With more than 1.300 million inhabitants and an average growth that exceeds 8% annually, the Chinese market offers a wide range of possibilities to Spanish SMEs. Now, before embarking on a business venture for the Asian colossus it is necessary to take into account some of its particularities if you want to achieve success.
The Chinese market is not without dangers. It is very difficult to penetrate it, due to the multiple barriers. iusTime, a group of professional consulting firms, offers ten useful tips to embark on the Chinese adventure, taking advantage of its multiple experience as a specialized consultancy.
1. China is not a single market
The Chinese population is divided into 30 provinces, with huge differences in income and consumption habits. Therefore, it requires that appropriate market studies be conducted for each of these areas. You have to analyze the demographics of each region before launching new products in the Asian giant.
2. Search the middle / high range
China manufactures for all the world, all kinds of products. Competing with local manufacturers is business suicide. Foreign products must always be positioned in the high ranges, associated with high quality, to attract the attention of a different public seeking exclusivity in a foreign brand.
3. Protect intellectual property
It is not the first time that a company comes to China to export its products and discovers that it is infringing a brand there, that perhaps in the rest of the world it is theirs. In the Asian giant, whoever registers first is protected. It is a basic point.
4. Adaptation to the local culture
The Chinese have their tastes and predilections. We must take into account the needs of the final consumer, their culture, their values, etc. It is the only way to do business successfully in that region. Understanding the differences between your culture and the Western culture avoids many mistakes.
5. Trusted local partner
The best way to enter the Chinese market is by partnering with local companies that can introduce you to the country. The success of internationalization will depend to a great extent on the reliability of this partner.
6. Web adapted to the Chinese market and its search engine Baidu
The Chinese are big Internet consumers: there are more users than inhabitants in the US, 718 million. There are many possible buyers. But to access them it is necessary to dominate your main search engine, Baidu, and local social networks.
7. Taboo products
There are several Spanish products that are in great demand in the Chinese market: construction material, textiles or food (especially olive oil and ham). But you have to be careful with other products, such as sausages, which are directly vetoed by Beijing. In addition, there are other strategic sectors, such as financial services, energy, chemistry or steel, which are heavily regulated. The EU draws up a list of all the marketable products in this country, analyzes the sectors with tax incentives and the most appropriate areas in each case.
8. Payments and financing
The best advice is to make the payments always with a bank guarantee, looking for the best financing after having analyzed the different variables, such as country risk, costs, own experience and that of other companies in the sector.
9. Labor costs
Competition for certain local profiles, such as engineers, salespeople and marketing managers with English skills and international experience, has boosted salaries in China and the level of professional rotation. In order to retain talent it is necessary to involve the personnel in the company, in the management, and above all to pay them well. Unskilled workers charge 80% less than in Europe, and average charges between 25 and 30% less.
The way of negotiating between China and Spain has nothing to do with it. Before closing an agreement, it is normal to wait up to three or four months, during which time the foreign entrepreneur must gain the trust of the local partner.