Strategy is Key to Success in China

China is a famously challenging place to do business, and many companies have failed to take advantage of the opportunities on offer. Jeremy Gordon, Chief Executive of the consulting company China Business Services, argues that while the specific challenges may vary, there are some critical issues that all companies operating in the market should take into account in their strategic planning.

(PRWEB) February 2, 2006 -- In addition to sensitivity on cultural issues, and the need for long-term commitment, several common issues to be considered when planning a strategy for the China market. Jeremy Gordon of China Business Services lists some of the most important ones:

1. Defining Internal & Accessible Markets - China should be thought of as a complex market containing important regional and provincial differences. Talk of one market with 1.3 billion consumers is unrealistic. In practice, the bulk of consumers come from the minority urban population, with an emphasis on the primary cities, and along the east and south coasts. Defining a realistic accessible market is critical to successful business planning.

2. Government Involvement - Central and local governments play a vital role in the management of business as well as the economy. Their impact can be felt through the continuing state control of many large enterprises and business sectors, as well as through regulation. Foreign investors need to manage relationships with government and regulators, and to communicate the economic, technological, and social benefits they bring.

3. Rapid Policy Change - One result of rapid economic development has been the need for an equally rapid growth in the development of policies and regulations affecting business. Managers need to constantly monitor - and seek to lead - policy change, and update business plans accordingly.

4. Lack of Transparency - Reliable, up-to-date information comes at a premium in China. Official statistics are often outdated or subject to later revisions, and gaining access to key information sources can be challenging. The use of multiple public and private sources, in conjunction with primary research, can provide valuable market insights.

5. Intellectual Property & Legal Protection – many companies view intellectual property (IP) and the legal system as a key risk factor when doing business in China. However, China is becoming more and more integrated into global intellectual property protection structures, and the court system is improving. In addition, the China International Economic & Trade Arbitration Commission (CIETAC) is a popular and respected venue for resolving disputes.

6. Intense Competition - China is one of the most competitive, fast-moving business environments in the world. It has attracted the major companies from Japan, the US, Europe and elsewhere, while local players have developed quickly and are very price competitive. Foreign businesses have become aware that their historical competitive advantages at home can be difficult to transplant. They need to update business plans rapidly while building strong relationships with partners, customers, distributors and regulators.

Gordon recommends that companies undertake independent research, and take professional advice, before committing resources to the market. Commenting on risk, he notes that, “unfortunately we are often retained by companies who want us to help fix problems they have already suffered”. He adds that “in many cases a simple consultation would have helped them to avoid the problems in the first place.”

- China Business Services Limited is an independent, research-driven consultancy that uses specialist resources to deliver integrated solutions to companies in China. Jeremy Gordon, the Chief Executive, has advised international companies in China for more than 10 years, and has written and spoken widely on China business issues.

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