Entrepreneurs targeting to expand to China are mainly attracted by the huge potential of its market. If your local market has been shrinking, China offers a bigger and ready market of 1.4 billion people. The rest of the Asia-Pacific region is also within reach. To be successful in growing your company in China, the first step is crafting a market entry strategy.
Failure to develop a good market entry strategy, especially when targeting new markets, is one of the main causes of high business failure within the first year. About 20% of businesses fail in the first year, while 50% more fail in the next five years. You can avoid becoming part of this failure through China consulting and market entry strategy. Keep reading to learn more about the best tips for crafting a winning market entry strategy.
Why China?
Before looking at the professional tips for market entry into China, let’s start by looking at some important facts. If you are yet to make up your mind about getting into the Chinese market, these facts and numbers might be all that you need.
- China is the second-largest economy on the globe. The World Bank predicts that China will overtake the US to become the largest economy by 2030.
- Since 1979 when China adopted progressive reforms, its economy has grown at an average of 10% per year. In 2021, China’s GDP grew by 8.1%.
- China is the globe’s largest exporter and 2nd major importer. Between 2010 and 2020, China contributed 25-39% of the global GDP.
- Since 2010, China has been the largest manufacturer after overtaking the United States.
- China is the 2nd biggest retail market on the planet.
Special Tips for Crafting a Good China Market Entry Strategy
Venturing into a new market can only work if you are able to correctly identify the targeted clients and offer products that can solve their challenges. If you are an app developer for financial organizations, make sure to identify what their challenges are and try to solve them. You can achieve these by using China consulting and market entry strategy.
Here are other useful tips that you should use to craft the best market entry strategy:
- Make Sure to Select the Right Company Structure
This is perhaps the most important part of a market entry strategy because the structure of your business in China determines how the company will operate. If you only want some presence in China to handle non-profit-based transactions, such as marketing and scouting for partners, a representative office (RO) might be the best vehicle. However, a wholly foreign-owned (WFOE) is the most preferred business structure because it allows 100% foreign shareholding. It also allows you to engage in profit-making deals.
- Study the Competitors and their Operating Design
As you have identified China to be a high-potential market, the chances are that other investors are already there. Therefore, you must develop a method of outdoing them. You can achieve this by looking at the design of their products and crafting something better. If they are offering web/ computer applications with only a few features, improve them and add new ones before offering them to clients.
- Identify the Main Challenges and Methods of Overcoming Them
Your market entry strategy will not be complete until you look at the challenges on the way and craft new methods for addressing them. Some of these challenges include developing supply chain networks, changing policies, and regulatory frameworks. For example, your company will need to follow the Chinese Accounting Standards (CAS), which are different from the International Financial Reporting Standards (IFRS) that are common in the west.
These are some of the best tips that you should employ to craft a good market entry strategy. You should also ensure to work with a China consulting and market entry strategy firm for assistance. One of the best options is Fiducia, which has been helping other companies understand the new market and build successful ventures.
If you bring Fiducia on board early enough in your company formation, the experts can help you with more activities to propel the company to success. They can assist with company registration, selecting the right business location, accounting & payroll management, and filing tax returns. Why go it alone and risk failing when China consulting and market entry strategy firms are ready to help? Visit Fiducia now for assistance in crafting the best strategy.
