Preparing For China

Starting to do business in China is likely to be more costly and time consuming than in other markets.

Challenges arise because of China's size, its 'gold rush' style growth and the fact China has a very different business culture and environment from what we are used to in New Zealand and in other export markets.

New Zealand and China are also markedly different in size,culture, politics, geography, history and economic structure.

These issues can present challenges for companies looking to sell or invest in China which can only be overcome by thorough research, spending a lot of time in-market and following a focused business plan.

Much of the information available on China may appear contradictory. You need to see for yourself which advice is right for you.

From a distance China appears huge. The reality is that it is several large regional markets and many more numerous niche and micro-niche markets which helps to make China more accessible to New Zealand businesses.

Differences between the size and focus of the two economies, rather than being an obstacle to doing business in China, often present opportunities for New Zealand businesses.

The Chinese dairy market is typical of the mix of the opportunities and challenges facing New Zealand businesses. Chinese consumption of dairy products is just one fifth of the international average, but is predicted to move more into line with the norm as incomes rise. It is estimated that if each Chinese person drinks half a kilogram of milk a day, the country's dairy consumption would equal more than a third of the world's total dairy production.

There's a twofold challenge for New Zealand companies wanting to take advantage of this opportunity. Firstly every other major dairy producer in the world is similarly focused and secondly the domestic Chinese dairy industry itself is growing rapidly.

You should also not underestimate the size and quality of your competition in China. The government's pro-growth policies have produced a host of businesses pursuing each and every opportunity.

Other challenges include the uneven application of regulations, local protectionism, indirect subsidies to local industry such as low interest bank loans, intellectual property violations and the need to build up closer relationships with business partners than would be usual in New Zealand.

While there are unique difficulties in doing business in China, they are not as great as they sometimes seem from a distance. Companies already in China see problems as fewer in number and of lesser importance than those looking at China from back in New Zealand.

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