An experienced market research company will then build upon this initial foundation of knowledge with more detailed information collected via Chinese-language desk research and in-depth interviews with leading industry experts and decision makers. Employing expatriates tends to be seen to offer greater operational control, although is also more costly in terms of salary packages, relocation costs, insurance and other expenses. The HiSTEP 2020/2021 – China Market […] B2B International did a great job in what was a specialist and difficult study to bring clarity and useful recommendations. 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. Opportunities. 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. China now has a host of different ministries and regulatory organizations with responsibility for industry regulations and laws. 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. Figure 3 – Foreign Investment Vehicle: Advantages & Disadvantages. China’s economy has been on the rise for decades. 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. IKEA in China. The quality of the research delivered by B2B International is always first class, achieving better results than what we had previously received before. Although China’s entry to the WTO in 2001 helped to liberalize China’s trade environment to some extent, many industries remain heavily regulated. We work as your own sourcing office in China. 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 … Choosing the right vehicle for entry is one of the most crucial decisions a business can make when entering China for the first time. Any company seriously considering entering the Chinese market in the future should register its trademarks with the China Trademark Office as soon as possible. As always, companies should consider their own resources, previous export or business experience abroad, and long-term business strategy before entering the China market. More than any other asset you and your team offered, your attentiveness and responsiveness provided a feeling that our business success was as important to you, as it is to us. Copyright © 2020 B2B International. In its bid to enter China, Starbucks needed to be as inoffensive as possible to the Chinese culture. 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. Everybody knows, China is a big market, including a gigantic consumer market of 1.3 billion people. 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. Whichever market entry mode is chosen, thorough market research should precede any final decision on how and when to enter the market. … It is critical to spend time researching and understanding the regulatory environment prior to making any decision to enter the market. From a culture perspective China is a higher context culture than many other countries within the world. We will make sure your website can work in China, Chinese user friendly, fully localized. 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. 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. Any foreign company looking to set up local production in China should first consult the China foreign investment catalog, which divides foreign investment projects into ‘encouraged’, ‘restricted’ and ‘prohibited’ categories. In conclusion, a decent understanding of how to manage these 5 difficulties when entering China market is the key to a successful migration. It is well known that the China market … On the other hand, some businesses can only achieve increased sales, brand awareness and business stability if they enter a new market. For example, China severely restricts foreign companies’ involvement in the field of petrochemicals, energy and telecommunications sectors. A growing number of market research companies now have operations in China, and the market is becoming easier to research than ever before. 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. China - Market Challenges China-Market Challenges Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country. We aim to enable foreign enterprises a smooth and successful entry into China. Similarly, declining sales in their home markets has forced many US and European companies to relocate China firmly to the centre of their long-term global growth strategies. As a consumer market, China’s rapid growth represents a significant opportunity for companies looking to grow or expand overseas. 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. Last Published: 7/30/2019. While the old adage “In China everything is possible, but nothing is easy” still rings true for many foreign companies when doing business in China, the extent of this difficulty seems to decline further with every passing year. As such, there is no one-size-fits-all approach by which foreign companies should approach the China market. 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. Assistant Professor. Prof. Letty Kwan. We also provide proven business training for you and your staff to adapt to a new and complex market in an easy and faster way. Registering a trademark across a number of different categories may also be necessary for companies keen to deter potential infringers. Try the Course for Free. It has also been a closed economy for well over a 100 years. Fastest growing internet, mobile smartphone, and online shopping markets. Over the long term, including Tier 2 and even Tier 3 cities in their strategy can enable foreign companies to gain first-mover advantage in these cities and lead to greater long-term market success. Uneven rates of economic growth in different parts of China over recent years have served to exacerbate many of the economic and social differences that already existed between different provinces. “When entering China, you must assume that you have lost product-market-fit and need to rediscover it. Whether hiring staff, investing in a joint venture or appointing a local distributor, carrying out due diligence is also an indispensable activity when setting up in China for the first time. 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