purpose of this section is to explore some
key issues of this market.
Company be in China?
Many companies in the US and Europe are
no doubt are viewing China with a combination of interest
and puzzlement. The promise of this market is undeniable,
but can also be a difficult market to crack, and cannot
be approached in the same way as Western Markets. Who
is right for China, and how should one proceed in dealing
with this market?
The first thing to say there is that Not Everyone is Right for
China, Right Now, and some may never be.
If, for example, a US company produces
a product (a meter, for example) with common technology,
and no clear advantage or point of distinction, there
are probably domestic Chinese companies that make a
similar product for half the cost, with an established
set of customers. It is unlikely that this company will
succeed in China at present, and the domestic meters
here will only get better.
However, another company may offer a
product that is distinct, or does have superior technology/value.
This company- and there are many US and European companies
in this category- should take a serious look at China,
and consider the advantages of a presence in this market.
Here are three:
1) Access to Domestic Market-
Current and Latent. This is the main reason.
In many industries, the only way to access Chinese
markets on a level playing field is to have a presence
here- and in some of these cases this must be with
local production. The reasons for this are not complex-
lower production costs, control of sales channels,
shorter lead times, etc. Furthermore, in some cases
only by developing markets today can one best target
latent markets that are currently developing.
2) Potential Export Base. This is not usually the main reason a company invests
in China, though this can certainly be a factor.
3) To Match Competitors. If one’s competitors are active in this market,
then it may not be a good idea to cede this market
Establishing a China presence does not
have to come with a large investment, and does not have
to be all at once. Starting small, and then gradually
expanding one’s presence is both feasible and
in many cases desirable.
There is no logic which says that one
must come to China only after one has established a
presence in other “more established” markets.
Some companies, for example, that have invested in Thailand
or South Korea over China have had to face growing labor
costs and a relatively static domestic market.
Most companies in most markets cannot
know whether China is right for them until
they make a careful examination of this market.
For additional info, see:
Structure & Overview
Questions to Ask
About GCiS China Strategic Research
GCiS (www.GCiS.com.cn) is a China-based market research and advisory firm focused on business to business markets. Since 1997, GCiS has been working with leading multinationals in sectors ranging from technology to industrial markets, medical, chemicals, resources, building and constructions and a few others.