Although recent data have revealed that the once-dominant exporter is now much more internally focused, there are many prospects for businesses wishing to develop internationally. China’s rise as a consumer economy has long been assumed.
China recently experienced a deficit in March 2013, according to official statistics, but the country ended the year with a surplus of close to US$270 billion. The results supported what many analysts had long hoped for, namely that the country’s future growth would be less dependent on exports and that the new leaders are committed to delivering sustainable, quality growth. This represents a welcome departure from the previous policy of growth at all costs.
The impact of China’s growing affluence and consumer spending is already being felt around the world, as new tourism statistics reveal that travelers from China spend more than travelers from any other country, with a record $102 billion spent on travel. China seems to be the ideal place for expansion for expanding businesses with international aspirations. But having local consultants on hand to help negotiate the complex market is essential because those who try will face lengthy governmental procedures and an unfamiliar consumer environment.
As the economy continues recovering, we assess some of the main difficulties encountered by overseas firms doing business in China.
Market access
China can be a particularly challenging market to enter because of local distribution networks, regional consumer purchasing patterns, and regulatory restrictions. Furthermore, it is challenging to start because the market environment is wholly unconnected to the majority of other economies in the world. According to estimates, 37% of products that pass muster for the US market in China are a failure.
Consumer preference
Over the past two decades, China has experienced a substantial class movement, and the consumer landscape has become much more varied. It is also totally cut off from marketplaces in other parts of the world, and many businesses have failed in China because they neglected to consider customer preferences.
Bureaucracy
With 31% of 338 respondents in a recent business study citing bureaucracy as their top concern when growing into the country, foreign companies frequently struggle with laws and regulations in China. The most frequently voiced issues concern obtaining the necessary licenses and permits, with many respondents lamenting the time-consuming procedures.
Governmental challenges
The main issues for businesses entering China are corruption and the transparency of government procedure, though when the new leadership takes office, this is likely to change. There is a growing risk that the Party leaders would be perceived as clinging to power in order to enrich themselves rather than making decisions that serve the interests of the people of China.
Standards and conformity assessment
In China, laws governing the creation, production, sale, usage, and disposal of goods are in place, and all goods must adhere to these laws in order to be sold. For many businesses, this approach may be quite foreign, which may hurt the nation’s allure.
Administration
Managerial workstations might become buried in paperwork as a result of administration, licensing, product approvals, and many other time-consuming operational tasks. The main challenge for many businesses to enter the Chinese market effectively is getting past the governmental red tape.
Competition
There is now more rivalry because many Chinese businesses are trying to raise the caliber of their goods and services in order to sell them abroad. In various circumstances, customers may choose to patronize domestic businesses over foreign ones. Market disruption is made more challenging by the fact that the government may favor domestic businesses.
Human resources
In China, managing human resources continues to be a top priority because there is still a shortage of skilled labor. As a result, businesses struggle to retain their top employees because certain job moves might result in wage rises of up to 30%.
We can guide you through these minefields since we have local expertise. Speak with us now whether you want to establish a business in China or if you just want to organize your Chinese activities.
