Good Establishing Business In China Report Example

The Chinese market has become attractive for various reasons. It is the second largest economy in the world and has a high population. Therefore, it presents a large market for both small and large businesses. Therefore, before someone ventures into the Chinese market there is a need to develop an appropriate strategy and market assessment. From the session, I appreciated a proper evaluation of the market. This evaluation is important as foreign markets are in a position to gauge whether one sell their products or services at a discounted rate and still make a decent return on investment. The business should also offer a product that is unique and solve a specific need in the Chinese market. That way, the business can stand out among its competitors. It is also essential to evaluate local competition and the reception of the Chinese market to foreign goods and services. Evaluating operational risks in the Chinese market is also essential before venturing into the market.
The second thing that I learned was how new entrants into the Chinese market can conduct a market analysis and the factors that should be emphasized during the process. The macro environment is used to determine the position of the market by focusing on the political, economic, social and technological factors. Using the Michael Porter’s five-force framework, its best to analyze the market by measuring the intensity of competition coming from other markets, the bargaining power of both the buyers and the sellers as this adds up to return on investment for the products and service offering. Threat of new markets entering the economy and threat of substitute products. Lastly, evaluating a company’s strengths and weaknesses is important as this gauges the survival of a company.
Lastly I learned about the various mode of entry into the Chinese market. The modes of entry are exporting, licensing, joint venture and wholly owned operation. The Chinese market has numerous legal hurdles in setting up a business in China. It is easiest to enter the Chinese market through a joint venture with a local Chinese firm, franchising a local Chinese firm or acquiring a Chinese firm. Business entering the Chinese market should be ready for tough regulatory requirements. This includes the licensing that a market needs to partake in so as to avoid inflicting as well as affecting the Chinese citizens. For instance, the Chinese authorities have put strict measures when it comes to licensing as foreign companies are being subjected to lengthy legal assessments before being given permission to start business.
Making a decision to start business in China is often a difficult one as one is not averse with what to expect and is not guaranteed immediate returns. Despite of all these obstacles, I have learnt that the Chinese market offers great potential for high returns if adequate planning is conducted prior to entry. Adequate planning will ensure that strategies that ensure success are adopted by the firm.