Instead of focusing on the mirage of a market
that is theoretically 4X the size of the domestic US market, companies should consider 11 reasons why China is a disastrous market for an export program launch.
It’s like 5 or 7 or 10 different countries
– you need to plan to manage a very complex market effort which will entail enormous sales channel and localization challenges. And you will face frequent conflicts. The alternative is to select a major metro, ivory-coast-telemarketing-database say Shanghai, but in that case your focused on a 20 million person market.
Relationship building will consume your resources – plan on three to five years of frequent travel and extensive investment to grab your first order.
IP jeopardy – no news flash for sure, but you’ll find yourself competing against counterfeits long before you have your first sale.
Corruption – although the Chinese government appears to be making genuine efforts to tame the rampant corruption, it is nevertheless a business reality which many SMBs find hard to overcome.
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Demographics – the market is aging.
Actual market size – estimates and projections vary, but the population which is actually in a position to consume your products is probably in the range of 300M and may grow to 500-700M. So realistically the market is roughly equal to the US and may grow to 1.5X.
Trade barriers and regulations – currency controls, local ownership, preference for domestic brands, etc. are examples of challenges you will face
Their growth depends on ours – One of the reasons to grow global sales is to diversify against downturns in the domestic market.
Although there is a certain interconnectedness among all markets,
growth in China is particularly susceptible to fluctuations in their export sales. Guess where most of those exports go….you know. The point is that if Chinese growth automatically slows in parallel with American growth, are you gaining diversification, or amplification of pain?
Culture – this is always a factor in global sales growth. But realistically some cultures, particularly business, are closer to ours. China represents a big leap – and simply overcoming that will consume resources to reach an equilibrium from which you can then BEGIN to develop relationships and perhaps business.
The numbers – the growth is slowing.
Will it continue on a shallower trajectory? Probably. Are there some perspicacious and mainstream folks who foresee a dramatic reversal? Absolutely.
Political risk – why do you suppose major retailers have established targets for reduced dependence on Chinese manufacturing? And how do periodic nuclear capability “reminders” from high level Chinese military officials strike you?