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China Market Penetration
AMA together with our partners is in the process of developing opportunities in the following sectors:
• China market penetration solutions
• Telecommunications market
• Finance and Banking market
• Outsourcing (ITO / BPO)
• others
Business Opportunities
The upcoming Beijing 2008 Olympics have created enormous business opportunities for international companies in the near term. Not to be outdone, Shanghai has won the rights to host both the 2007 Special Olympics and has won the 2010 World's Fair as well. Both of these events have received great support by the relevant Chinese government.
China, as the world's fastest growing developing economy and its largest destination of foreign direct investment, presents a major opportunity for trade and investment by International IT, infrastructure, and other business related corporations.
In China, economic activity and investment are primarily driven by government projects. Several government-funded technology infrastructure initiatives currently underway in China represent the largest ever opportunities for overseas firms.
Challenges for Overseas Companies
However, China is a complex and difficult market in which to enter and compete effectively. Many believe that the Chinese market is opaque and difficult to navigate without professional local guidance. Like most countries, local relevance, good information and exceptional relationships are very important in the China market. To date, many overseas companies have wasted time and scarce resources with flawed China strategies. Global companies that want to really understand China and develop profitable business there need expert guidance and professional business development advice.
Frequent challenges that foreign companies face:
- Understanding the Chinese customer or partner
- Procedures of doing business
- Hidden costs of doing business
- Uncertain economic / political environment
- Transparency and accountability
(1) Understanding the Chinese customer or partner The Chinese customer here can mean the consumer or even firms and industries. China has a history that is unique from many other Asian countries in the developing world, in that the country as a whole has not integrated a substantial amount of Western culture into its own throughout its history. It has not been a former colony of any Western power and hence maintains its own very unique identity and culture which is void of any Western influence. The Cultural Revolution (1966-1976) as well as one-child policy, unique to China today, has also played an important role in shaping the society. Hence it is easy to see how this unique history and background creates much diversity between a foreign investor and its Chinese customer or partner. Further, a foreign business’ marketing and business strategy employed successfully elsewhere may not necessarily meet with the same success in China. Please see the summary of our services below on how we can help you better understand the Chinese customer.
(2) Procedures of doing business An important conclusion that we have gleaned from frequent communication with our clients as well as the Fortune Magazine 2005 Foreign Investor Survey, is that foreign companies have come to accept that the Chinese have a different way of doing business. However they do not yet necessarily understand the Chinese custom and methods of conducting business. Hence a frequently cited problem faced by foreign companies is in finding high caliber management who are able to navigate through the complexities of doing business in China. AMA’s business consulting as well as implementation services is able to provide full support to you on this issue. Examples of the issues that some foreign companies face here in China range from which Ministries to contact, what procedures to follow, what agreements are needed and with which counterparties, etc. Also equally important is having the right relationships, which are needed to smooth out bureaucratic and business procedures.
(3) Hidden costs of doing business Frequently, foreign investors underestimate the costs of doing business here in China and end up running hugely over budget. This stems mainly from a few factors related to insufficient knowledge of China’s unique way of doing business:
- Insufficient knowledge about pricing, actual cost of goods and services, as well as the - magnitude and the flexibility of negotiation
- Underestimation of labor, storage and transportation costs
- Insufficient provision of loss stemming from delays or inefficiencies along the chain
- Lack of proper due diligence
- Insufficient knowledge of the procedures of running a business in China
We offer a complete investment risk analysis service, using our expertise in doing business in China to help you better understand the costs and benefits of any investment decision.
(4) Uncertain economic / political environment Economic management and governance are substantial factors in attracting foreign investment. However the business sector and the government do not always have a clear understanding of each other’s methods and objectives. It is important that the business community has confidence in the government’s management of the economy to promote long-term economic growth and stability. It is also equally vital for any foreign venture’s success that it meets with the authority’s full support. However foreign investors have sometimes found the Chinese-style of economic management and policy-making unfamiliar, leading to much more caution when making investment decisions. However, we believe that this unfamiliarity should not play a big part in affecting investment decisions in China and we aim to provide avenues of communication between our client and the relevant authorities to better mitigate this. We organize exclusive events that create opportunities for dialogue between our clients and relevant government agencies to develop a deeper understanding between the two parties. We also aim to provide key state and local government support to our clients’ businesses and elaborate more on this.
(5) Transparency and accountability Local Chinese companies do not always hold similar standards of transparency and accountability as their foreign counterparts. Hence before undertaking a partnership with a local company, proper due diligence is of utmost importance to avoid any future issues arising from a lack of transparency and accountability.
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