The document discusses doing business in China. It provides statistics on China's large population and growing economy. China has over 1.3 billion customers, making it very attractive for global companies. However, selling in China also faces challenges like lack of intellectual property protection, bureaucratic systems, and fierce local competition. Foreign companies must understand Chinese culture and avoid losing face to be successful in China. Developing strong guanxi networks can help companies make connections and gain referrals.

2. Introduction
Chinese consumers
Embracing new economic ideas and
habits, and devouring goods that have
long been unavailables, unaffordable or
forbidden.
However:
It’s a part of a consumer culture and an
economic system that remain quite
different from those of developed
countries

3. Introduction (cont.)
1,3 Billion customers: It’s a number that has
captured the attention of every company in the
world that wants to do business in China
• Multinational companies are more getting
excited from the opportunities offered by the
world’s largest consumer market
• Largest recipient of foreign
direct investment.

4. The Economy
GDP per capita $8,394
Agriculture 41%
Industry 46%
Services 43%
China in Figures Unemployed 4%
Land Area 9, 640 m m2 Main Exports:
Population: 1,346m Office equipment/ Clothing
Life expectancy: Telecoms equipment/ Electrical
machinery
Men 72 yrs / Women 76 yrs
Main Imports:
Adult literacy: 94% Electrical machinery
Average annual income Petroleum products
per household $10,220 Professional & instruments
Metal ores & scrap

5. • China oppened and it’s growth rates are impressive (since 2008)
• China's cities have expanded at an average rate of 10% annually
• In the last two decades, almost 200 million people have been
lifted out of poverty employed =+10 million/year
• Pressure for more socially responsible products which affect
competitiveness as China’s economy integrate the global
economy.

6. How to do business in china
Marketing / Promotion
Exhibition
Promotion & Testing in retailer
Distribution Channel
Distributor – sell to retailer
Retailer – sell to consumer
Online Selling – direct sell to consumer
Sales Team
Hypermarkets; Tesco, Carrefour, Hua lian,
Lotte Mark
Hotels, restaurants, small stores
Partners
As a joint venture, sign confidentiality/ non-compete
agreement to be protected.

7. What are the Major Concerns:
• Ministry Of Health – approve on ingredients, especially
additive, preservative and colouring
• Ministry Of Agriculture – approve on ingredients
• Ministry Of Commerce – check on the market competitive
and commercial impact to china local market
• Gong Shang Department – Brand name of the product,
patent / copyright
• Custom – Tax rate
• Labeling Control department (AQSIQ) –

8. Advantages of selling
in China
• Strong middle class is emerging (25 million to 30)
• Strenghts in Mass Manufacturing
• Large electronics and heavy industrial factories
• Highly Segmented Market

9. Desadvantages of Selling in China
• No effective law governing business
• High Governmental interference
• Involving of the complex Guanxi Networks
• Bureacratic systems and widening of social
gap.
• Environmental Damages (China occupyes
the second place among the major
greenhouse gas emitters worldwide)
• Fast rising wages reduce competitive
advantage

10. Opportunities for selling in China
• Chinese spend more in Durable goods and innovative
products (cars, phones, high techs..)
• Mix of cheap labor and stable prices and stable politics
is what foreign companies find appealing.
• Incentives (tax breaks, low import duties, low-cost
land and low construction costs for new factories)

11. Threats foreign companies face
when investnig in china
• Fierce & unethical competition (local/ foraign)=>
Dog-eat-dog world
• Lack of Intelectual Property regulations even if
protection is pushed by government, still it’s
practice is virtually non-existant
• Lack of requirements for safety equipment
• Highly fragmented domestic market.
• Corruption.
• Protectionism.

12. Cases of companies facing this
problem:
Intellectual property Burberry
infringement
corruption Johnson and johnson
Local competitors Tesco
Foreign competitors Tomas Lyte
protectionism Coca-cola

14. 1) What are the implications of Guanxi
networks networks for selling in China?
Most common business favor of guanxi is to receive introductions to one’s
contact ( create valuable connections)
• Chinese are more encouraged to do business with
people they are comfortable with.
• If MNC’s develop good guanxi with chinese
businesspeople, the laters may refer customers to thm.
• Guan xi is useful to gather essential information and to
meet important potential partenrs

15. 2) An important Chinese cultural issue is the
avoidance of loss of face. Discuss its implications
for selling in China.
• Overseas Businesses have to pay attention to not do
anything the Chinese consider as humiliating.
• To avoid losing face and damage Guanxi Chinese prefer
indirect forms of influence to deal with difficult requets and
embarassment.
≠ of the MNC’s use of direct and open ways to deal with
requests this can create conflict between the partners and
spread confusion to solve even the most simple problem.

16. 3) Explain the concept of self-reference criteria
and its implications for selling in China.
The concept of self-reference criteria :to
forget about self like if a company is
going to another country then the going
company will have to take care about the
culture.
For example: if a foreign company enter
the chineese and wants to open its outlets
in china the name of the company should
respect the culture of the host country .

17. A real case is the following:
Esso, the brand name of a gasoline,
was a successful name in the United
States and would seem harmless enough
for foreign countries; however in Japan
the name phonetically means stalled car
an undesirable image for gasoline.

18. Thank you very much