One stop shop for all your needs: China
The Chinese consumer market is displaying great potential for growth in all industries. As China’s appeal towards outsourced manufacturing grows, their economic status attracts companies looking to expand their market share and diversify their product lines. It will also improve the composition of outbound investments, as well as expand opening-up in the western region, inland areas and border areas, creating new opportunities for China’s economic cooperation with other countries. While most companies succeed by gaining a strong foothold in the Chinese market, the rest slip and fall. Why is that?
There are three predominant factors that influence China’s business world, which either build up companies to their full potential, or quickly detract them from foreign expansion.
- Market Size
China’s size makes it ideal for companies to expand internationally, but most don’t realize that the Chinese population is highly diversified, in economic status, consumer preferences, and language. A marketing strategy in one geographic region may be obsolete in another. Foreign businesses do not understand the cultural practices and demographic makeup of the country’s regions therefore, most fail in one area with tactics that would have succeeded elsewhere. We’re talking about big companies like Apple and Uber that failed to make an impact in this country. Therefore, with the right strategy and planning, success can be achieved.
Cultural practice in China differs dramatically from western understanding. Business etiquette, communications, and social values are not the same. Therefore, you can easily turn off potential Chinese customers and partners with an ethnocentric approach to marketing. For example, Chinese appreciate openness rather than what westerners consider “courtesy.” The Chinese build relationships on high levels of trust rather than in tokens of reciprocity.
Business owners tend to focus their global expansion strategy by getting around the regulation and bureaucracy of another country. But in China, the laws and procedures are far too complex to adopt in a western style. Trademark and intellectual property rights are too easily disregarded, and companies must protect themselves from Chinese “first to file” laws. In a recent survey of over 330 business with presence in China, 31% said bureaucracy was the primary point of struggle with entering the market.
If you are in a growing industry that meet the needs of China’s ever-present consumer market, consider hiring a consultant to help you navigate the country’s unique market. Ausmate strives to provide you the right guidance along with contacts in China to facilitate smooth transition and integration into Chinese markets. Below are a list of few growing industries in China.
- Financial and Professional Services
- Environmental Studies and Life Science Research
- Manufacturing and Infrastructure Design
- Information Technology and telecommunications
A few efforts have been taken recently to make the Chinese market more accessible to businesses across the world. According to the government report overseas investors will be granted tax deferrals for the reinvestment of profits made in China. Procedures for setting up foreign-invested businesses will be simplified, and business filing and registration will be processed together.
China will also phase in lift restrictions on the scope of operations of foreign-invested insurance companies as well as make market entry standards the same for both domestic and foreign banks. In addition to encouraging processing trade to shift to the central and western region, the country will actively expand imports, host the first China International Import Expo, and lower import tariffs on products including automobiles and certain daily consumer goods.
The report said China is committed to promoting trade and investment liberalization and facilitation. The country is ready to work with all relevant parties to advance multilateral trade negotiations. It also calls for trade disputes to be settled through discussions as equals, opposes trade protectionism and will resolutely safeguard its lawful rights.