China boasts one of the largest unified economies, has an influx of business, a built-in base of a billion possible consumers and a ready infrastructure for foreign investors. With so many metrics pointing to China as the ideal market, you might be tempted to expand your business there, too.
However, new businesses quickly learn about some of the complexities involved in a Chinese launch, such as dealing with bureaucracies, language barriers, aggressive local competition and a difficult business environment. These factors have caused many successful foreign businesses to fail spectacularly in China.
Horizons assists foreign businesses with successful establishing or expanding their business to the Chinese market. Our experts are familiar with the local markets and the legal requirements that businesses in China must adhere to. Here are 7 of the most important things to consider before you launch your business in China.
Read: Top Small Business and Investment Opportunities in China and Top 10 Rules to Launching a Succesful Business In China
Hire in China in 12 hours with Horizons EOR services.
#1 Localization of a Product
Foreign businesses cannot make the mistake of assuming that because they have experienced success in other countries that the same approach will automatically work in China. Creating a local version of a product often involves many distinct steps, such as translating the language on the product’s labeling and considering the various markets within China.
It is important to start closer to a beginner mindset when emerging into the Chinese market and not make assumptions about previous use by consumers in other regions.
You may have to consider how the local Chinese market may respond to your product or service and what objections they might have to it. Additionally, you may need to consider the different geographic regions in China and whether there are certain areas that will be more responsive to your product or service than others.
You may also need to consider if the timing of your entry into the Chinese market is optimal. You might be too early or too late into the market. Consider using effective market research offered by Horizons to test your product early and affordably.
You must learn about problems consumers in China are having and develop solutions to address them. Creating customized protypes will show that you value the experience of the Chinese user. Talking to potential customers and learning from their experience can give you great insight into the market.
#2 Marketing Strategy for China
Once you have conducted some market research and determined that your product might fit the local market, you should then begin adapting your market strategy to the Chinese. You will need to consider the significant cultural differences in China in comparison to the other cultures where you have previously launched your business. Avoid having a minimal return on investment by not staying loyal to a proven marketing strategy that worked in the west.
You will need to adapt your social media strategy to local channels and make key changes in your marketing plan so that you bring in the Chinese market and do not alienate potential customers. For example, since Facebook doesn’t work in China, you may need to spend more time on WeChat, a social media platform and corporate marketing base.
Companies may garner more success when they publish product catalogues, share interesting content and promote events on this platform. Having a strong social presence and being actively engaged is expected in the Chinese market.
You may need to learn about how to use the Weibo wholesale platform to connect with local customers. Another effective strategy is to observe your competitors’ marketing strategies and see how they are successful. You can also test different marketing strategies by focusing on certain channels and then measure their return.
It is also important to market your product in a way that demonstrates cultural awareness. Collectivism is usually more important in China and eastern cultures than individualism. Some activities may be more socially inherent to these consumers, such as shopping online.
Your marketing strategy should be adapted to resonate with the local market in China. We can provide strategic consulting that is based on our intimate knowledge of the Chinese market and culture to help you better match your product or service to your eastern companies.
#3 Technical Issues
Western cultures that are accustomed to Googling everything and having easy access to information may be surprised to know that China’s Great Firewall actively blocks a number of important websites. This site provides a list of blocked websites in China, including the following:
- Google Drive
- New York Times
- Google Wallet
- Google Chrome
- Microsoft OneDrive
- Google Translate
Therefore, if you come to China and plan on doing work here, you should be prepared to use different programs and not to have access to some of the tools you might take for granted.
Additionally, you may experience problems when attempting to use APIs, SDKs or other plug-in services from abroad. Push messaging services, map services and other standard tools might also create problems.
It is not uncommon in China for businesses who have went through the process of hosting their site on a whitelisted IP to experience unexpected slow down, finding their site is inaccessible or their system becoming unreliable. Additionally, it may be difficult to obtain the type of license you need.
Foreign businesses can avoid some of these problems by hosting their server in China and building global and local solutions into their technological infrastructure.
#4 Local Platforms
Many businesses have apps or platforms that they are used to using to sell their product or service. However, operating in China may require you to adapt to local platforms instead, even if you are not familiar with them. You will want to connect with customers on their level and on the platforms that they are used to using.
For this reason, online sellers might want to sell off popular channels like Taobao, TMall or Alibaba stores. These are the channels that locals are most familiar with, so it will be much easier and cheaper to try to appeal to them on these channels rather than luring them to your individual website.
Similarly, businesses that use mobile apps may need to create a WeChat application to reach their customer base and use this as their primary way to engage with potential customers. Many international mobile applications are not widely used by the Chinese market and many of these are quickly abandoned.
Chinese customers often prefer using WeChat for many of their service purchases and using payment solutions through this platform.
#5 Local Partners
Many foreign businesses decide to work with a local partner to have better access to local networks and connections, as well as a better understanding of the language and culture. They may create full joint ventures with these domestic companies. This arrangement can help you have more success and have a trusted partner who can assist you with the common challenges associated with launching a business in this massive market. It could also allow you to have access to more equitable options.
Working with a local partner can also help you use an ICP license, which is very restricted. This allows you greater access where you need it most.
#6 Local Employees
Not all business entities in China are allowed to hire local employees. Working with a local partner can give you access to hiring from the local talent pool.
However, if you do not want to have a formal arrangement with a domestic corporation in China, another option is to use the PEO services of a recognized employer-of-record like Horizons.
We have access to the greatest talent throughout the world and can help you find the perfect members to add to your team, including operational employees, management and others. We can also help you navigate the immigration system and assist with visa processing so that you can complete this process seamlessly.
Once your employees are in place, we serve as the employer-of-record and are responsible for all compliance measures and reporting to local and national government.
#7 Business Cycles
It is also important to learn how to measure the success of your business in shorter cycles.
China is a vast country that prides itself on its ability to quickly innovate and be successful. Therefore, many businesses must enter the market at lightning speed. It is also important to gain the first-to-market advantage since knockoffs are quite common and competition will quickly emerge.
These factors will require you to continuously evaluate your product or service to determine if it is still a good fit for the market. If it is not, you will need to be able to quickly pivot and make necessary changes to remain relevant.
Horizons can assist you with every aspect of launching your business in China, from conducting market research, providing strategic consulting, helping with business formation, visa assistance, legal assistance and handling all HR and payroll responsibilities.
Contact us today to find out more about how we can be your strategic partner in your expansion.