China presents the biggest opportunity for both small and big businesses. Over 350 million middle class consumers interested in international brands, attract more and more foreign businesses every year. How to enter the Chinese market? How to start working with China in the current economic conditions? A business with China has not only great potential, but also great risks that must be taken into account.
In the business with China, there are a lot of nuances, but the game is worth it, because this is a billion-dollar market - according to forecasts, China with 13.3% of global GDP will become the world economic leader by 2020. Building a successful export to China is a rather difficult task and you need to understand what key problems companies face and how to solve them. You can understand all the nuances yourself and learn from your mistakes, or you can use the services of consulting companies like Opportunity Guide. When choosing a company, you should examine the reputation of each, as well as find out how many years it has been working on the market.
- Find your niche in the Chinese market.
It is well known that the Chinese market is one of the largest markets in the world and it represents a great potential for almost any goods and services and when entering the Chinese market, it is necessary to conduct marketing research focused specifically on a specific province or administrative region – each of them has a rather serious specificity.
Of course, most companies want to enter the market in Beijing, Shanghai and Guangzhou, since these cities not only have a large population, but also significant purchasing power, as the average income is higher than in China as a whole. But for the seeming simplicity of the work, these cities have higher competition with global brands and additional costs for office and marketing, which will be much greater than in small (by the standards of China) regional centers.
Conducting marketing research is very important for a proper understanding of positioning and branding issues in the Chinese market. Currently, these studies are the de facto standard for successful work in the Chinese market. It is not recommended to focus on the so-called “desk research”, better get information from the primary source.
- Get familiar with the legal aspects.
It should be understood that the rules in the market change very quickly, since most industries in China are quite seriously regulated by the state, and in many industries it is rather difficult to work, typical restrictions apply in telecommunications, energy and petro chemistry. Both in terms of exports and in terms of foreign investment projects in China, there are three categories:
- encouraged projects (retirement home creation, architectural design, textiles, etc.)
- restricted projects (educational institutions, car manufacturing, and airline maintenance, etc.)
- prohibited projects (nuclear fuels production, tobacco sale, audio recordings production, etc.)
Businesses should learn about the Chinese tax system, administrative requirements, and intellectual property laws first of all, in order to understand what type of business entity to establish. Foreigners have several legal options to choose from when establishing a company in China, such as a Wholly Foreign Owned Enterprise, Joint Venture etc. It is recommended to research more about the types of available business entities and decide which one suits your purposes. For more detailed information and consultation please contact us. It should be taken into consideration that intellectual property infringement in China occurs quite often and if you are just entering the Chinese market, remember that your solutions and technologies can be copied or borrowed in another words.
- Attract the Chinese customers.
Succeeding in the Chinese market requires research, investment and patience. Not only are there cultural differences between China and western countries, but there are also differences within the market itself. It is often best to find an experienced local partner that can guide you.
Nowadays the digital marketing dominates China, while the whole world is still following traditional media and offline marketing. In fact, Chinese consumers spend on average 1.5 hours a day searching the information online, which means that online stores became a great tool of success for many brands.
A website both in English and Chinese is necessary to enter a market and increase the popularity of your products. Apart from the regular website one should consider such platforms as Taobao, Tmall, AliExpress, JD and Wechat, that allow you to communicate with the buyer directly, arrange discounts and promotions. More on the popular online platforms in China will appear in our next post very soon.
Undoubtedly, the question of entering the Chinese market is quite serious, requiring a thorough research and it would be next to impossible to discuss it in several paragraphs of the article. In addition to those considered in the article, this topic covers many other factors, such as recruitment, taxes, logistics, accounting features, bureaucracy and Chinese business culture, etc. Mastering the Chinese market for almost any company is a difficult task, but in the end good research and a well-chosen partner in China will contribute to your success, one might even say determine your success when exporting to China.