What makes so many foreign companies attempt to enter China? A 1.3 billion population, a stable economy, and low labour costs are some of the reasons that foreign companies attempt to enter China to develop or expand their company.
However, “Ninety-nine percent of companies who want to access China as a foreign company, shouldn’t,” said Oscar Ramos, Programme Director at the Chinaccelerator in Shanghai which helps to connect startups wanting to access the Chinese Market. The reasons probably are because China has already plenty of local companies that are targeting locals. Furthermore, Chinese are good at imitation. They are always taking care of the new trends internationally. Once the trend is successfully getting attention, they will imitate and localize it to make it sounds like ‘made in China’. Therefore, Mr. Ramos also suggested that foreign companies need to think about what makes them better than any local company if they want to enter China without failure.
Moreover, Google, Facebook and such social media platforms which are commonly used for foreign startups to get new customers and promote their company are banned in China. And around 96% of online traffic in China goes to the Chinese servers according to the report of China Internet Network Information Centre. As a result, China lacks an international promotion method. Even when they can choose, they will still use the local platform because it is normally a country or the public attempt to protect their own products and brands, but it causes difficulty to foreign startups. Foreign companies need to access Chinese social media platforms in order to get in touch with Chinese customers whereas they need to hire Chinese or foreigners who know Chinese to run those platforms. Otherwise, the companies do not have any promotion in China.
A Culture difference would be a huge obstacle when letting foreign companies access China. This is the same situation when Chinese companies attempt to access international markets. Asian and European countries have a completely different lifestyle, habit and requirement. No matter Chinese or foreign companies, both can understand the specific requirement of the locals easily while both cannot understand what foreigners need indeed because of the cultural difference.
Nevertheless, foreign startups still have opportunities to enter China. Several industries such as health care, education, fashion and food may have a chance to enter China as China lacks expertise in those foreign industries, according to Mr. Ramos. Also, the Chinese have more confidence in foreign brands in such areas because many products that are made in China are always reported of unsatisfied quality and have a safety check problem. Hence, foreign brands can mark it as a chance for expansion or development in China.
Hola! My name is Alice. I come from Hong Kong. I now studying degree programme in The Hong Kong Polytechnic University, majoring in English studies. I come to Valencia, Spain for my internship in Bbooster for six weeks. This is my first time to travel Europe and I do not know how to speak Spanish. This internship really trains my independence and problem-solving skill. If you have any questions or anything want to share with me, please do not hesitate and chat with me on Facebook.
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- Alice Chan