Tips for Entering the Chinese Business-to-Business (B2B) Market

Tips for Entering the Chinese Business-to-Business (B2B) Market

China is expected to surpass the US as the world’s second largest economy by 2020. By Purchasing Power Parity (PPP), it’s already the biggest. There are plenty of reasons for this success—cheap and skilled labor, unhindered supply of materials, effective use of FTZs by the government and high FDI etc. These factors have also led to a boom in the business-to-business (B2B) industry of the country. Though highly lucrative, the Chinese B2B market is famously complex. Here are some tips for entering the B2B market of China:

Target Market Identification

With a 1.3 billion plus population, the Chinese market is socially and economically complex. There are disparities of economic growth within different states; these states specialize in different kinds of products. B2C activities are concentrated on the coastal line whereas B2B activities are spread across different parts of the country. A new entrant in the B2B market would need to identify their target market accurately to maximize exposure.

Location Selection

The Chinese market is divided in tiers of different cities:

Tier 1 cities—Beijing, Shanghai and Guangzhou—are the most mature consumer markets with others to follow. Different tiers offer different advantages and disadvantages. Tier one, for example, will provide larger market but costs and competition are also likely to be high. A new entrant should weigh all pros and downsides of different tiers and decide accordingly.

Government’s Policies and Regulation

China has faced constant criticism for stringent laws and policies throughout the years. Getting through the red tape can be a daunting task for entrant. It is important to get the services of a registration company that would guide the investor regarding the ins and outs of B2B industry of the country.

HR Issues

The Chinese culture is starkly different from the rest of the world. Other than language, food and religious views etc. the Chinese business etiquette is also quite unique.

Any new entrant in the market would be advised to hire smartly such that the local responsiveness and international expertise are adequately balanced.

Despite all the challenges, Chinese B2B market remains one of the most fruitful B2B destinations. Get started with your registration process with Business China. The company helps foreign investors navigate the tough Chinese markets to set up their business in major cities like Guangzhou, Shanghai, Shenzhen and Foshan, and other large cities in China.

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