Deciding when to enter China market is a tough call for foreign companies. They may be tempted by opportunities in China market, but could risk venturing in China before they’re fully prepared. While entering China market extends your company’s reach, you don’t want to move into China market too soon and use resources you need to continue growing on your home turf.
Here are 10 key questions to ask before entering China market:
#1. Have I built a solid foundation at home?
Make sure your business is stable on a day-to-day basis before entering China market. For instance, you should determine whether your business could function well in your absence. Companies also need to have the distribution running smoothly enough so that they don’t have to focus on it constantly.
#2. Do I have the bench strength for entering China market?
You will need to assign one or two senior employees to your China business effort. So, you need to determine whether you can afford to move people from their current responsibilities, as well as whether they bring–or can quickly develop–the necessary skills for China sales and marketing. At minimum, you’ll need someone who is going to be accountable for the export sales part of the China business.
#3. Will I find the talent I need in China?
If you decide to expand to China market, finding local talent can be a challenge. Sometimes it is not easy to find enough of the skilled talent you may need. You also will be competing with established companies that know where to find talent and how to recruit local candidates.
#4. How will I need to adapt to the local culture in China?
Most of the time your business need to adapt to the local culture in China. That may mean customizing your product or service to meet China customers’ tastes. At the very least, you will need to put your marketing message in Chinese and make sure the meaning translates correctly.
#5. Do I understand the cultural implications of the sales process?
Closing a deal in China can be a vastly different experience than you’re probably used to. Sometimes the consumers’ reaction might be “No, we aren’t interested” in your product or service, which means you will need to have an extremely long and costly sales process that might never leads to a sale. Such behavior is especially prevalent in China. To avoid this problem, look for customers who have bought similar items or services in the past, and sometimes it’s better to cut off talks if they lag for too long.
#6. Have I sized up the local competition in China?
Understanding your competitors in China can provide insights into how–and whether–to expand to China market. But many companies don’t take time to figure out whether similar products and services are already available in China market and what they would need to offer to compete successfully. Spending time in China and speaking with potential customers can help to avoid costly mistakes.
#7. Do I need an business partner in China?
For many companies, it’s critical to find a local Chinese partner when expanding to China. Partners can help facilitate sales, while keeping costs down for the home office. Forming a partnership takes time–often, a year or longer–and requires plenty of due diligence to find the right fit. JingleOffice offers a wide range of service to help foreign businesses and works as your trustworthy business partnerships in China.
#8. Am I financially able to sustain an overseas expansion?
Entering China market requires a startup-like period that’s longer than many entrepreneurs anticipate. You have to expect to lose money for a while. So, you not only need enough capital to make the initial investment, but you also should have a long-term financial plan in place. You will likely need to update the plan to reflect actual revenue and expenses as you ramp up in the new market in China. It’s not something you are going to turn a profit on right away; you have to be here for the long haul.
#9. Where’s the potential for red tape?
Expanding your business beyond your domestic market can mean lots of extra paperwork, especially for medical and technology companies. With such a variety of regulations surrounding exports in your country and imports in China, it’s important to understand what’s required for your particular industry before attempting to expand to China. Medical-device companies, for instance, require extra documentation, including proof that the Food and Drug Administration regulates their products, sensitive technology companies may require a export license.
#10. Should I simply expand my online presence?
For some companies mainly relying on online business and ecommerce, it may not be necessary to establish a physical presence in China. You may be able to offer international shipping directly and provide payment options without the hassle of extensive tax regulations in China. Selling online through a professional e-commerce partner in China with international capabilities is far easier and much less costly than building a local presence. But in China market you will need to develop your China websites or E-shop in Chinese that accept the local currency. China Online shoppers are more likely to buy when the experience is in their local language and local currency.