Digital in China offers the best ROI, simply because you have the greatest exposure at … We finish with a brief summary of the ‘Dos and Don’ts’ that any foreign company approaching the China market for the first time should take into consideration. China is a challenging place to do business. In industries with greater levels of regulation (such as the healthcare and food sectors), foreign companies will need to attempt to unravel the web of complex laws and regulations, and try to understand which authorities have primary responsibility for implementing them. Uneven rates of economic growth in different parts of China over recent years have served to exacerbate many of the economic and social differences that already existed between different provinces. This site uses cookies to improve your visit. Having entered the market, it is equally important to constantly monitor for any changes to legislation or regulations and how these could affect your business. Companies that are entering the Chinese market for the first time as well as larger Western companies that have an established presence in China similarly struggle with not having a sufficient understanding of the local marketwhere they are hoping to drive sales. In addition to the numerous off-the-shelf reports available about the Chinese market, there are now a growing number of companies offering tailored market research services (whether it be global consultancies and management consultants, government-affiliated agencies or private individuals providing research and consultancy). We will make sure your website can work in China, Chinese user friendly, fully localized. As China’s economy develops, it is also accumulating a growing number of industry-specific regulations and standards, which both domestic and foreign companies should conform to. Invest in China with the relevant investment vehicle . For example, in the healthcare sector both the Ministry of Health and the State Food and Drug Administration (SFDA) play a role in drawing up and enforcing regulations, while there are also provincial level MOH and SFDA organs that implement regulations at a local level. Although some basic due diligence can be carried out in-house, nowadays there are also numerous legal and risk assessment consultants with offices in China that provide business intelligence, individual background checks, and risk analysis consultancy. China has a “first-to-file” patent system, which means that it is possible for local Chinese companies to register another company’s patents even though it is not the original inventor of a technology. The challenge of China market entry has become an increasingly important one of Western companies of all shapes and sizes. Entering China Market We aim to enable foreign enterprises a smooth and successful entry into China. All sessions of the series are free and open to public. We’ve put together four basic tips to get you started thinking about Chinese law. Entering the China Market: Top 10 Legal Issues By: Fang Shen With more than 30 years’ rapid growth, China has become an enormous market that many American companies simply cannot afford to overlook. Assistant Professor. We are a local market consulting company in China. Tier 1 cities are China’s most mature markets in terms of consumer behavior, and are typically the most suitable testing ground for foreign companies with limited experience in China. China also has a “first-to-file” trademark system, which means that a foreign company’s legitimate brand and logo cannot be used if these trademarks have already been registered by a local Chinese company. Copyright © 2020 B2B International. In its bid to enter China, Starbucks needed to be as inoffensive as possible to the Chinese culture. “When entering China, you must assume that you have lost product-market-fit and need to rediscover it. But it’s all changing, things are getting easier… Premier Xi again made opening up China a priority in the latest 5 Year Plan. Also, there are time limitations on registering patents in China, and so companies that registered their patents outside China more than 12 months previously are usually unable to register their patents locally in China. One might include a mixture of various legal, practical and technical measures designed to prevent infringement and ensure legal rights are enforced in the event of an infringement. Equally, staff turnover rates are extremely high in China and retaining quality managers over the long term is challenging. The quality of human resources available will also be closely related to where the company is located, and it is generally the case that the quality of people available is much higher in Tier One cities such as Shanghai and Beijing than Tier Two and Tier Three cities. Although, it is not mandatory to collaborate with a local consultancy to have managed one’s legal and administrative procedures at the early stage, it is recommended. The guidance and recommendations we received were most helpful, resulting in a great response from US management. Although foreign companies in the b2c sector still remain focused on coastal cities, business-to-business markets are often far more geographically scattered. Any company seriously considering entering the Chinese market in the future should register its trademarks with the China Trademark Office as soon as possible. Return on Investment should always be a number one priority when entering China, it’s a large-scale market so test your concept first with a quality budget that can achieve results. This white paper has attempted to illustrate some of the fundamental considerations that any company must take when approaching the China market for the first time. Entering the China market. Home ChoZan / Entering the China Market. The first realization that foreign companies often need to make is that China is in no way a uniform and homogeneous market. “Ways to enter the Chinese market” focuses on the different options open to European SMEs considering to enter the Chinese market. If you import from China, direct sourcing through a reliable China sourcing agent is your best choice. Regulation is becoming more stringent, as are to efforts ensure that companies actually conform to them. Along with these qualitative techniques, quantitative research can then help with determining more accurately market size, future growth trends, levels of competition, routes to market, key customer requirements and so on. While the old adage “In China everything is possible, but nothing is easy” still rings true for many foreign companies when doing business in China, the extent of this difficulty seems to decline further with every passing year. A key benefit of hiring a Chinese manager is the local market knowledge and deeper understanding of Chinese business they bring to the role. Very often, the enterprise type will determine the human resources available, and foreign companies tend to have greater freedom with WFOEs and rep offices than JVs in this respect. On the other hand, some businesses can only achieve increased sales, brand awareness and business stability if they enter a new market. The nature and make-up of markets in different parts of China also varies considerably, which means that foreign companies should think carefully about which geographical location offers the best vantage point to target the broader China market. China - Market Challenges China-Market Challenges Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country. If you don’t want to miss such a huge market with tremendous potiential and strong resilience, we can provide you with the necessary support and services. Effective market research is essential to determining the size and nature of the market opportunity and acts as a benchmark against which firms are able to measure future performance. Likewise, new market entrants should ensure that all trademarks are registered both in English and Chinese, and that any internet domain names are properly registered. Lesson: Bridging cultural gaps helps consumers understand the value of the product. B2B International did a great job in what was a specialist and difficult study to bring clarity and useful recommendations. Opportunities. Registering a trademark across a number of different categories may also be necessary for companies keen to deter potential infringers. Through research it was established that the usual advertising methods may come across as a direct attack on the tea culture that prevails. For example, it is critical to spend time mapping out the location of customers and suppliers, understanding how distribution channels vary between different locations, and fully researching any local regulatory barriers that could block market entry in specific regions. In particular, there seems to be a growing trend of exports, joint ventures and purchasing from China by companies in the Midwest. In recent years, the prevailing wisdom among foreign enterprises has been to focus predominantly on China’s Tier 1 cities (i.e. As such, there is no one-size-fits-all approach by which foreign companies should approach the China market. Although there are often many obstacles in the way of achieving success in China, the rewards of successfully navigating this difficult course are also immense. From a culture perspective China is a higher context culture than many other countries within the world. Ultimately, when choosing which form is most appropriate, a company should consider each of these factors, along with the overall costs of setting up a local entity and hiring local employees. With Appovation's regional presence and expertise, challenges associated with China market entry can be assessed, addressed and overcome. The following is a list of the more common challenges experienced by companies and organizations looking to access the Chinese online population, both consumers and businesses alike. The quality of the research delivered by B2B International is always first class, achieving better results than what we had previously received before. Despite a difficult economic climate in Europe and the United States, China’s economy has continued to grow by double-digit rates over the last couple of years. There is no one-size-fits-all IP protection strategy for China, and typically an effective IPR strategy mix will employ a number of different tools. Therefore, our services are multi-language and multi-cultural. Although a growing number of foreign companies are ‘going it alone’ in China, the joint venture (JV) business model still brings with it many advantages and can often be seen as a lower-risk strategy than the wholly foreign owned enterprise (WFOE). Equally, while some b2b markets require setting up a local Chinese entity, in other markets using local intermediaries or a small representative office may suffice. Good market research can help to identify any potential road-blocks to market (competitive, legal or regulatory) and identify any weaknesses in a company’s product or service offering. Try the Course for Free. The barriers to entry are manifold in China, including language differences, the … Shanghai, Beijing and Guangzhou) – highly populated areas with a large, middle-class representation and income levels well above the national average. With this in mind, it is generally recommended that foreign companies, and particularly those with large IP inventories, consult with lawyers and IPR specialists to formulate an IPR strategy for the China market. Make China an innovation centre – The company that makes China an operations centre and not an innovation centre is missing a huge opportunity, as well as risking ‘missing the mark’. China’s economy has been on the rise for decades. The objectives of the market analysis section of a business plan are to show to investors that you know your market and that it’s large enough to build a sustainable business. Chinese regulatory bodies often operate in a quite opaque manner, making it difficult to anticipate regulatory changes before they happen. Find a Local Partner. Entering the Chinese market is not a low-cost process, and any company must be confident in the revenue streams it will generate before doing so. In the wake of the melamine poisoned milk scandal in 2008, the Chinese authorities have taken a tougher line against companies that openly flaunt the food safety law, whilst the SFDA is also tightening regulations on pharmaceuticals and medical devices to avoid similar events from occurring in the future. Although being based in a Tier 1 city may offer the lowest risk point of market entry, it will also mean that the company faces higher operational costs and more competition. Similarly, declining sales in their home markets has forced many US and European companies to relocate China firmly to the centre of their long-term global growth strategies. As always, companies should consider their own resources, previous export or business experience abroad, and long-term business strategy before entering the China market. China is a country that is constantly changing and its markets are evolving more rapidly than almost anywhere on earth. With a population that exceeds 1.3 billion people and a land mass larger than the United States, China’s sheer size and scale presents challenges uniquely distinct from any other market (including other Asian markets such as Japan and South Korea). Market research specialists and legal consultants can help foreign businesses to better understand how China’s laws and regulations should be interpreted. IKEA in China. In the past, foreign businesses have often been drawn to coastal provinces such as Zhejiang, Guangdong, Jiangsu and Shanghai, due to higher populations and incomes in those areas. Three top tips for marketing to Chinese outbound tourists. Although these steps may lead to very different conclusions for different companies, they can help companies to properly determine an appropriate strategy for China. It is well known that the China market … The HiSTEP 2020/2021 – China Market […] Taught By. … Mandarin, considered the hardest language to learn for native English speakers. Entering the Chinese Market and Culture One key difference between entering the Chinese market is the strong cultural ties that China has with its own history, norms and ways of doing business. Different definition​ In China, the meaning of probiotics is different from the FAO/WHO standards, … Entering China Market, our consulting business offering China market entry strategy, and Chinese marketing services. The reality is that if you have no plans to enter Asia in the near future, you are missing out on a new frontier with exponential growth opportunities. 6 Reasons Your Business Needs to Enter The Chinese Market By The End of 2014 Published on November 7, 2014 November 7, 2014 • 14 Likes • 0 Comments We aim to enable foreign enterprises a smooth and successful entry into China. As in many countries, China has actively encouraged the setting up of industrial clusters in specific cities or regions, and in many cases entire industry supply chains can be concentrated in a small handful of cities. Beyond these legal measures, there are a number of practical measures that foreign companies can adopt to protect their IPR. Within China, rapidly changing demographics, rising incomes, increased consumer spending and an increasingly open business environment have all helped to make the Chinese market increasingly attractive to Western businesses across a variety of industries. In particular, foreign companies involved in consumer markets have tended to focus their attentions on these higher income coastal regions. It is critical to spend time researching and understanding the regulatory environment prior to making any decision to enter the market. More than any other asset you and your team offered, your attentiveness and responsiveness provided a feeling that our business success was as important to you, as it is to us. There are still a lot of industries that remain off-limits to foreign companies, and many industries where severe limitations remain in place. Many have termed China as the world’s factory where lots and companies around the world are entering into China to further expand their business. Typically, this initial in-house ‘desk research’ can help firms to determine whether further, more detailed research is required and can assist with setting goals for more detailed research later on. Not only do Tier 2 cities have the advantage of lower set-up and operating costs, but the increase in consumer spending power in these areas is creating a rapid growth in demand for foreign manufactured goods and products. China encompasses a population of more than 1.3 billion people. At all stages we felt well taken care of and informed. Another important consideration is whether registering a patent could actually serve to disclose key technical information that could otherwise be protected through employee non-disclosure agreements (NDAs) and other practical measures. According to a leading consulting firm, 76 percent of China's urban population will be considered middle class by year 2022. It has been difficult to enter this huge new market because China has a vastly different culture from the ‘West’. Although China is unified in the geo-political sense, socially and economically the picture is much more disparate and fragmented. Dealing with China Market Entry Challenges with a PEO. Economic growth and rising incomes in China’s Tier 2 cities have made entering these markets much more attractive to foreign suppliers than it was in the past. The key objective of due diligence is ultimately to verify the trustworthiness of partners and employees, and to flag up any skeletons in the cupboard before proceeding with any sizable investment. The aim of this white paper is to highlight some of the key challenges that foreign companies face when entering the China market for the first time, and to offer some practical recommendations that can be integrated into a company’s China market entry strategy and expansion plans. Challenges in Entering the Chinese Market With growing competition and stricter regulation across the European Union, Forex brokerages have started to turn to China for expansion. Likewise, environmental problems caused by poor environmental regulatory enforcement and widespread pollution in years gone by have led to the introduction of much tighter environmental legislation. For example, China severely restricts foreign companies’ involvement in the field of petrochemicals, energy and telecommunications sectors. Whichever market entry mode is chosen, thorough market research should precede any final decision on how and when to enter the market. A growing number of market research companies now have operations in China, and the market is becoming easier to research than ever before. The profusion of English-language publications on China available through the internet makes it relatively easy for Western companies to carry out some initial research on the Chinese market. Entering the China Market 2:54. Explore More. In many b2b markets, such clusters can help foreign companies to know where its target customers are, which cities to focus on and even where to base its operations (particularly where local manufacturing will take place). Largest and fastest growing source of international tourists for most countries. Breaking into the China market successfully can seem like an almost impossible task to foreign companies with limited or no experience of doing business there. 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