Doing Business in China: How to Enter a New Market

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Despite the recent global economic crisis followed by a difficult climate in the United States and Europe, China’s economic growth continued and has been the engine for global growth for the past few decades. The country is set to overtake the United States as the world’s second-largest economy by 2032.

Such conditions make China’s business landscape a profitable hub for foreign companies seeking to expand their operations overseas.

While the prospects of doing business in China are positive, it is important to take into consideration the large and complex business landscape. With rapidly changing demographics, increased consumer spending, open business environment, and rising incomes, many American and European companies are seeking to relocate to China to sustain long-term global growth.

In this blog, we take a look at a few factors companies need to keep in mind when deciding to enter into the Chinese markets.

China is home to a population exceeding 1.3 billion and a larger land mass than the United States. The sheer size of both land and industry brings unique challenges when compared with other Asian markets and while the potential does exist, understanding and accessing the opportunities can prove extremely challenging.

Whether it is a first-time entrant or large western multinational corporations with established Chinese presence, an insufficient understanding of the local market and customs can lead to stunted growth and profits.

It is also important to understand that China is not a homogenous and uniform market. Economically and socially, it is fragmented with uneven growth rates in different parts of the country. This has led to an exacerbation of social and economic differences between the provinces. Such differences include variations in average income levels, literacy rates, per capita GDP, and population levels to name a few. All these factors should be taken into consideration by foreign businesses when choosing which province or city is best suited for their operations.

Understanding the government regulations and policies regarding the industry is paramount. Although Chinas entry into the WTO back in 2001 allowed for liberal trade policies, many industries still remain heavily regulated and little or no prospect of growth for foreign entrants. Primary examples include telecommunications, petrochemicals, and energy sectors. The foreign investment projects are cataloged into ‘prohibited’, ‘encouraged’, and ‘restricted’ divisions.

Extensive market research should precede any entry into an industry. The growing number of foreign entrants has spawned local marketing research companies which allow easy access to off-the-shelf research reports with many offering tailored services in the form of management consultants, global consultancies, government-affiliated or individual agencies.

These points offer some insight into the fundamental considerations which must be undertaken by any business seeking to enter into the Chinese market. Contact us today for the best English to Chinese translation services. Our qualified team of linguists allows easy access to simplified or traditional Chinese including both online and printed documents including audio and video translation services.