For the past decade, China has enjoyed the economic benefits of serving as a popular sourcing and production location for major high-tech and electronics manufacturers. Now businesses within the industry are seeing the country in a new light and recognizing its potential as a major growth market, as well.
Companies around the world are gearing up to begin selling or further ramp up sales capabilities in China's growing consumer market, and the high-tech industry is feeling a particular sense of urgency to develop this region for new revenue.
Express delivery and logistics play a critical role in the support of trade and transportation of goods between China and the rest of the world. UPS established its presence in China in 1988. Sinotrans, a Chinese transportation company with over 40 years of experience, was the service agent for UPS until 2004. Today we have 88 operating facilities and cover 330 cities throughout the country with 190 weekly flight segments that connect China to the United States, Europe, and across Asia. UPS also has 16 import gateways and 17 export gateways and serves several airports throughout the country, including Beijing Capital International Airport, Guangzhou Baiyun International Airport, and others.
Although China is unfamiliar territory for some companies, this emerging market is ripe with opportunity and can be successfully navigated with some advance preparation and research. Here are some tips on how to successfully establish and maintain a global business in China, as well as information on some unique challenges you may face:
Identify a business objective. High-tech and electronics companies should evaluate their strengths and resources, know what they can do best, and have a clear vision for what they want to achieve in China before entering the market. China is a vast country with very different regional characteristics, and it's not necessarily the right market for every company.
Do your research. Research is essential before entering any market, and China is no exception. Economic development and average per-capita income varies by province and by city. Therefore, it is important to gather specific, local information from reliable sources about a broad range of topics, including local business life and government regulations for foreign companies.
Understand the business environment. To succeed in China, companies should partner closely with local communities and governments. Although there is no set timeframe for building a strong brand in China, it's critical to understand that business in China is based on relationships and trust. Chinese businesses take a long-term view toward business, and business transactions are based upon the parties developing a relationship first.
This scenario extends beyond interactions with individuals in the business community to the government. It's important for a company to demonstrate its operational competence and be recognized by the Chinese government and regulatory authorities as being valuable to the economic and overall development of China.
Study the market. It's important for foreign enterprises to understand that China is not a homogeneous market. The world's most populous nation is a rich mixture of languages, cultures, and ethnicities. To enhance a brand's chance of success, a company should offer products targeted to specific regions and demographics within China, and then develop an appropriate marketing strategy to support that image. A marketing strategy that works in the other countries might not work in China. A company must maintain enough flexibility to adapt to shifting needs and stay abreast of consumer demands.
Become a "Student of China." Before attempting to do business in China, company representatives should make an effort to obtain a basic grasp of Chinese history and culture. Although translators are at the ready, it is helpful to learn one or two simple Chinese phrases. Your efforts will go a long way toward breaking the ice during a business meeting.
UPS can help companies with both the process of determining if China is the right market for them, and if so, getting started doing business there to navigate challenges and capture new market opportunities.
You mentioned some good points Carla. A friend of mine lives and has a business in China & shared some experiences with me like:
Picking a location is very important especially in the urban cities. People need to know which city is the place for their industry and then they will need an office or shop. Now, we all know that setting up a shop its all about location, but even office? You'd be surprised how the locals there think. They are more keen to doing business with a foreigner sitting in a decent office in a decent location.
Thanks Carla for providing the 5 important tips. I do agree with becoming the student of china before establishing a shop, it is very important to learn the chinese language to do market with people there. And if you especially join a business school you can understand different marketing standards, likes and dislikes of the people there to come up with product to match there expectations.
China governement has no reason for not making the business environment a safe and conducive one for the investors, as it has much benefitted them socially and economically.
Understanding the business environment can really help business to avail the existing opportunities of resources to grab the market. It can also help to biuld image of the company in the minds of people and to formulate effective business plants.
Understanding the country's history and culture will definitely help. That is the same for any new country in which you want to established your business quarters. But I agree that there features specific to China you might learn first.
"and the government of that country has also interest in business affairs."
I know that China is an appealing market for potential investor. But what I fear the most is the government control over business activities. Can China government be always trusted to garantee investors a safe business environment?
All these tips are very important most especially "Understanding the business environment", as business environment refers to the surroundings of business enterprise, and this affect its operation and determines its effectiveness and success. Business can't work in isolation, it is the economic and social organ of the society, it must achieve its economic goal, it can't ignore the interest of the society, and the government of that country has also interest in business affairs.
Thank you for your comment. Unlike outsourcing, expanding exports to fast growth markets, such as China, actually increases jobs in the United States. Export growth provides new consumers for products made in the U.S., which lead to more production, and in turn more job creation. In fact, exporting supported 27 percent of U.S. manufacturing jobs in 2008.
As the economy rebounds, so will the number of jobs. The Office of the U.S. Trade Representative reports that exports to China, the 3rd largest export destination for U.S. companies, totaled $91.9 billion, an increase of 32 percent over 2009. Just imagine how many jobs can be supported to produce a growing number of in-demand U.S. goods to be sold in China.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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