Why should I expand to China?

With a growing economy, a population of over one billion potential consumers and a growth of a millennial generation with a worldwide view, there has never been a better time to expand your business into China.

 

Over the past thirty years, China has rapidly expanded from a poor and rural country to one of the global leaders in manufacturing who are now seeking to expand into development and technology. With the rapid industrial developments in terms of manufacturing, jobs and a rise in the middle class, commercialism has shot up over the years. With a population of almost 1.4 billion, the potential customer base is unparalleled by any other country.
 
Beyond simply the size of the population, thanks to the rapid speed of development there are many sectors within China that are still finding their identity. While in the West areas such as cosmetics and make-up have a long history and set style, in Chinese culture these trends are continuing to develop. This offers opportunity to companies outside of China as the current internal markets are more limited and consumers are searching for existing, reputable products to experiment with.
 
While the culture of the Chinese markets offer potential to a wide variety of product types, the method of sale in China also makes it relatively simple for businesses to expand across borders. While e-commerce in the West has gained popularity over the years through sites like Amazon and eBay, it is unmatched by what is happening in China. Within a few years it is expected that around half of all sales within China will be made online, with all sorts of goods – even fresh fruit and vegetables – being delivered. The social media itself is tied in with e-commerce, with people using social apps like WeChat to not only talk to friends but to purchase goods. This is an ideal set-up for businesses to streamline into as the need for shops or getting into local retail is no longer necessary to ensure you can get high sales rates. Rather, all you need to do is set-up a digital store on one of the main e-commerce sites to have access to potentially millions of customers.
 
A running theme throughout the advantages of exporting goods to China exists within the growth of the millennial generation. Chinese youth are drastically changing the commercial and retail landscape of the country. Similarly, in the West, what was once people buying what they needed locally has been transformed by millennials openness to internationalism and free trade across borders. Furthermore, while big brands and labels from the West are popular, there is a growing trend for individual identity among youths. People are gradually shifting towards a preference for smaller, boutique brands that separate them from the crowd, giving SME’s a competitive advantage over their typical big brand rivals.
 
Elaborating on the value of a Western brand, these take on a unique quality of their own. Western goods are often seen to be a higher quality than those manufactured within China, partly driven by various health and safety scandals over the years (for instance the Baby Milk Scandal back in 2008). The West typically have much more rigorous health and safety standards and must go through a lot more regulations and testing before being introduced to the market, especially with big brands. While the same might not be the case for smaller, luxury items – the perception of Western quality can be used to a SME’s advantage to achieve a quality appearance. Furthermore, often fake and replica products are produced within China for a quick sale, so if a product is from the West it is guaranteed to be genuine, further promoting this image of quality and safety. By leveraging this elusive quality brand to their advantage and with the right marketing strategy, SME’s have the potential to capture and flourish in a relatively untapped market with their products.
 
While there are barriers which come with exportation (see our post Barriers of Exportation), a potential customer base of 1.4 billion, easy and cheap access to the market through e-commerce, the growth of a ‘pro-free trade and internationalism’ millennial generation and the elusive brand which western products hold make China a fantastic starting point for beginning international expansion of your company.