Foreign Investments Can Cost A Lot
It is important to realize that investing in foreign countries can be an expensive proposition, including doing business in China.
It is not cheap to fund inventories, create distribution networks, (which usually require the hiring of local workers,) and to be in competition for shelf space which comes at a premium due to its limited nature.
In addition, marketing necessitates capital.
Partnering Can Help
Ben Wey suggests one “shortcut,” and that is going partners with a local company. It is a wonderful symbiotic relationship wherein the western company brings technology and its brand to the table, while the local company contributes an existing infrastructure and local network for distribution. In many cases, Ben Wey says, this type of arrangement is the best strategy for entering into the Chinese market.
Worth the Effort
These challenges should not present themselves as obstacles not worth overcoming. Companies today are realizing more and more that they must have a presence in China because they “can’t afford not to” be in China. Even medium and small businesses are coming to this realization with more frequency.
As Wey put it, “Leaders of western businesses think that if they are not in China then they are not in the largest growth market in the world.”
Companies must realize that in order to get a slice of the Chinese business pie they need to be ready to invest lots of time as well as capital, and at times partner with a Chinese company. Wey explained that western companies must set aside the short-term, quarter-by-quarter mentality which is common in the west, and commit to the long term reality of investing in China.
It is helpful to examine the western companies that entered the Chinese marketplace years ago and were able to accomplish their long-term strategic plans. In many cases these firms have been rewarded with a nice piece of China’s exploding consumer market. The future will show that the importance and size of this market will only continue to grow.
