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SHANGHAI - GATEWAY TO BUSINESS IN CHINA
Written by: Chris WingoArticle Overview: With the sixth largest economy in the world, continued annual growth of nearly 10% and a 1.3 billion people strong population, Big Dragon China has developed a reputation as the “great new market”. A majority of multi-nationals are already in China while small to mid-size firms around the globe are rallying to get on board. Succeeding in China, however, is not without challenge and many companies fail. To be successful, a company must act intelligently. Intelligence means seeking expert advice, ensuring the opportunity is real and entering China through a developed regional market or “gateway” if you will. For most products and services, our gateway of choice is Shanghai.
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Free Download - Insights from a another sales effort in China By Chris Wingo |
SHANGHAI - GATEWAY TO BUSINESS IN CHINA
The Shanghai Advantage
- One of most transparent business environments in China and favorable business policies
- Developed infrastructure including highways, subways, rail, waterways, two international airports, seaports and communications systems
- Presence and influence of many multinational companies and executives
- Availability of educated workforce
- Large bases for manufacturing, financial and service sectors
- Residents with progressive more internationalized mentalities
- Ready-made market with China’s highest per capita disposable incomes
- GDP of Shanghai plus that of contiguous provinces equals 25% of China total
Shanghai Opportunities
On the opportunity side, greater
Shanghai offers a sizable market in and of itself. Shanghai area people are more affluent, educated and forward
thinking than many people in other parts of China. Trends are set in Shanghai that the rest of China follows. Even the central government uses
Shanghai as an incubator of sorts to test reforms and other policies. If there is to be an opportunity in
China, there’s a good chance it will manifest itself in Shanghai first.
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Table
II: Shanghai and China
Comparative Data (’03-’04 est.)
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Measure
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Shanghai
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China
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Population
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17 million (< 2% China total)
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1.3 billion
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Overall
GDP
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$73 billion (> 5% China total)
$375 billion for Shanghai region(25% China total) |
$1.5 trillion in 2004; 6th largest in
world, 4.5% of global GDP
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GDP
Growth
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11%+
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8.5%+
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Income
per Capita
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Roughly twice national average
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Roughly ½ Shanghai average
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Foreign Direct
Investment
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$6 billion (2003)
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$58 billion
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Trade with US
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$19 billion
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$172 billion
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Imports from US
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$7 billion (18% China total)
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$40 billion
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As China continues to
modernize, the demand for a variety of products and services is growing. This is especially true in Shanghai
where the expectations of an expanding middleclass are becoming increasingly
high. Opportunities for everything
from capital equipment to up-scale consumer products and specialized services
abound. Per the US Commercial Service,
commercial sectors to watch include “telecommunications services,
transportation infrastructure (ports, metro, light rail and highways),
distribution services, environmental technologies, construction materials,
architectural and engineering services, industrial equipment, machine tools and
manufacturing process controls”. On
the consumer side, consider:
- Shanghai has more than 30 Starbucks as well countless KFC’s and Pizza Huts that are consistently busy. Shanghai people are quick to try new concepts, especially ones that are food related.
- As Shanghai’s middleclass grows, so does its demand for services related to convenience, health, financial and insurance. WTO obligations especially support positive trends in the service sector.
- People in Shanghai are discriminating buyers that prefer famous brand products (e.g. watches, cell phones, cosmetics) and services (e.g. MBA programs, language training, life insurance). Such products and services tend to do well even with higher pricing.
Other Considerations
Choosing to enter China through a more developed
market such as Shanghai generally increases the likelihood of a successful
venture. However, even markets
like Shanghai offer no guarantees of success. In addition to geographic selection, it’s critical to employ
sound business practices as you move into this new arena. A couple of many other important
considerations follow.
Ensure Your Opportunity is Real: Don’t
make assumptions for China based on your western business experience. Instead, carefully
assess how your offering fits in the China
market. To be successful in China,
you need to ensure the following are true.
- Your product or service really is something Chinese buyers need or want and are willing to pay for
- No closely comparable low-priced Chinese alternative exists or can be created on short order that will become the preference of local buyers
- Given projected pricing and costs (account for contingencies) your business can be profitable within a reasonable period of time
Seek Expert Advice: Going-it-alone in China is generally cost-ineffective and failure prone. Seek the assistance of experts that know China and have experience at doing what you are trying to do. Experts come in many forms including consultants, attorneys, the US Commercial Service, Chambers of Commerce, businesspeople, etc. Be sure that whoever you choose to work with is qualified to advise you. There are too many “China experts” who interestingly enough have never been to China.
Conclusion
China’s continued economic growth, increasingly favorable business climate and massive population are making her an attractive option for companies seeking to expand their business. China offers tremendous opportunities but must be pursued correctly or else significant time and money will be lost. Entering China with Shanghai as your gateway combined with adherence to sound business practices is a good way to ensure successful participation in this “great new market”.
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Article Tags: biz in china, business in shanghai, china, chinese, doing business in, economy, enter china, gateway, shanghai, statistics
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About the Author: Chris Wingo RSS for Chris's articles - Visit Chris's website  I established my company China Sage Consultants in 2003 intent on helping US companies become more effective at selling in China since sustainable sales are after all the lifeblood of an organization. From 2003 until now, my team and I have been through the ringer on behalf of our clients. We can confidently say "we know sales and business in China". So when your company is ready to start selling in China, we suggest you talk with the other sales consultancies first, then us. We are confident you will see how our experience can make the difference you will need to succeed in China.
Visit www.ChinaSalesInc.com for more information. See my China Street Dog Blog for his latest thoughts on selling and business in China as well as other current insights.
As for me personally, I started my career as an aerospace engineer with Ford Aerospace back in 1985. From there with MBA in hand, I ventured into technical sales with W. L. Gore & Associates before landing in China in early 1997 to manage Gore's Asia-Pacific business. In 2003, I setup and now run China Sage Consultants and our China Sales Incubator program. Visit my Linked-In profile for the full story.
Click here to visit Chris's website   Ten Tips for Selling B2B in China Insights from a another sales effort in China Facing the Facts about Face in China Tied Up and Gagged by Chinas New Labor Law Is it Time for You to Start Selling in China |
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Looking for partners for a potential online shopping busines
- Hello Everyone,
Our company is called Legou (CHINA) Int'l Ltd, which is located in City of Beijing, China. we have been done international business between Europe, USA and China for a very long time.
By reviewing market recently, we found out a potential business opportunity for drop shipping. Shopping online is become more and more popular, especially among young people, many of them wondering where to buy good quality commodity in amazing cheap prices. Maybe eBay, Amazon or somewhere else, now we have a perfect solution, we help customers to buy from the largest Chinese like eBay online action websit: Taobao Com, over 8 million of items selling there, buyers can find many factory sellers and retailers directly. We just act as an agent to purchase items.
Taobao Com is in Chinese, sledom sellers can speak English and famliar with international payment and shipping, through us we take responsible for quality inspection, packing when orders arrived our office as well as final delivery to your customers around the world.
Thus, we need to move as soon as possible in order to earn as much as we can, so we would like to find some business thoughout Europe, USA, Australia, Japan and Korea........, or if anyone want to work as a agent for this particular business opportunity or for more detailed information about how it working, please do not hesitate to contact me or VISIT taobaodeals com.
We will work on profit sharing basis and no investment from your side is required.
I am looking forward to hear from you soon
Yours sincerely
Re: SEEKING PRIVATE OR ANGEL INVESTOR
- Definitely have a thorough and accurate business plan. In the US, you can get help at SCORE - their website is full of great information and you can check for local chapters.
If you would like a book that has all kinds of great information about financing options - this one is very good ---
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Re: I want to make money online
- First, I'd say definitely online. Your $3,000 will go a lot further online than offline.
Second, I'd read Kevin's list and the linked article and make a BUSINESS decision what you want to do, what you can offer and who you can sell it to. Do some serious keyword search and find a hungry niche, and this is your start (free).
Second step (free): Sign up for clickbank, paydotcom or some other affiliate exchange and find suitable products to promote.
Third step (free): Get a free site somewhere, but make sure it's on something that looks like its own domain - yourname.wordpress.com or yourname.blogspot.com or some such. Write some nice things that promote your affiliate products and put your affiliate links on the page.
Fourth step (free): Go on article directories like evancarmiahcel.com (if appropriate) or ezinearticles.com and write stuff that is interesting for your niche, using your niche keywords. Put a link to your new site in the resource box/bio.
Keep doing this until you make money. My kids (18 and 12 at the time) sold stuff on clickbank. Anyone can do this.
Good luck!
Are you Self Employed or a Business Woman?
- Us women are especially vulnerable to thinking we can do EVERYTHING ourselves! I'm not immune to this way of thinking either. (It seems to go with the territory of having XX chromosomes and growing up in our North American culture.)
Anyhow, this kind of thinking can actually trip us women up when it comes to business.
I've heard it said that a true business is something you create that can eventually run by itself. A business is meant to give us freedom and not tie us down.
A business works FOR YOU. If you are the one working FOR YOUR BUSINESS, then I invite you to open up to the possibility of using your entrepreneur skills to recreate a business that works for you.
When I was first challenged on this concept, it was a huge AHA moment. I am grateful because I realized I was still a little stuck on working harder instead of working smarter. I've opened up to a whole new world of possibility and now I'm thinking MUCH BIGGER than before. I expect my income will be much bigger as well.
In all honesty, I've realized that my coaching business has been a glorified job. I will still do coaching because I love to do it, but now I am in the process of developing multiple streams of income that use my time more efficiently and products that sell even while I'm on holidays.
I'm also developing a retail store which will eventually mostly run itself. Then I will move on to my next project. It's liberating to be on the path of creating businesses that work FOR me. This is how I can run multiple companies without wearing out! In fact, I plan on having MORE time for me.
So, what are you doing? Are you self employed or running a business?
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