Entering China: Expert Advice from 10 Industry Leaders
China’s economy keeps attracting global attention. The fast-growing consumer market, rising middle class, financial reforms, and demand for services lure businesses from all over the world. Some succeed but many fail to enter the Middle Kingdom. I asked 10 industry experts what advice they'd like to give to companies that want to work with China. And here is what they say.
This article I originally prepared for the Ukrainian Association of Sinologist magazine. Below is an English and Chinese copy of the content.
Exchange & Cooperation Department VD
Shanghai Technology Innovation Center (STIC)
China is fast, and the Chinese are very hardworking. If you consider commercial landing in China, bring the technology or product that is unique enough and the team that has enough perseverance.
Funder & CEO
China is the world's second-largest market, but that doesn't mean that doing business in China will be easy. The market is fiercely competitive in almost all industries, however, nothing is impossible. The startup and tech ecosystem in China is very much on its own, therefore be as Chinese as you can, and learn from locals.
Incubation Dept PM
Caohejing Hi-Tech Park Innovation Center
The Chinese market is one of the most dynamic markets in the world, with unlimited opportunities. But opportunities often coexist with challenges, and the complexity of the Chinese market can sometimes exceed your imagination. There is a product/technology that has been successfully verified in the domestic market, and a certain understanding of the Chinese market, coupled with a partner who can integrate local resources, will be a condition to gain a foothold in the Chinese market.
Find a reliable and qualified local partner with matching capabilities to open up the Chinese market. Don't worry too much about intellectual property issues, especially at the early stages of the project. Take action first and follow the market and customers.
Assistant General Manager
Caohejing Innovation Center
Foreign entrepreneurs have created many successful commercial cases in China. There are various factors behind these successes, but one thing in common is that they all have a suitable local partner. China is a relationship-based society. Although the younger generation is more inclined to free-market and modern business rules. However, a suitable local partner can effectively break down cultural barriers, establish a local network, and obtain market resources.
总经理室 | 总经理助理
Managing Director & CEO
Microsoft for Startups
Find a local partner who can help you navigate the complicated business environment, go-to-market, and support your customers. You need an extremely good lawyer to help you to set up the right legal entity (rep office, JV, or WOFE), to advise you on negotiating with your local partners, protecting your IP., etc. Be patient and do plan to stay here for the long term. It takes time to build the relationship, understand the market, even customize the product for the local market. Hire the local trusted employees. It will pay off in the long term. China is a super competitive market, the experiences you learn here will also make you more competitive somewhere else whether it is business model innovation, close to the supply chain, its speed, and scale.
微软加速器 | 北亚地区
The biggest problem for overseas tech startups to develop in China is basically the lack of preliminary preparation. What kind of preparations do these companies need to do?
Market research. Is your company suitable for the Chinese market? Many founders only think that the Chinese market is huge and they think that the project is good and should be directly implemented. Usually, these predictions and expectations are not realistic. The most appropriate preliminary preparation should be to conduct very precise market and industry research. To do it in China today is not as difficult as it was ten years ago. With a lot of data, the biggest challenge is to understand what is useful for the project and what is just noise. The ultimate challenge is understanding this data and how to sort out some meaningful analysis.
Expert visits. Before the epidemic pandemic? most entrepreneurs would pay a visit themselves or use the opportunity of roadshows in China to conduct industry research and visit experts as preparation for landing. Of course, this practice has been put on hold for now, but it is still an indispensable part (of the preparation work). The landing plan must be communicated and consulted with the local experts and industry elites, to get the most accurate understanding of the local market.
The main goal of the above preparation is to confirm whether you and the company have the ability and opportunity to enter China. We always believe that the core goal of a successful project comes from preparation, preparation, and preparation!
Head of China
The Internet companies we invested in, Canva and Applyboard, have achieved good results after entering China. Therefore, I think it is possible for cross-border startups to succeed in China. However, first of all, before entering the Chinese market, you must determine whether your product is what the Chinese market desires and whether you will have a competitive advantage in developing in China. The competition in China is very fierce. For example, companies we invest in overseas want to enter the Chinese market in order to gain more users and higher valuations, but I usually advise them to think carefully. Secondly, if you already have a very clear plan, I think the most important thing for these cross-border startups is the local team. It is unrealistic to rely entirely on external Chinese partners. You must attract a capable and experienced local person to become a part of your team. Of course, if you can find local or cross-border investors to support you, that is also a very good choice.
Pegasus Tech Venture
Do the market research and try to find a trustable local partner in China first before landing your business here.
Pegasus Tech Venture
I think the founders must have an in-depth understanding of China's business culture, establish reliable local partners, and further understand the uniqueness of the Chinese market. The company can not only focus on its own products and solutions, it should have a profound understanding of the needs of Chinese users, which will be the best way to develop the products and solutions.
我想创始人首先必须要深入了解中国的商业文化，并建立可靠的本地合作伙伴。要进一步了解中国市场的独特性， 创业公司不能只关注自己的产品 首先必须要深入了解中国用户的需求 只有深入了解中国的用户，才能尽快开发出最好的产品和方案。
As we see, most of them are saying the same things. China's market is complex, very different, and extremely competitive. To make it right in China:
1. prioritize this market
2. customize and localize products and services specifically for China
3. local partners and the local team is crucial for the company success
It seems there is nothing new. But everyone is emphasizing it again and again. That's how important it is. Yet too often, it's simply overlooked.
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