Method for Chinese Market Entry

China, which is home to about 18% of the global population, is an economic giant, holding the top position when it comes to manufacturing, exports, and foreign direct investment. Since 1979, the country has been undergoing multiple waves of reforms, which have propelled it to the current highly revered position. In 2022, the country’s GDP is estimated to be about USD18.4 trillion, which is only second to the United States. 

With its average GDP growth rate of 7-10% for about 30 years, China is undoubtedly the first destination for investors that want to see their companies grow fast. Even with the jurisdiction’s high potential and notable benefits, you need to have the right market entry strategy. Keep reading to learn more about the factors to consider for market entry into China. We will also demonstrate the unique benefits of using China consulting and market entry strategy professionals.

Comprehensively Research the Chinese Market

One fact about China that you need to know is that it is not a homogenous country. With more than 55 ethnicities and populations concentrated in specific areas, your entry strategy should align with tradition and modernity. You need to appreciate that customer behaviour and demographics differ in different regions and factor it when developing your strategy. For example, the country’s minimum wage is set based on regions, with some having higher rates and others lower. In Guangzhou, the minimum wage is €245 per month compared to Yunchun, which has €120 per month.

The Complex Legal Environment

As we indicated already, China is undergoing rapid reforms. Therefore, the policies and rules of operations are changing. For example, the country has all along been requiring companies that run as joint ventures (JVs) to ensure that Chinese partners hold controlling shareholding. The law is now changing, and investors are encouraged to simply follow the limited liability company model without compelling any party to hold higher shareholding. 

Other laws that you might find different or tough to follow compared to what happens in the west include the accounting, payroll, and tax requirements. In China, the country strictly follows the Chinese Accounting Standards (CAS), which deviates from the common International Financial Reporting Standards (IFRS)

By understanding the legal framework that guides companies in China, you are able to attune your business with all the requirements to avoid getting into conflict with the law. 

Preparing for Technical Difficulties 

Note that just like you have noted the business opportunities in China, other investors are also rushing there. Indeed, you are likely also to face already established local enterprises. Therefore, you must be prepared for technical difficulties that might arise along the way and strategies to overcome them the right way. Apart from the competition, here are other challenges that you need to think about and factor in your strategy: 

  • Changing consumer needs. 
  • Finding additional funds to meet financial shortfalls in your company. 
  • Expanding the company to the regional market. 
  • Working with new suppliers, especially those located outside China. 

Why You Should Work with Experts New Market Entry

Crafting a new strategy for market entry is never easy, and a lot of things can go wrong. Despite the challenges and associated complexities, the good thing is that you can make the process smooth by working with China consulting and market entry strategy experts can help you to learn more about the new market faster. Having helped other brands enter and race to success, they can easily tell you what works and what doesn’t. Other benefits of using experts when crafting a strategy for entry include: 

  • It takes a shorter time to craft a market strategy. 
  • You are sure of crafting a strategy that will not be against the law. 
  • The experts can help you with a lot more executive functions, such as payroll management and filing tax returns. 

The decision to get into the China market is an excellent one for your business. By bringing on board China consulting and market entry strategy professionals, crafting the best strategies and setting your enterprise on the path for rapid growth becomes easy. Visit Fiducia now for the best market entry-related consulting.