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Economy

Is it too late to enter China market?

By Andrew Moody (China Daily)
Updated: 2010-04-26 09:49
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Is it too late to enter China market?

Crowds of shoppers in Nanjing Street, Shanghai. Many foreign companies now have little choice but to enter China as it emerges as the world's key market in the 21st century. [Provided to China Daily]


BEIJING - Is it too late to enter the China market? Foreign companies have long seen the country with its 1.3 billion people as a potential bonanza. But have those foreign companies who have yet to make their move missed the boat?

Certainly, there are signs the China market is becoming tougher for those companies wanting to enter from outside.

Indigenous Chinese companies, particularly in key sectors such as technology, are increasingly competitive and have a more solidly entrenched position.

China's State-owned enterprises, which have benefited greatly from the country's 4 trillion yuan stimulus package, appear to have an impregnable position as never before.

There is also a sense among some in the foreign business community that regulations and rules are selectively applied to the advantage of Chinese companies.

Could it be that those who came five or even 10 or 20 years ago to China were the lucky ones and in the best position to benefit from any future spoils offered by the market?

Edward Tse, chairman of global management consultants Booz & Co in China, based in Hong Kong, admits there has been a recent nervousness among foreign companies.

"I think there has been a lot of talk in the international businesses community about how businesses feel about China now," he said.

But he added that many foreign companies now have little choice but to enter China since it is emerging as the really key market of the 21st century.

"The great majority of the companies I deal with regard it as the most important market in the world, if not the most important, " he said.

"For most foreign companies, it is not about whether to enter China, but having the right China strategy."

Since the reform and opening up began in 1978, the number of foreign companies in China has grown to around 435,000, according to the State Administration for Industry and Commerce.

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Around 480 of the Fortune 500 leading companies in the world, are now in the country.

When many first entered there was very little in the way of domestic competition.

In 1992, there were just 140,000 private companies in the country compared to around 6.6 million today.

US businessman Tom Melcher is someone who is unafraid of this competition and does not believe it is too late to enter China.

He is chairman of American technology company Zinch's China operations.

The company, which provides an online platform for students applying to colleges or looking for scholarships, launched its operations in China this month.

"Are we too late? Absolutely not. Is China a bad place for foreign companies? Absolutely not. It is much easier than it was five or 10 years ago, " he said.

He said there has been a big improvement in the regulatory environment so foreign companies have a much better understanding as to where they stand.

"The regulatory environment in China is getting much more clear than it was five years ago. Sometimes it is clear in a good way. Sometimes it is clear in a bad way. But what is important is it is clear. That is what business people need," he said.

He says it is also easier for foreign companies to recruit talented people from the local workforce than it was just a few years ago.

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