Together with the Beijing 2008 Olympic Games, everyone is talking about the huge opportunities opening up in China. As the Chinese government is liberalizing the economy, industries such as tourism, manufacturing and service are investing their revenue especially for the upcoming Olympic Games.
China expects a huge pre-Olympic investment boom and feels very optimistic towards the Beijing’s Olympic economy. MNCs in the market sectors such as telecommunications, banking and real estate are planning to hop onto the bandwagon and take the chance to market their brand globally as the driving forces of the China market are prevailing. Ambitious companies from all over the world want a piece of the growing market benefits.
Both domestic and foreign brands are trying to get hold of the chance to showcase their brand value. For local brands, the Olympics would help them to expose the brand internationally as foreigners would be entering China for the Olympics in 2008. Foreign investors are also trying to enter into the China market as the Chinese government is liberalizing the economy.
However, entrance to China market does have its flipped side. Like a two sided coin, the China market is attractive due to their large consumer demand and growth prospect but China is not an easy market. As China has its unique business style and a rich heritage culture, many foreign investors are finding it hard to make it work in China.
Foreign-invested companies bring a myriad of benefits to China, namely investment, expertise, management techniques and jobs of all levels. However, Chinese companies fear foreign investors’ competitive advantages and are moving fast to solidify their own market share. Domestic companies have grown in confidence and enhanced their products quality. With better products and marketing tactics, local companies are increasing their market share and profits. This is one of the downfalls for foreign investors in the China market. Foreign companies have to find ways to fight off the local competition whereby some had to lower their prices to gain more market share. It is very important to partner up with local firms as establishing in China requires patience and commitment. Local firms will provide the necessary network (Guanxi) for foreign investors with regard to the administrative work or business dealings.
The Chinese places a strong importance on having a good relationship (Guanxi) with all types of organizations regardless if they are commercial or personal based. The Chinese uses the Chinese word, “Guanxi” to represent any close relationship they have with an individual or an organization. Having Guanxi in China would allow things to be done faster and allow a higher chance of clinching a deal. Furthermore, companies need to pay close attention to the local culture and regulations. There are effective ways to enter into the China market without treating the China market like a lion’s den. One would be to find out a detailed research on China market. In addition, consulting a local individual or organization would enable an easier access to China market network and providing their expertise on handling the Chinese culture and procedures.
by Alina Hoon
About the Author
Alina Hoon is a consultant of Starmass International. Starmass provides professional consulting services to assist foreign companies to enter the China market, from China market research, competitor study and China market analysis till export to China. Visit more business resources at: www.starmass.com
Leave a Reply