Equally, while some b2b markets require setting up a local Chinese entity, in other markets using local intermediaries or a small representative office may suffice. … Home ChoZan / Entering the China Market. With a population that exceeds 1.3 billion people and a land mass larger than the United States, China’s sheer size and scale presents challenges uniquely distinct from any other market (including other Asian markets such as Japan and South Korea). Try the Course for Free. Shanghai, Beijing and Guangzhou) – highly populated areas with a large, middle-class representation and income levels well above the national average. The world’s largest middle class. It is especially cost-efficient in your entry stage in China. When to enter China Research findings can assist in testing assumptions, evaluating needs and informing crucial decisions.Analyses of market research studies can keep you on the right track and identify problems early enough that changes can be implemented. Challenges in Entering the Chinese Market With growing competition and stricter regulation across the European Union, Forex brokerages have started to turn to China for expansion. From a culture perspective China is a higher context culture than many other countries within the world. Within China, rapidly changing demographics, rising incomes, increased consumer spending and an increasingly open business environment have all helped to make the Chinese market increasingly attractive to Western businesses across a variety of industries. In industries with greater levels of regulation (such as the healthcare and food sectors), foreign companies will need to attempt to unravel the web of complex laws and regulations, and try to understand which authorities have primary responsibility for implementing them. Fastest growing internet, mobile smartphone, and online shopping markets. Make China an innovation centre – The company that makes China an operations centre and not an innovation centre is missing a huge opportunity, as well as risking ‘missing the mark’. Typically, this initial in-house ‘desk research’ can help firms to determine whether further, more detailed research is required and can assist with setting goals for more detailed research later on. Understanding government policy and regulations is critical to success in Chinese b2b markets. Although some basic due diligence can be carried out in-house, nowadays there are also numerous legal and risk assessment consultants with offices in China that provide business intelligence, individual background checks, and risk analysis consultancy. On the other hand, some businesses can only achieve increased sales, brand awareness and business stability if they enter a new market. It is critical to spend time researching and understanding the regulatory environment prior to making any decision to enter the market. Along with these qualitative techniques, quantitative research can then help with determining more accurately market size, future growth trends, levels of competition, routes to market, key customer requirements and so on. Ultimately, when choosing which form is most appropriate, a company should consider each of these factors, along with the overall costs of setting up a local entity and hiring local employees. We are a local market consulting company in China. In its bid to enter China, Starbucks needed to be as inoffensive as possible to the Chinese culture. Therefore, our services are multi-language and multi-cultural. China has been a popular target of market attractiveness studies for more than two decades, with companies timing entry, level of investment, and market strategies to coincide with regulatory and market growth expectations. Many have termed China as the world’s factory where lots and companies around the world are entering into China to further expand their business. Different definition​ In China, the meaning of probiotics is different from the FAO/WHO standards, … Whichever market entry mode is chosen, thorough market research should precede any final decision on how and when to enter the market. It is well known that the China market … B2B International did a great job in what was a specialist and difficult study to bring clarity and useful recommendations. Assistant Professor. The guidance and recommendations we received were most helpful, resulting in a great response from US management. Everybody knows, China is a big market, including a gigantic consumer market of 1.3 billion people. Moreover, most expatriate managers have a very limited local knowledge of Chinese cultural and business practices, and very seldom have the Chinese language skills necessary for dealing with Chinese companies on a day-to-day basis. We work as your own sourcing office in China. Through research it was established that the usual advertising methods may come across as a direct attack on the tea culture that prevails. Taught By. With this in mind, it is generally recommended that foreign companies, and particularly those with large IP inventories, consult with lawyers and IPR specialists to formulate an IPR strategy for the China market. Digital in China offers the best ROI, simply because you have the greatest exposure at … As such, it is certainly no exaggeration to state that rather than representing a single, unified market, China is actually a collection of individual sub-markets defined by vastly differing demographic, economic and cultural characteristics. Companies planning to set up a local manufacturing facility will be required to research a broader range of factors, such as local manufacturing and transport infrastructure, access to key raw materials, local investment policies, the availability and cost of human resources, and a myriad of other factors. Very often, the enterprise type will determine the human resources available, and foreign companies tend to have greater freedom with WFOEs and rep offices than JVs in this respect. Before you can begin thinking about entering the China market, you need to ensure you understand the laws. Despite a difficult economic climate in Europe and the United States, China’s economy has continued to grow by double-digit rates over the last couple of years. Explore More. We are a local market consulting company in China. The first step of any effective China market entry strategy is therefore to identify the geographical location of the target market(s) and the best specific location to target first. Get most of your jobs done in China with a top-notch China Virtual Assistant. Economic growth and rising incomes in China’s Tier 2 cities have made entering these markets much more attractive to foreign suppliers than it was in the past. With Appovation's regional presence and expertise, challenges associated with China market entry can be assessed, addressed and overcome. Government regulations can very often impact significantly on the timeline and costs of market entry, and companies are advised to examine the implications of such regulations prior to committing to the market. Entry mode often depends on a number of factors, including industry landscape, the geographical size and scope of the market, whether the company plans to manufacture locally or import its products, and the level of on-the-ground sales and technical support required by customers. Not only do Tier 2 cities have the advantage of lower set-up and operating costs, but the increase in consumer spending power in these areas is creating a rapid growth in demand for foreign manufactured goods and products. We help you grow your business in China and get closer to your Chinese customers, Start Your China Business With An Experienced Representative. For China market entry, businesses must focus on finding the right entry channels and recruit the right employees for uninterrupted operations. Chinese laws require foreign companies to adhere to numerous compliance requirements and contract obligations. China’s economy has been on the rise for decades. It has also been a closed economy for well over a 100 years. In the wake of the melamine poisoned milk scandal in 2008, the Chinese authorities have taken a tougher line against companies that openly flaunt the food safety law, whilst the SFDA is also tightening regulations on pharmaceuticals and medical devices to avoid similar events from occurring in the future. Having entered the market, it is equally important to constantly monitor for any changes to legislation or regulations and how these could affect your business. All sessions of the series are free and open to public. Market research plays a key part in Starbucks’ major market entrance strategies. One might include a mixture of various legal, practical and technical measures designed to prevent infringement and ensure legal rights are enforced in the event of an infringement. By continuing, you agree to the use of cookies. IKEA in China. As always, companies should consider their own resources, previous export or business experience abroad, and long-term business strategy before entering the China market. While it is true that China represents a huge potential market for foreign manufactured goods and services, it is also the case that understanding where these opportunities lie and how to access them can be extremely challenging. Marketing and Selling to Chinese Businesses Business-to-Business Market Research in China Market Sizing In China, To learn how our China expertise can help your business enter China, To find out more on how our market research expertise can help your business. Companies that are entering the Chinese market for the first time as well as larger Western companies that have an established presence in China similarly struggle with not having a sufficient understanding of the local marketwhere they are hoping to drive sales. In particular, foreign companies involved in consumer markets have tended to focus their attentions on these higher income coastal regions. If you import from China, direct sourcing through a reliable China sourcing agent is your best choice. And as you know, China is a rapidly developing country, which with 1.4 billion people. But it’s all changing, things are getting easier… Premier Xi again made opening up China a priority in the latest 5 Year Plan. In recent years, the prevailing wisdom among foreign enterprises has been to focus predominantly on China’s Tier 1 cities (i.e. Although, it is not mandatory to collaborate with a local consultancy to have managed one’s legal and administrative procedures at the early stage, it is recommended. The reality is that if you have no plans to enter Asia in the near future, you are missing out on a new frontier with exponential growth opportunities. This site uses cookies to improve your visit. “When entering China, you must assume that you have lost product-market-fit and need to rediscover it. In addition to the numerous off-the-shelf reports available about the Chinese market, there are now a growing number of companies offering tailored market research services (whether it be global consultancies and management consultants, government-affiliated agencies or private individuals providing research and consultancy). If you don’t want to miss such a huge market with tremendous potiential and strong resilience, we can provide you with the necessary support and services. Figure 3 – Foreign Investment Vehicle: Advantages & Disadvantages. Developing a market-entry strategy involves thorough analysis of potential competitors and possible customers. For example, there are huge variations between different provinces in terms of population levels, per capita GDP, average income levels, consumer spending habits, education levels, literacy rates, lifestyles and so on. As China’s economy develops, it is also accumulating a growing number of industry-specific regulations and standards, which both domestic and foreign companies should conform to. Although foreign companies in the b2c sector still remain focused on coastal cities, business-to-business markets are often far more geographically scattered. According to a leading consulting firm, 76 percent of China's urban population will be considered middle class by year 2022. Making that first step into the China market is an intimidating step for most companies in the b2b arena, with an almost endless series of potential pitfalls to be negotiated. It is crucial to start with a beginner’s mindset and test your current solution in the new market. Despite a difficult economic climate in Europe and the United States, China’s economy has continued to grow by double-digit rates over the last couple of years. Effective market research is essential to determining the size and nature of the market opportunity and acts as a benchmark against which firms are able to measure future performance. Also, there are time limitations on registering patents in China, and so companies that registered their patents outside China more than 12 months previously are usually unable to register their patents locally in China. All Rights Reserved. 6 Reasons Your Business Needs to Enter The Chinese Market By The End of 2014 Published on November 7, 2014 November 7, 2014 • 14 Likes • 0 Comments Each company’s China strategy is likely to be informed by any number of different factors – from industry sector, product type, company size and culture, through to long-term business aims and global corporate vision. China’s enormous market size and related market growth potential are key factors in its attractiveness. Entering the Chinese Market and Culture One key difference between entering the Chinese market is the strong cultural ties that China has with its own history, norms and ways of doing business. The Do’s and Don’ts of Gift-Giving in China, Marketing and Selling to Chinese Businesses, Business-to-Business Market Research in China, Petrochemicals, chemicals, pharmaceutical, automobile, electronic apparatus, financial, Automobiles, electronic appliances, textiles, apparel, toys, petrochemicals, chemicals, Chemicals, textiles, communications, petrochemicals, steel, foods, auto parts, biomedicine, IT, semiconductors, biomedicine, communications, electronics information, Light industry, plastics, textiles, apparel, toys, metallurgy, household electrical, furniture, kitchenware, Agricultural, oil & foodstuffs, pharmaceutical, Can employ own people without restrictions, Higher start-up and operating costs (registered capital), Tax and repatriation of profits challenging, Opportunity to utilize existing sales networks and customer base, Finding a trustworthy partner is critical, Challenging to agree terms of the partnership, Success may depend on having staff on-the-ground to oversee operations, Partner likely to negotiate terms in their favor, Good for marketing, partner auditing and admin, Carry out extensive market research before entering the market, Segment the market (by geography, income and customer habits), Determine the best entry vehicle according to results of research, Determine the best routes to market and channel partners, Consult with legal experts to create an IPR strategy for China, Register trademarks in China prior to market entry, Carry out due diligence on prospective partners and employees, Rely on hearsay or third-hand market information from Chinese partners, Assume that similar market conditions apply throughout China, Invest in a local presence prior to researching the market thoroughly, Choose partners or employees without proper due diligence, Assume that IP rights are automatically protected under Chinese law. The objectives of the market analysis section of a business plan are to show to investors that you know your market and that it’s large enough to build a sustainable business. Lesson: Bridging cultural gaps helps consumers understand the value of the product. Get the information you need to do safer, better business. Good market research can help to identify any potential road-blocks to market (competitive, legal or regulatory) and identify any weaknesses in a company’s product or service offering. Whether it be the large Western multinationals with an established China presence or the first-time market entrant with no previous China experience, foreign companies of all shapes and sizes often find their China success stymied through insufficient lack of local understanding. A thorough and well executed market research study can help prevent poor decision-making and establish a clear strategy map for the future. A further problem is that China’s regulations are often vaguely worded and open to interpretation, which can be unsettling for foreign companies used to a more transparent regulatory environment. Entering the China Market: Top 10 Legal Issues By: Fang Shen With more than 30 years’ rapid growth, China has become an enormous market that many American companies simply cannot afford to overlook. China has a “first-to-file” patent system, which means that it is possible for local Chinese companies to register another company’s patents even though it is not the original inventor of a technology. 5 Top Tips for Western Companies to Ensure Business Longevity in China: The three most common distributor problems. Factors affecting viability of entry. After years of unsuccessful attempts to enter China’s massive $27 trillion payments market, Mastercard announced today it has won approval from the People’s Bank of China … The Department of Business, Economic Development & Tourism (DBEDT) and the State of Hawai‘i Beijing Office (SHOB) are conducting a webinar series for Hawai‘i companies on entering the China Market beginning October 22, 2020, via an online platform. Market in China is indeed a growing pool of investments, trade and production. There is no one-size-fits-all IP protection strategy for China, and typically an effective IPR strategy mix will employ a number of different tools. Figure 2 – Selected Cities According to Industrial Orientation. “Ways to enter the Chinese market” focuses on the different options open to European SMEs considering to enter the Chinese market. Networks and local market knowledge and deeper understanding of how to manage these 5 difficulties when entering market. 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