Even though there is a ton of economic data demonstrating the potential of the Chinese market, setting off to conquer China does not come without risks. It is not an easy market, especially for companies lacking international trade experience. Several companies that have been too hasty have learned this at their own expense. Every step in the process requires planning.
Here are 7 tips for maximizing your chances of success:
Establishing a foothold in China and developing your presence on the market requires patience and determination. Sometimes, it can take two to three years for efforts to become profitable, and you need to be ready to invest the time and money required. Not only do you need to make several trips to China to establish your activities, taking part in several events and trade fairs is also a must in order to develop a network of contacts. In addition, you need to plan to hire an interpreter and employees, and adapt your promotional tools for the market.
Does a market of over 1.3 billion people, with a middle class that could number 700 million by 2020, guarantee a clientele for your product? Not necessarily. The vastness of the market does not mean your products will find takers. China is made up of numerous distinct markets from one region to another. It is also preferable to adapt Western products to suit local tastes. Business information services, such as Info entrepreneurs, can provide data specific to your sector of activity.
China is a huge country, and the area where you establish your business is a key factor. The advantages the Chinese government grants to foreign companies vary from one region to another. The majority of foreign firms are concentrated in certain regions, which creates a favourable economic environment, but also means fierce competition. Many smaller cities offer interesting growth rates and less competition. If you want to limit your risks, it is easier to establish a foothold in Hong Kong than in Mainland China, and it offers an excellent springboard to the rest of Asia.
To successfully establish your business in China, you need to be on location and to have a good understanding of the culture and the way administrations function. You need to be able to rely on a trustworthy person who speaks the local language and who can build bridges between the two cultures. Several companies just starting out use the services of an agent who has a good knowledge of the field, standards, and laws. But take care: choosing a representative is a strategic challenge. Canadian and Quebec-based organizations in China can help you through their networks.
Once relations have been established with clients and partners, it is important to maintain them by devoting time to them. The Chinese value face-to-face meetings, and relationships are built over the long term. It is important to become acquainted with local customs in order to avoid unfortunate situations. In the event of a conflict, the quality of your relationships could be the key to avoiding a crisis.
A lack of respect for intellectual property is still one of the most important risks that companies face in China. The situation is improving, and the fact that Chinese companies are now pitted against one another on this issue is also helping. However, while the country currently has modern regulations, their application is not always up to scratch. The Canadian Trade Commissioner Service recommends having an intellectual property protection strategy that includes registering your patents, trademarks, or copyrights in China. You should also plan to have your agreements include measures such as arbitration in order to stay out of court, and have access to local representatives with a good knowledge of Chinese business practices.
In a country in which the public administration is so important, government administrations and institutions must be seen as partners. Local Chinese governments and state owned enterprises can help you enter local distribution chains. It is important to have a good understanding of how they function and to cooperate with them to establish good relations. The central government creates numerous plans, and understanding their goals will allow you to determine which business opportunities to seize.