Despite all the pitfalls and geopolitical issues China remains a $10 trillion economy which grows on average around 7% per year. In a recent article for McKinsey, director Gordon Orr outlines some of the issues and strategies for businesses who are considering operating in this vast market.
It is without doubt an opportunity for businesses of all sizes and whilst some companies have had their fingers burned, not least by corruption which is still prevalent in the system many businesses have done their homework in great detail, sought advice from key professionals who know how to minimize the risks and have progressed to cement key relationships with the supply chain and built a growing customer base.
Doing business in China -establish your positioning
However it is crucial that you are prepared to play by the rules in this economy. Joint-venture partners are necessary in many industries if a business wants to be successful, and as the report states; if regulations state that you have to have a joint venture partner and hold a minority position, that is the way it will stay.
Following government policy is also stated as a key factor in the way you intend to develop your business, aligning your objectives with that of the government in general terms is advised. Orr also points out that it is crucial that you identify the reason you are investing in China, are you investing in China itself or the opportunity it creates for you in other parts of the world.
The protection of IP is another fundamental consideration, consider if you need to introduce your core IP into the market or if you can be successful without divulging key technology. It is probable that the loss of your core IP may not be contained within China and used to erode your core business outside of this market.
Plenty to absorb in this excellent report if you are considering China as an export market.
Read the full report here
It is without doubt an opportunity for businesses of all sizes and whilst some companies have had their fingers burned, not least by corruption which is still prevalent in the system many businesses have done their homework in great detail, sought advice from key professionals who know how to minimize the risks and have progressed to cement key relationships with the supply chain and built a growing customer base.
Doing business in China -establish your positioning
However it is crucial that you are prepared to play by the rules in this economy. Joint-venture partners are necessary in many industries if a business wants to be successful, and as the report states; if regulations state that you have to have a joint venture partner and hold a minority position, that is the way it will stay.
Following government policy is also stated as a key factor in the way you intend to develop your business, aligning your objectives with that of the government in general terms is advised. Orr also points out that it is crucial that you identify the reason you are investing in China, are you investing in China itself or the opportunity it creates for you in other parts of the world.
The protection of IP is another fundamental consideration, consider if you need to introduce your core IP into the market or if you can be successful without divulging key technology. It is probable that the loss of your core IP may not be contained within China and used to erode your core business outside of this market.
Plenty to absorb in this excellent report if you are considering China as an export market.
Read the full report here
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