Monday, August 6, 2012
Doing business in china
The Basics of Doing Business in China
In the last 25 years the world has witnessed the largest and most sustained period of wealth creation in history. In 2006 China had 15 known billionaires. In 2007 the number had risen to 106, and some predict the number has now reached levels higher than the USA.
With a rapidly growing number of wealthy consumers, continued economic prosperity, increasing wages, and improved infrastructure and payment systems, it is easy to see why doing business in China makes increasing sense. Especially for B2C ecommerce operators, the opportunities in China cannot be ignored. With more than 485 million internet users, of which more than 173 million are shopping online, the scale of opportunity is enormous and still growing. Behind Japan, China is already the largest consumer of luxury goods in the world. If you are not already doing business in China, it is time to start thinking about it.
Before you do business in China, you should ask yourself the following questions:
Do you have the time and resources to enter China properly?
Entering China is still not an easy proposition, especially when establishing an appropriate physical presence. Countless experts advise that entering the market and building a business that makes a profit will take a number of years. Those entering the market should be taking a longer term investment view and not expect success to come quickly or easily. For those that have the resources and patience, the potential long term rewards are huge.
Have you taken all the steps needed before exporting to China?
Are you sure your business is fully committed to the necessary level of money, resources and time that will be required? Are you sure your product will have enough competitive and marketing advantages to sell successfully. China is a highly competitive market and you will need to ensure your research is thorough. Also can you reach the potential production levels that may be necessary if you are manufacturing out of China? China is very much a volume driven market and products generally have to be produced at huge volumes to gain economies of scale and pricing competitiveness. Are you ready for a very different marketing approach? Marketing in China is very different to Western markets due to the huge cultural variations across the different geographic regions. Selecting markets within China and setting prices is not easy. China has many large regional markets, along with numerous niche markets which have great price sensitivity.
Are you willing and ready to setup in China?
There are ways of dipping your toes into the China market and many research firms that can assist you in evaluating your companies’ potential in China, however to really grow and build a long term business with China, you are going to need to establish a local presence. This is not a cheap or fast exercise. Expect to invest large amounts and you will have to do plenty of flying.
If your business is looking to do business in China, we can help you with all aspects to accepting payments. Contact us today to help you establish or improve your payment system.