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Key China Issues - Research in China

Here we provide some viewpoints on research in China.

Uniqueness of Research in China
With respect to research, China is both unique and not unique:

Unique
China is unique because it is truly unlike any other market in the world: a shifting combination of state-controlled industries, new and growing private companies, a uniform lack of transparency, heavy government influence, a large collection of western companies with large operations, millions of well educated, western oriented young Chinese and hundreds of millions not so well off. And, of course, it is huge. China’s size, however, means not just geometric size but diversity; diversity by region, by industry, and by quality of people.

We strongly believe, based on our experience here, that a strong operational understanding of how to approach these markets and make sense them is vital. This means, for example, not just knowing that most all drugs in China are purchased in hospitals, but how the dynamics of this work, who controls the process, and how this is changing.

A market like any other
On the other hand, doing research in China should use methods that are not unique to this market but which can be applied to evaluate markets, companies, or channels anywhere in the world. These should be rigorous and effective, and transparent. This is usually where the domestic research companies fail. There is sometimes the belief that , in contrast to western markets, understanding this market is in the end not possible, or that there is some genetic advantage in doing so. We disagree.

Comparing Research in China, and the West
Here are 5 ways that research in China is both similar and different to the West.

Similar to the West

1. The same qualities that make for strong strategic analysis in the West also apply in China. Thus “country knowledge” has its limits.

2. Good international research methods are normally equally of use in China. This includes methods for B-to-B and technology research.

3. The analysts that carry out research in China, as in the West, need to be well trained. Being a native in either place, or having a background in the industry is insufficient in itself.

4. In the West, as in China, relationships will not make a project, and will not in the end deliver quality.

5. There is no reason that the total research product, including strategic application of results and value added be any less in quality in China than in the West.

Different from the West

1. Primary research in China relies to a greater extent on in-person research, which in the West is often not necessary or not feasible (or not done).

2. Information in China is often dubious in origin, so demands particular skepticism and scrutiny- and transparent methods.

3. In China, “knowing one’s way around,” which includes understanding the particulars of the market, knowing where to get info, and relationships is of greater importance than in most Western markets.

4. Due to language and cultural barriers, top management in China tends to be much less in touch with the market, and understands it less in China. The need for quality research here is greater.

5. Analysts in China, while no less intelligent, have less traditional education in analysis, so must be taught this to a greater extent.

For additional info, see:

Reliability of Sources

Misunderstandings

Common Failings

Research Sources

 

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.

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