For those looking to begin a new business initiative in China, the following actions are intended to aid your market entry plan.Make an Initial Trip: Consider making an initial trip to visit China and get a feel for the business environment.
Having a sense of the similarities and differences in the way business is conducted can help you determine the best way to approach your operations.
After this initial visit, you will have met people in your industry and have a general understanding of how your line of business is conducted. You may also learn potential key players, partners or professional service providers you will need to work with, especially in the initial stages of entry.
Conduct Market Research: Before diving too far into the process of entering China, take some time to conduct initial market research. This research should include verifying the legality of your product or service in the Chinese market, as well as the market demand for it.
It is also important to determine the current demand for the product and to what degree this is being met by the current competition. Understanding the strategy of your competitors will help you focus on pursuing a unique approach to the market.
Decide on a Legal Structure: Have you determined how you will be establish your business in China? Different legal structures come with different start-up procedures, tax policies, and limitations on the types of business transactions that can be performed.
Options include establishing as a Wholly Owned Foreign Enterprise (WOFE), Representative Office, signing a Joint Venture (JV) with a Chinese firm, or engaging a consulting or trading company are all options.
Determine the Regulatory Process: If only one piece of advice can be given about the regulatory procedure in China, it is to begin early. Knowing what certifications you will need to obtain for your products is an important first step in this process.
Once you have identified the regulations which apply to your specific product, begin the regulatory procedures to obtain the time consuming certifications needed; the earlier you begin, the earlier you will be able to profit from your efforts. To accomplish this task, it is a good idea to find a reliable agent to work on your behalf.
Gather Information from the Market: In China, little information regarding potential and upcoming projects is publicized in media outlets or on the internet and it is instead passed between people. Having a local presence and a strong network of contacts in China is essential for gaining access to this kind of information.
Prepare to Invest: As with starting any new business, upfront costs should be expected. To run a successful business in China, recognise that you will need to spend a significant amount of time and money to establish your operations.
However, although the initial investment can be significant, the rapid expansion of the Chinese market means that great rewards are possible for companies that make the necessary financial and time commitment when entering the Chinese market.
Keep in mind, the rewards may take longer to see than you would anticipate, so be prepared for a longer period of work before the harvest.
By Anthony Goh and Sarah Burnham. Mr. Goh is President and Ms. Burnham is Business Development and Communications Associate at US-Pacific Rim International, Inc.(www.us-pacific-rim.net)
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