Creating Opportunities In the Chinese Market

By CABDC President Peter Zhang

The Beijing Olympic Games are now part of history and etched in our memories. For many American household’s, it was the first time they have seen media coverage of modern China on a sustained basis. There were profiles done on everything from Chinese food to the meticulous effort into building the Bird’s Nest and other Olympic venues. If one ventures through the busy streets of Beijing or Shanghai one can’t help notice all the construction cranes adding to the cities skylines. China has become a vast reservoir for direct investment by manufacturers and multi-nationals around the world. Beijing’s face lift and a recommitment to investors will undoubtedly spur a new influx of foreign investment within travel, finance and commerce. This trend is unlikely to stop anytime soon.

Trade between the east and the west is nothing new and didn’t start with the World Trade Organization. Two hundred years before modern procurement and sourcing departments came into existence; the United States was busy accessing Chinese ports to bring back valuable commodities during the era of the famous Clipper Ships. They were the fastest means of transportation available although the cargo holds were quite small. The benefit of bringing product to market cheaper and faster was appealing to most businessmen then, just as it is now. Today, what is the most compelling reason to set foot in Chinese market place? With over, 1.3 billion people, vastly increasing disposable wealth and 15,000 new foreign entities establishing their presence in China each year is enough reason to consider China as an important strategic consideration for companies around the world.

I was having tea with an executive of a mid-size pharmaceutical firm. He was concerned with the cost of starting-up business operations with-in China and all the red tape. I reminded him, that last year the pharmaceutical industry spent $113 million dollars to lobby congress in the US. I asked how much his company spent giving to their favorite presidential candidate. As he searched for the answer, I asked if he would combine it with the total expenditures including manpower to ensure their print and television ads met strict government and regulatory approval. There are no such things as free markets no matter how charming the idea.

Finally, and almost painfully, he retorted, “I can’t get a fair shake with my products in this market.” I turned to the gentleman and told him that it is with certainty that I can say when you have gained access and agreement with local market decision makers and have demonstrated benefit, you can be certain that your product will get preferred treatment and every ounce of protection. He was going back to his office to discover that his company hadn’t fully realized its potential in China because they hadn’t done their homework.

Every government has the right to set the terms which industry is able to manufacture and distribute its goods within a market. It’s incumbent upon each individual entity to ask the right questions and possess all the tools to navigate new territory with the same expertise they used to fair well in domestic markets.

The other common error is simply ignoring the US Chinese markets one of the fastest growing demographics. Many Chinese immigrates keep close ties with family and friends in China.. In addition Chinese are increasing their social economic status and buying power here in the United States. Multi-cultural marketing efforts while growing are mostly focused on Hispanic marketing and Spanish speaking audiences. Little has been done with leveraging the power of Asian media and domestic based foreign print and television media despite the rapid increase in the number of Chinese speaking citizens coming from China, Malaysia, Singapore. And in most multinationals, products are conceived and developed with no forethought of the products feasibility in foreign markets. Look at Apple’s Ipod which has been unsuccessful penetrating the Chinese market. Their organization wasn’t set-up to access a different legislative system, communicate with regulating branches and negotiate with telecommunications in an effective manner. Marketing data reports that they weren’t very effective in communicating to their audience.

Year after year western countries set-up shop in China without any idea how to access government and key-decision makers, business law and cultural styles, in short, deficient in the language of the Chinese marketplace. When a company enters the Chinese marketplace a company should ask one important question, “Does my company have access to leaders who agree that my product serve the good of the Chinese people?” Good ideas, leadership and innovation aren’t always enough if one doesn’t have access and the ability to converse in the language and culture of a nation of such worldwide economic and political influence.

My recommendation to anybody interested in awakening their crouching Tiger is first to make that decision that this is an important market and that success can be obtained. Finally, access to the Chinese market is all about the right relationships. Chinese American Business Development has been providing access the China market for 20 years. Call us today to discuss your interests in establishing a presence in the Chinese marketplace.