Now China is no longer simply a cheap location to manufacture goods; it’s one of the largest, fastest growing markets in the world and also an increasingly important strategic location for companies worldwide.
Recent years, Xi Jin ping, the Chairman of the People’s Republic of China, has visited many countries and signed influential cooperative projects with those countries. Therefore, China’s economic status in the world is more important. It’s becoming imperative for foreign companies to win a place in China market in order to stay competitive in global markets. Moreover, China is also a strategic location to target the rest of Asia-Pacific.
The following reasons will tell you why NOW is the great time to start business in China:
1. Exciting Market
China has roughly 1.4 billion people, with 56 percent living in cities, which are poised for considerable growth. New research shows that the country’s urban population will reach 926 million by 2025, and top 1 billion by 2030. There will be an enormous opportunity for global companies to support this trend with products and services. Moreover, Chinese economy grows rapidly. It is no secret that 2015 GDP growth in China increased by 6.9 percent. China has had the fastest growing major economy in the world for the past 30 years, with an average annual GDP growth rate above 10 percent and per capita income growth at an average annual rate of more than 8 percent. China now ranks as the second largest economy in the world behind the United States. This potential and profitable market represents great opportunities to achieve a successful business.
2. Supportive Policies
China has been gradually opening up its import tariff and its importation policies for commodities in recent years. A number of pilot policies have received remarkable results, bringing unprecedented opportunities to the retail and consumer industry. The government reduces import tariffs on popular consumer goods and increase imports of such goods in order to boost domestic consumption. Foreign businesses should follow closely on policy development in China and take advantage of opportunities to expand your business in China.
The Chairman of China has conducted a strong diplomacy strategy, which is to inform the world that china is open now more than ever to the international community and is more welcoming to foreign businesses. Internal processes are continually implemented to improve the economy in the country. These factors lead to high expectations for its economy in the coming years.
3. Rising Middle Class
China is entering a new era. Domestic consumption rises along with the growth of China’s middle class. China’s rising middle class is forecast to approach about 600 million by 2020 which is twice the size of the current U.S. population. Currently, Chinese consumers spend about $1,400 – $1,600 a year; ambitious projections place future spending at three to five times that amount by 2025. Consumption growth will be driven by the dramatic rise of middle-class households and affluent households. More of today’s low-income households will enter the lower rungs of the middle class over the next five years, these segments will still account for roughly half of urban households. The emerging-middle class and middle class will remain the biggest consumers in many categories. For foreign companies, the potential gains from this are huge.
4. Hunger for Foreign Brands
Chinese prefer foreign products in terms of two reasons. First is quality. Countless product scandals in China mean Chinese consumers question the credibility of many products and look for reputable brands for safety and quality. Due to an increase in purchasing power and quality-awareness, foreign brands are more popular than domestic brands. Foreign brands are often associated with higher quality. As a result, advanced foreign technologies and products of high quality are gaining popularity.
The other reason is that owning Western goods is a matter of prestige. The Chinese consumers today are looking for brands capable of performing not only utilities functions but also symbolic functions. Chinese consumers who purchase Western products are viewed as elegant and refined. Buying foreign products is a way of confirming their professional success and ability to live a high level lifestyle.
5. Future Potential
During the past decade, there has been a marked rise in the living standards of the Chinese people. China’s increasing economic strength and living standards have created a market with huge purchasing potential. As a result of higher incomes, dramatic changes in the Chinese lifestyle are occurring. Chinese consumers have begun to look for products with higher quality and security, thus generate a growing need for imported goods which exactly fit the needs of Chinese consumers. The rapid and continuing increase in imports shows clearly that China is potentially a huge market with many business opportunities for foreign exporters.
6. Improving Law
Immense strides have been made towards the improvement of the judicial system and ensure the safety of foreign investments. The efficiency of justice systems, indeed, is crucial to ensure the proper functioning of markets, not least through effective enforcement of contractual obligations and rights in a number of fields, like property (including intellectual one), insolvency cases, and labor law. The Chairman has created several campaigns to fight against corruption since being elected to office. Conducting business in China has become safer and easier for international companies compared to the previous decade. Predictable, timely and enforceable justice decisions contribute to trust and stability, and thereby to a business environment conducive to entrepreneurial activity and investment.
Related reading: 9 Keys to Successfully Sell Your Product to China