Looking to Set Up Business in China? Here Are Some of The Challenges You Might Face
When it comes to business, China has always been an enigma in the global sphere. Way back in the 12th and 13th centuries, the Chinese built a huge wall around their borders to shelter themselves from outsiders.
Though they tried to raise walls, the people of China couldn’t escape the menace of colonization. In the years that followed, the country fell prey to Western colonizers, who had emptied the resources of the country and made use of its human capital as well to build their economies.
After the Second World War and during the Cold War era, China adopted socialistic principles in devising their economic policies, wherein they focus on self-sustainability, in which the country makes use of its available resources within its geographical limit to build a reliable economy.
Over the years, China began opening its economical doors to the outside world, where it became an export powerhouse.
Though the ideas of the free market originated in the Western part of the world, the country became a manufacturing hub for all Western countries owing to the highly-skilled workforce and the less human capital invested in developing and manufacturing different consumer goods and products.
China developed its economic status by increasing its exports. Be it any corner of the world, you can spot Chinese goods and products. This shows the power of China in the export market. However, with a lot of other Asian countries coming into the export sphere, the demand for Chinese products is facing stiff competition. The country is now focusing on foreign direct investment and is opening its doors to outsiders to set up businesses after getting a Chinese visa for business.
Though they’ve come about in welcoming the other countries of the world and different entrepreneurs with exciting ideas for setting up businesses in China, the country is filled with a lot of different challenges. Some of the important obstacles you get to face while you plan to do your business in China are listed below.
Access to markets
The markets are very varied and highly distributed in China. There is no centralized system of operation for outsiders, who plan to set up their business there. Also, the buying habits of consumers in China are completely different compared to any other place in the world; this makes it very difficult for an outsider to understand consumer behavior. This particular aspect is very important in understanding and researching the market scenario to diversify the products you build and to reach out to the exact demography. The important point to be noted while planning business in China is that the environment of the market is completely isolated from other markets in the world.
A lot of studies and surveys reveal that even products from the United States of America failed to perform in China. The dumping of goods is not possible in China whereas it’s possible for China to dump its products in every part of the world.
Preference of consumers
The class categorization based on the economical aspect in China is not very varied. One has to agree to the fact that the purchasing power of the consumers has increased significantly. The type of consumers you get to cater to in China is not very varied when compared to other parts of the world. Also, it’s very difficult to understand the preferences of consumers in China because they aren’t ready to expose the data and the mindset of people who live within the borders.
All the media is highly scrutinized and controlled by the Chinese government where every information has to pass through the Chinese authorities before getting displayed on various media outlets. The channel of marketing and advertising is very tough and isn’t easily accessible for an outsider.
High Tarrif Barriers
The products developed in China are of very low prices when compared to the other products. Therefore, consumers are more likely to purchase Chinese goods. Also, you can’t try to compete with the pricing of the products developed in China for non-tariff barriers, and the tariff barriers imposed on the products developed by foreign countries are very high.
There are a lot of other challenges, like obtaining the right set of human resources. The human resource data is available only to certain sectors. It’s very hard to get approvals and licenses as the red tape in China is difficult.
Moreover, it’s not that easy to get all the government documents passed through legal compliance and procedure in China. However, you can use this Chinese document authentication service to help you.
Above everything else, it’s very important to learn and understand the language so that you could reach out to the consumers. Chinese is a language that has to be mastered.
