijing has made encouraging moves to overhaul and strengthen its food and drug safety regulations.

As a result, China's State Food and Drug Administration (SFDA) and the General Administration of Quality Supervision, Inspection and Quarantine, which oversees food and drug exports, are working diligently to ease global concerns and crack down on substandard drugs and counterfeit medical devices. Together they already have implemented nationwide quality-control inspections and are setting up SFDA offices in three Chinese cities.

The promise of lasting reforms along with the prospect of cutting costs and tapping an ever-growing Chinese market is attracting large medical device makers to China. General Electric Co. (NYSE:GE), Koninklijke Philips Electronics NV (NYSE:PHG), Siemens AG (NYSE:SI), Medtronic, Inc. (NYSE:MDT) and others are stepping up their manufacturing presence in the mainland.

One domestic player unfazed by the arrival of multinational giants is China Medical Technologies, Inc. (Nasdaq:CMED). The Beijing-based biotech company develops, manufactures and markets non-invasive medical devices that include advanced in-vitro diagnostic products utilizing a high-intensity focused ultrasound (HIFU) therapy system to treat solid cancers and benign tumors; and enhanced chemiluminescence (ECLIA) technology and fluorescent in situ hybridization (FISH) technology, used in the detection and monitoring of various diseases and disorders. China Medical's two key products, HIFU and ECLIA, have about 70% market share in China. And the company's R&D lab is close to the cutting edge of being one of the country's most productive sources of innovation in advanced in-vitro diagnostic systems and high-intensity focused ultrasound products.

The HIFU system, which uses high-intensity beams to destroy cancerous tissues and tumors, has been used to treat tumors (breast, kidney, liver, pancreas, uterus, pelvis, bone, limbs and superficial tissues) in more than 40,000 patients in China since 1999. HIFU is primarily sold to state-owned hospitals, which make up the majority of health-care facilities in China, but the Korean Food and . . .

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