China is the second largest economy today - It is set to become the world’s largest economy by 2030 and will shape the financial fate of nations around the world, both because of its size and increased level of integration into the world economy.
China's economy has enjoyed 30 years of explosive growth. Its success is based on a mixed economy that incorporates limited capitalism within a command economy. The Chines government's spending is a significant driver of its stable and healthy development. Growth is making China a world economic leader. It has reported its fastest economic growth in seven years, with its gross domestic product growing by 6.9 percent in 2017. China is almost certain to become more economically important than the U.S. was during the past century.
With a labour market both large in size and high in quality, and a government so committed to international development, doing business in China should be high on your agenda.
While China’s first push was based on the export of highly competitively priced goods, its growth in recent years has turned it into a major importer of western products. Coupled with the size of its population and the rise of the Chinese middle class, this offers you access to one of the world’s most important markets for an immense variety of services and goods.
People in China tend to have a very high work ethic and seek to succeed by developing a wide array of professional skills. As a result, those that decide to do business with China will be dealing with highly committed and competent individuals. This combined with the natural high level of organisation and discipline makes doing business here not only profitable but also highly rewarding.
The ability of enterprises - backed by foreign capital - to sell to a sizeable local market makes China an attractive destination for FDI. As the Chinese economy continues to prosper, evolve and mature, higher-end industries such as healthcare, information technology, engineering, robotics and luxury goods, among others, can gain a bigger footprint in China as its local conditions, resources and other FDI determinants are enhanced.
The more FDI flows into the country, the greater the economic chain reaction, providing a positive effect to sustain such growth. This can be seen by the explosive growth rate of the middle class in China and it is suggested that urban-household income will at least double by 2022.
China’s rapid economic growth and expanding geopolitical influence make it a rising regional and international power in trade. Trade has become an increasingly important part of China’s overall economy, and it has been a significant tool used for economic modernization. It is currently the world’s number one trading nation and manufacturer by output.
As China's economic power starts to expand beyond its national boundaries, trading with China has never been so appealing. The support of the Chinese government is rather extensive, and there are immense support measures in place to facilitate any business that decides to trade with the country.
China’s wealth provides it with considerable influence within the international system of trade. It is better equipped to wield market access and its economic strength attracts other countries to enter mutually beneficial economic agreements with China.
At first glance trading with China might appear difficult due to cultural differences. However, these should not be seen as obstacles as they can often be turned into a competitive advantage. For example, Chinese society is generally considered a very traditional one, where interactions are governed by status, and fostering good relationships with the right people is key to success.
Communication with China can sometimes become an issue. Most representatives for China can speak other languages quite well however, they tend to not offer responses in which they think you may not want to hear. This is what makes it so important to work with trade representatives in order to keep lines of communication open.
It is important to network with business people and government officials with any country you are planning to do business with. Yet, it is crucial, sometimes even critical, for the ultimate success of trading with China. In China, people are focused on building personal contacts and rapport before entering into a partnership or a transaction. This is known as ‘Guanxi’. Guanxi is a Chinese term meaning "networks" or "connections" that open doors for new business and facilitates deals.
Due to the state-controlled economy, it would be highly advantageous for international contacts in China to find, establish, and develop good relationships with government officials.
The key to smart investing is knowing in what direction the economy is going. There has never been a more important time to have China on your watchlist and an experienced partner on the ground to help you uncover the opportunities.
Trade can lead to higher GDP, better and more choices of products and services for consumers, increases in competition in domestic market leads to competitive prices which are good for consumers, competition also leads to better quality in goods and services, and reduces unemployment and poverty. Thus, this leads to growth and maturing of a country’s economy as a whole and also the businesses involved.
If you are considering trading with China, it is extremely important to have a company with a base in China to help you. You need someone who understands the culture and has relationships with Chinese nationals.
Communication with China can be quite difficult if you are new to business here, this makes it important to have someone who can do more than just translating the language. You need a representative to fully understand your pitch so that they can ensure the others in a meeting have understood it properly. They need to understand what your objectives are for each meeting and what your short-term strategy is for this trip and for the China market in general, this way they can help steer the meeting rather than simply translate what each side is saying. They can question to ensure a clear understanding on both sides and they can help drive the meeting in the right direction, especially if the Chinese side has caught the wrong drift and is veering away through misunderstanding.
If you want to find out more information about trading with China and how we can help, please get in touch with our representative for HMC in Shanghai – Claire Tsao on Claire.firstname.lastname@example.org