Good reasons to do business in China

(PRE-NOTE: I wrote this article in 2014 and, upon reading it again, found that the overall theme is still relevant today. Granted, some of the uncertainties and challenges have evolved but the course of action has not. Don't write off the Chinese market, but rather look deeper for where your company might fit in. Now, enjoy the article, unchanged from 2014.)

I studied up on China before starting my work here some 18 years ago. Though all the historical and cultural stuff I learned remain valid, the answer to "how should one approach business in China" has continued to evolve, almost daily. It seems doing business in China is like playing basketball with a ball and court that somehow morph into new shapes every few minutes - continually changing conditions make for tough play.

Add to this an increasing volume of bad China press - "real estate market in decline", "GDP growth rate falters", "banking crisis imminent", "China bullying neighbors in South China Sea" and "unfair antimonopoly law", all search terms that will return a shipload of unglamorous reporting - and things look bleak. All the bad news and horror stories confused by a promise of big opportunity can make any China gazer numb.

Numbness aside, China is not going away anytime soon and there are in fact good reasons why a company should consider doing or continuing to do business in China. Reflecting on my company's experience and with a little consideration, I came up with the following five.

1. There is opportunity in China if you look smartly

For companies with differentiated B2B or strong brand consumer products, there are real opportunities to capture market share and grow company revenues. Unique B2B products that will help China build up its technology base and economy are in demand. On the consumer side, well-branded products that are useful, cool or sometimes just safe can sell very well. Of course, many products cannot compete in China for a multitude of reasons so it remains vital to do your homework. Whatever business you are in, do not let fear cause you to miss out on what could be a real opportunity. See China’s Five Best Business Opportunities, Revisited (ChinaLaw Blog).

2. Scale alone says do not say "no" to China

Geez, with China housing about 20% of the world's population and its second largest economy, how can a serious global company not have a China strategy. The numbers alone suggest that without a China presence, you will be missing out on a large portion of the global market. In fact, I am willing to predict that long-term your company will only be able to play in the minor leagues if unable to succeed in China. China's size and increasing global influence mean all serious globally focused businesses have no choice but to say "yes" to China. See China Is Projected to Overtake the U.S. in Mobile Revenue (WSJ).

3. Compete in China and you can compete anywhere

For many products, even services, China is the most competitive market in the world. China cares not how successful you are in your home market - step into China and you will encounter a slew of intense low-cost in-kind and "out-of-kind" competitors, not to mention all the government constructed hurdles. Selling to a price sensitive audience against local products with a 60% lower price tag in an unfriendly environment is no small feat. Unless buyers want only the best and you happen to offer the best, you will have to become very creative very fast. But doing so will make you that much more competitive inside China and out. See China - Intense price competition in a buyer's market (Your Wind World).

4. Sun Tzu said "Foil enemy attack by attacking first"

We believe it can be better for companies to take the fight to China rather than wait for Chinese competitors to bring the fight to them. Doing business in China forces a level of ingenuity that often leads to greater level of competitiveness. A company doing business in China can gain insight into Chinese competitors and develop ideas for winning both in China and back home as well. Plus, Chinese competitors will have less wherewithal to venture abroad if they are having to fight harder for market share at home. But doing business in China - selling in China - is not for amateurs, so be diligent in your approach. See New Path for Trade: Selling in China (NYT).

5. China makes you old while keeping you young

If you happen to the be the lucky one assigned to manage your company's business in China, get ready for a ride. Business in China is fully engaging from early a.m. to late p.m. With so little idle time, time accelerates. It is hard for me to believe I have been doing business here as long as I have. I have literally "aged" in China. On the flip-side, China keeps businesspeople young. The intense mental and physical activity required to deal with complex Chinese business situations foster agility, learning and vibrancy. I would not trade my China experience for any other.

In summary, China is never easy and always unpredictable. There are no guarantees and the risks formidable for those who choose to do business here. Still, there are reasons why a China business venture or "adventure" should be given serious consideration. So call your team together, give it some thought and consider taking the plunge.

For all the seasoned China business professionals who happen to read this, please share your own thoughts on "business in China".

Wishing you smooth selling in China,

Chris Wingo, Managing Director

China Sage Consultants (Shanghai) Co., Ltd - Turnkey sales and business support services proven to fast-track your business in China and home of China Sales Incubator full-service sales outsourcing program. Since 2003.

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