Primary Challenges of Doing Business in China
Starting your business in China has become very easy as compared to decades ago. China has seen remarkable economic growth since its economic reforms in 1978, three decades ago. It is expected that China will soon become the largest economy in the world. The new reforms made by the Chinese government have open new opportunities in the field of industrial innovation and business growth, but still doing business in China is not a piece of cake.
Let’s have a look at the primary challenges of doing business in China.
Cultural Nuances
China is emerging as a market leader in the global business world. Its people are known for their hard work and habit of self-reliance. China portrays its political, traditional, and business values very uniquely. If you are unable to understand the cultural nuances before starting the business in China then, it will lead to miscommunication and the miscommunication is the biggest challenge that foreign investors and companies face in China. No doubt, the number of Chinese people who understand and speak the English language is increasing, but it is very difficult to find such people that understand the nuances of the culture and language of both native and target language and understand the meaning of business negotiations. Miscommunication may result in breaking your business deal. The solution to this challenge is to hire a professional translation partner that can provide you with impeccable translation services so you understand the Chinese and Western cultural differences well and devise your business strategy accordingly.
Challenges regarding Rules and Regulations
To get legal permission to start a business requires very lengthy administrative procedures. It is a big challenge in China. Lots of businesses need to acquire the standard business license that contains the scope of business and it is issued by municipal administrations of Industry and Commerce and other legal authorities. For instance, if you want to start a health firm in China, you need to obtain a business license from the municipal administrations of Industry and Commerce. Besides, you also have to get a permit from the Food and Drug Administration. Although the Chinese government is making many efforts to make China a user-friendly environment for investors and businessmen, the traditional bureaucracy and red tape are the main problems for the businessman to execute their business plans in China. In addition to this, vivid rules and regulations with no understanding and no transparency create a challenge for foreign investors and businessmen to compete. Many global marketers also face the problem of easy market access because of stringent quality checks on imported goods.
Challenges Regarding Logistics
Although the government has improved the logistics environment in China, still the cost of shipping is expensive. The logistics of China is considered very uneven, and it affects the handling of the product in and product out. During a certain period during the day, the entrance of large trucks is prohibited so product shipments are transferred to small vehicles so that they can reach the consumer markets on time. Logistics hamper the supply chain. Furthermore, warehouses, shipping yards, cargo hubs, and distribution centers are not automated, which creates a problem for the foreign businessman to deliver their products well on time in the mass market. Logistics and supply chain hampers product access to potential customers, and they are the biggest challenge.
Intellectual Property
China is known for providing cheap and counterfeit products across the globe. 80 percent of the cheap and counterfeit products in the world come from China. The foreign investors face a great challenge of enforcing intellectual rights in China because of local judicial protectionism and biases towards foreign investors and businessmen. China has tried very hard to implement laws and regulations regarding IPR, but weak governance has mitigated the IRR system in China.
Sales and Distribution Challenge
Your business can only be successful if you can provide products to customers on time. This can only happen if you know the right distribution channels and how to manage them. There is a fight between western brands and Chinese distributors. Many global brands have been abused by their distributors. Chinese brands have a history of providing fake and copied products, so other western brands are more profitable with better margins. This needs to be discussed with Chinese distributors due to linguistic and cultural barriers. So foreign investors or businessmen should hire a reliable translation partner who can help them understand the laws and regulations regarding distribution and sales. Local partners will help you in this regard. Chinese and global brands are required to develop a strong relationship with distributors.
Increase Competition in Chinese Market
The market in China is very competitive. The competition is not only among foreign brands but also with national champions who want to compete with global brands. Furthermore, the Chinese government wants to invest in economic activities because of the US-China Trade war. Many global companies come to China and many local companies take advantage of high purchasing power. This makes the competition fiercer and makes it very hard for the foreign businessman to retain its customers.
Wrapping Up
Do you want to start your business in China? To make your business journey easy and successful, you need to know the basic challenges of doing business in China. For that, you need to understand the Chinese culture and language. Worry not, Chinese Translation Services is here for you. We provide you with impeccable Localization Services in fast turnaround time and economical rates. Contact us for more details.
