Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
Industrial and commercial sales in China are typically driven by the initial price. There is an increasing amount of corporate and government buyers who take the value of quality and the lifecycle cost of products under careful consideration. However, U.S. firms with premium offerings are still faced with pressure to decrease their prices in order to compete with lower-quality local offerings.
Over the past few years, the Chinese consumer market has been the driving force behind the continuous development of China’s economic structure. Chinese consumers are willing and eager to pay higher prices for higher-quality and brand name products. Chinese private consumption is already a contributing factor in boosting China’s economy and should continue to see growth for years to come.
Below is a graph showcasing the increase in Chinese Consumer Expenditure from 2008 to 2019.
China’s advertising market is large and sophisticated, which means that proper marketing and advertising are critical in both the consumer and industrial markets. The concept of guanxi, which refers to having personal trust and a strong relationship in business, continues to be a key factor to successful partnerships.
Below are several ways to build guanxi (keeping in mind this is a long-term, patient approach):
- Have general knowledge of China
- Familiarity with China and its culture will aid in facilitating initial connections and help build strong foundations for business relationships.
Being introduced to a potential Chinese business partner through an intermediary will encourage conducive business discussions because they generally prefer to do business with people they have a personal connection with. In other words, the higher social status your intermediary has, the more chances of success you will have.
A vital part of guanxi is the trust between two parties who conduct business, so constant communication, frequent on-site visits, and transparency all play considerable roles in successful partnerships.
Gifts are well received by Chinese businesspeople and unquestionably reinforce trust and relationships. Gifts that are unique to the U.S. and/or have your company logo are usually the way to go.
With the evolution of technology over the past decade, Chinese businesspeople are now more connected than ever to the global marketplace. Chinese businesspeople have become more sophisticated and have gained significant experience with using modern methods to sell products and services through online platforms.
New technologies, such as distribution route optimization, have helped get products to consumers faster and more efficiently. This has given U.S. companies more flexibility with their business models because of choice between working with business partners that specialize in local/regional coverage or, rather, ones that are capable of covering larger areas due to the technologies that enable them to do so.
While a growing age of the management workforce in first-tier cities speak English, U.S. exporters should understand the limits of English language proficiency in China. Chinese customers generally welcome U.S.-made products, but to ensure success, some key elements must be taken into account.
These key elements include:
- Manufacturer-provided localized customer support
- On-site training
- Local service centers
- Catalogs and manuals translated into Chinese
Logistics in China have become less arduous in recent years with increased transportation options and continued improvement to highway, air, railway, and port infrastructure. According to the China Highway and Road Association, 76.9% of all goods travel by truck. However, this percentage is projected to decrease over time due to the increase in air travel availability.
New aircraft fleets will make the transportation of goods increasingly viable options, particularly higher-value products. Most major international logistics companies are now operating in China, although they face regulatory barriers that limit their ability to provide domestic services.