Local Chinese Market and Business Climate

The most glaring aspect of China is the sheer size of its population and market, and the prospects for growth that result from this size. The ability of enterprises - backed by foreign capital - to sell to a sizeable local market makes China an attractive destination for FDI.

As the Chinese economy continues to prosper, evolve and mature, higher-end industries such as healthcare, information technology, engineering, robotics and luxury goods, among others, can gain a bigger footprint in China as its local conditions, resources and other FDI determinants are enhanced.

Additionally, economic growth and FDI can start a "success domino effect." The more the region attracts FDI, the more it grows. The more it grows and matures, the more investors are willing to provide FDI. This point underscores the advantage of China's sizeable market, which presents growth opportunities in current and prospective commercial activity. The more FDI flows into the country, the greater the economic chain reaction, providing a positive effect to sustain such growth.

1.         Who’s the probable target audience?
2.         Who our customers are? who else our customers should be?
3.         How can we make the conduct customer insights Analysis?

Developing effective strategies across a range of marketing disciplines -- including branding, pricing, segmentation, and marketing effectiveness -- requires broad insights into consumers and their needs. Understanding the motivations, wants and needs of Chinese consumers is critical to success in China.

Our starting point is a broad understanding of our client's business and the particular business challenges at hand. We establish clear objectives that align with business realities and then determine which research approaches, designs, and analyses will generate the clearest, most useful insights for our client. Our consumer insight research ranges from in-depth qualitative observational studies to focus groups to major quantitative studies. In developing customer insights, we may also apply tailored, state-of-the-art processes to address specific issues, such as brand strategy. Once the research data is in hand, we begin the process of interpretation and synthesis. Our expertise, along with our familiarity with both the client's business and the market place, enable us to cull the most actionable consumer insights from the data. We provide a tailored solution that directly addresses our client's specific business objectives.
1)      How to evaluate competition in China Market?

It is important to find more detailed information about your potential competitors, not just how many there are and who they are. Finding detailed and accurate information about Chinese companies can be difficult.
As well as researching your potential competitors, it is just as important to research any companies you are considering doing business with to ensure they are reliable. Performing due diligence in China can be difficult, partly because of the distance and language barriers. Also, many aspects of business are very different in China.
2)      How’s the competition landscape in the Market?
Competitiveness in Market of China.
China's attractiveness as a destination for investment capital rests on its development of infrastructure, resource availability (physical and labor), productivity and workforce skills, and the development of the business value chain. The level of maturation of these elements can make China more attractive for FDI relative to other nations, such as India, that compete and vie for the same investment capital. A growing and developing economy requires infrastructure and resources in order to facilitate the sale of goods and services. Lower transaction costs, due to the maturation of these elements, enables investors to earn returns on their investments as their enterprises are able to generate profits. Roads, highways, bridges and other forms of physical infrastructure should be present, maintained and provide sufficient safety for the transportation of goods as well as for the commute of employees.

Another component for attracting FDI involves the availability of low-cost, skilled employees who possess the necessary aptitudes, experience and proficiencies to create, manufacture, and provide goods and services that can compete in global markets.
3)      How to identify new growth opportunity?
4)      How to secure target market?
5)      How to fulfill market needs?
6)      How to develop a well-planned strategy?
7)      What’s crucial information about the potential market?
8)      What new products we should create?(refer to product innovation)
9)      Are your products marketable in Chinese market? if yes, what is its potential?

How to determine that there is a market for our product in China?
The one word answer is: Research. As China's economy develops, different markets are emerging - even different economies within the market. For example, Shanghai bears little resemblance to the poor areas of the northwest. Each potential market needs to be carefully researched upon which China market entry strategies can be developed. A comprehensive is your foundation for a flourishing business in China and reduce your risks substantially in China market entry.

Do you need a China market entry strategy?
Forward-thinking companies recognize that success rests on the need for a cohesive market entry strategy. This requires a proper understanding of China's particular business culture and practices through China market research. China, of course, is not one big market but a myriad of diverse and expanding markets. Each sector has its own particular attributes. Each business is different. Many companies who are interested in China market entry have experienced frustration and bureaucratic delay, frequently resulting from ineffective communications, inappropriate relationships and a general failure to comprehend what motivates the Chinese marketplace. Companies that have yet to gain a foothold in the country face a number of issue and challenges.
Where do we start in a country this size?
Indeed, China's population size of 1.3 billion is overwhelming. Further investigation reveals that there are approximately 200 million comfortable, middle class Chinese consumers. Beijing, Shanghai and Guangzhou are the three leading Chinese cities which may be considered as first priority in China market entry, however there are many additional high population cities with substantial middle income populations.

How do we find a potential partner? How do we know how good that partner really is?
Finding an ideal partner is your first step to be successful in China market entry, however, it might be the most difficult stage. We has extensive experience and network in partner matching as our systematic approach aims at sourcing and identifying the most suitable Chinese dealers/agent /distributors for your company who have capability to market your products. This will reduce your risk in the selection of Chinese partners and save your valuable time and effort.

What types of difficulties have foreign companies encountered in Chinese market entry?
Language and cultural issues are the obvious difficulties. China's size is daunting, especially when coupled with difficult travel and communications. The second difficulty may be bureaucracy. The split between central planning market and the free market produces inconsistency resulting in referrals from one department to another in the search of finding the right person to contact and the right procedure.
What are some of the current particular obstacles?

Non-tariff measures frustrate foreigners trying to do business in China. Quotas, some of them not even published, are slapped on many imports. Quality inspection is tougher for foreign-made goods. Even if the goods are allowed into the country, they are at the mercy of state-run-distributors. The complexity and difficulty of the situation is highly fluid. It requires continual monitoring in order to have the most appropriate connection to neutralize the negative impact of bureaucratic action or inaction. These obstacles in China market entry are one of main issues to be addressed in our China market research.

Which is better - an agent or a distributor as means of China market entry?
It depends on the circumstances and what you are trying to achieve. Considerations include:
1)      Who are the agents with access to your target customers?
2)      What are your existing operations and how can the new intermediary fit with them? For example, if you want to keep an existing sales operation, you will need an intermediary who is happy to work alongside with that.
3)      What rights and responsibilities do you want to be included in your agreement with the intermediary?
4)      How closely do you want to be involved in the sales process? It can be easier to have more control over how an agent handles sales.
5)      What type of relationship do you want to have with the end user? Using a distributor may distance you from the ultimate customer.

Can I give an agent exclusive rights to a particular territory in China?
Yes. An agent may well want to negotiate exclusive rights to the territory. If you also wish to be able to sell through other channels such as through you website or via mail order, you will need to ensure that your agreement with the agent allows this.

How much control do I have over what my agent does?
The degree of control you have will depend on what has been agreed. For example, you can agree what products can be offered, what contract terms will be offered to customers and so on. You can also agree how the agent should approach customers and so on. However, if you exert too much control in this way, you may find that you inadvertently create an employment relationship with the agent.
Your agreement should clearly spell out the extent of the authority the agent has to act on your behalf. Be aware, however, that if the agent exceeds that authority, and you go along with it, you may well have effectively given the agent authority to act in that way in future.
For example, if the agent arranges a sale without authority, and you then agree to fulfill the sale contract.