Expanding Your Business To China: What You Need To Know

It’s often said that the best time to start a business is during a downturn, but what about expanding? Read our article for tips before expanding your business to China. 

China has grown to become the most attractive international market for most American and European investors, mainly because the economy offers businesses huge opportunities to expand. The Asian economic powerhouse has a population of almost 1.4 billion people and is the world’s second-largest economy after the USA.

However, as with most emerging economies in the Far East, expanding to China poses its own set of challenges. You need a great product and competitive prices to succeed in China, of course, but there are many other considerations that you have to make in China that you do not give much thought to in the west. Many western multinationals have tried to localize and launch businesses in China but ended up failing because they wanted to operate in China in the same manner they operate in the west.

If you don’t want your business to fail, here are 4 things you need to know when expanding your business to China:

What you need to know?

1. Understand and embrace cultural differences

Work-life separation isn’t a thing in China; people in business interact at a more personal level than in the west. Chinese employees, for example, want to spend quality time with you in order to know you as a person and to tell you what is going on in their private lives. Note that most employees in China are young graduates, especially in logistics and supply chains, so they will also require unique talent management. It is always advisable to work with China PEO when managing young Chinese talents.

Carriers, customers, investors, and vendors also want to have a personal touch with you and your business before they sign up to doing business with you. This cultural difference can be hard to understand, but you must respect it lest you be perceived as overly aggressive and unwelcoming, and that can hurt your business.

2. Never underestimate the power of local networking

Networking helps businesses establish professional relationships with one another and to reach out to more potential customers and clients. Businesses all over the world need networking for both B2C and B2B visibility.

But networking is more than that in China. You will need local networks and backing of locally-recognized companies in order to launch a successful venture in the country. These local companies and business people will help you identify potential competitors, know a few local marketing tricks, and basically help you formulate your business plan.

Of course, these are things you can learn by conducting your independent market study or observing shopping behaviors on online platforms, but then everyone is doing exactly that. You need to network with non-competing brands in order to get a unique perspective of the Chinese market and stand out from the crowd.

3. China is vast, so you need to prepare for “Many Chinas”

A population exceeding 1 billion is too huge to have a homogenous culture. That tells you that when expanding to China, you must avoid targeting the entire country at first.

Shopping trends and consumer preferences change from one province to the other. In that case, it is best to narrow your focus to a specific region or large city. Basically, one province in China is like a whole Western European country.

For a smooth entry, choose a region that is well developed in terms of transport and communication infrastructure. Also note that setup costs- labor, taxes, shipping duties, and employment regulations, among other costs, vary from one region to the other. You need to consult lawyers, consultants, trade groups, and accountants for advice before opening a shop in China.

4. Work with local translators

Everyone in China- from Chinese officers, employees, to customers loves to converse in Mandarin rather than English. Mandarin is the commonest language, but there are many regional dialects and cultural differences in the country. You cannot capture them all unless you work with a local professional translation company. Note that some business requirements, particularly laws and certificates, are subject to local interpretation.

Conclusion

When launching a business in a new country, it is important that you understand local employment, taxation, and other business laws. You will have to do that when expanding your business to China as well. Also, remember to conduct extensive market research before creating your business plan so that you can get the unique perspective of the Chinese market without losing sight of the unique selling point that has brought you success this far.

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