With China now accepting foreign investment from the West, is it the right time to consider expanding your business and entering this huge market?
China is now the fastest growing emerging market and unofficially, the largest market in the world. Business that are expanding worldwide, must take China seriously as an opportunity for growth.
With 1.5 billion consumers in China interested in Western products and services, it could be hugely rewarding for companies to make their move into China. However, it’s complicated market, so expanding companies need to do their research and gain a depth of understanding all the different factors before making the final decision.
The Chinese market has moved from an agricultural market, to a manufacturing base for worldwide products. It now offers business opportunities for many sectors such as Energy, Environmental and Climate Change, Financial Services, Technology, Life Sciences, etc. with many of their cities offering major opportunities.
The three areas to focus on for entry into China:
- Market Size
China has a large land mass and large population but due to its size, the population is diversified and has many consumer preferences with numerous sales outlets. Due to the sheer size of the country, it is important to understand the different markets that exist within the country; a marketing strategy in one area, may not work in other areas of China.
Understanding the demographics of the Chinese market and the cultural practices within each region, is hugely important. Each region in China is different and it is necessary to understand the factors of each and take them into consideration. The United States, which is similar in size to China, has a relatively similar consumer uniformity across its states. In China, consumer uniformity differs region to region, as does economic activity. Ensuring you research the varied landscape and considering these factors, will help you work efficiently to your target market.
Culturally, China is very different from the West especially in business etiquette, social values and communications. For example, in China the group may be praised more than the individual.
Finally, regulation is complex in China. There is a high level of bureaucracy which may put foreign investors off entering the market. Trademark and intellectual property in China may need to be scrutinized and it is important for companies to protect themselves in this regard. One of the key areas to consider is regulatory needs locally and nationally. It is important to understand; ‘Just in time’ supply chains, data integrity, documentation and customs arrangements, which may be very different to any existing markets.
If you are serious about the Chinese market, align these three areas; market size, culture and regulation, and use a P.E.S.T. and S.W.O.T analysis for each region of China you are considering. There are many opportunities in China for Western companies, but as a complicated region, it requires focus, research and a well thought out strategy, for any expansion to be successful.
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