Breaking the great wall in China

By Sali Lu

With the closing of the Beijing Olympics, it is interesting to look more specifically into the current market in China, after a mention of the Eastern Asian hemisphere in the very first entry of our blog. The Olympics certainly highlighted China’s many economic and social achievements, helping overcome some of the misconceptions and fears about China’s growing might still held by many in the world. Furthermore, a recent Mercer survey found that more than 90% of multinational companies said China is important to their global strategies, with 52% calling it critical.

However, there are still the underlying concerns for companies when selling into China, these ranges from intellectual property issues, arranging a reliable network of distribution partners, up to certain infrastructure concerns. Problems always arise when companies do not take the timeout to evaluate the potential risks involved, what framework should you be using when assessing potential supply chain issues? If China is the place you want to break the wall, what should be part of your business planning process? With these questions in mind, a monitoring/control process and conducting an in-depth analysis of potential risks are just some of the essential.

If the company’s leadership is able to keep abreast of the country’s evolving regulatory environment, and risks are evaluated by management to help properly plan the new venture, there are certainly profitable business opportunities available as China continues to make actions towards a more open and liberal economy. A 5 year review by a number of organisations of its progress in 2006 indicated that majority saw reasonable and good improvement in China’s business environment since its engagement in the WTO in 2001. Now it’s been another 2 years down the road, breaking the wall in China is much easier with greater improvement in China’s economy, however, both positive and negative changes also involve new ways of risk management and new challenges facing any businesses wishing to give it a go at breaking the great wall.

 

Selling into East Asia

The United States is a tough market right now.

But, as we all know, revenue is the lifeblood of any organisation. You can’t live without it.

The challenge now is how do you keep growing, or at least keep your head above water, when 50% or more of your entire marketplace suddenly dies.

Well, the good news is there is an entire planet out there… and one region in particular is experiencing spectacular growth.

East Asia, in particular but not exclusively China, is experiencing a transformational economic growth shift. There are hundreds of millions of people being lifted out of poverty and being transformed into modern, middle class consumers. There are more middle class Chinese then there are Americans – although granted they still don’t have quite the same spending power on a parity basis.

Still, the scope of the opportunities in the East Asian Hemisphere are enormous.

Of course, there are complexities… for a start, the market is split into dozens of small nations, each with their own culture, customs, legal and political frameworks and, more often than not, language.

And, when you look closer you find that what they all share in common is frequently the exact things that set them apart from the United States… things like their culture, their time zone and their way of doing business.

None the less, it seems clear to us, sitting here in Australia, that most of the world’s growth opportunities lie right here in this part of the world.

The companies who emerge the strongest from the current economic storm are going to be those firms who figure out how to tap into the opportunities now on the table in East Asia.