5 Reasons Why Businesses Fail in Entering Chinese Market

Sep 9, 2017
2 min read

Many foreign brands, are now trying to get inside Chinese market, but it is not always that easy. We have summed up the obstacles for SMEs when going into Chinese market

1. Language

When dealing with China, the first problem you run into is the language; it is all Chinese! In Shanghai, which is China’s most advanced city, you could manage as a tourist with speaking only English, but when it comes to rest of the country it is something different; Chinese people can’t/won’t speak English.

Of course, it is possible to come to China with a translator and do business, but it is far from ideal.

2. Culture

It is tough for SME (Small and Medium-sized Enterprise) to overcome this obstacle. A Large corporation can just open an office in China, hire English speaking Chinese that will compensate for the gap and hope it will be enough. If not, they lose few hundred thousand, and that is a reasonable risk. SME cannot afford this kind of potential loss. Culture and mentality in China are being expressed in many ways, from body language to business negotiation codes, working order and more. Chinese culture has a direct influence on the business culture, therefore, for foreign businessmen, even if he has a translator helping him, will often feel like he is in the no end street with the Chinese.

3. Product Management

Many foreign manufacturers or retailers have great products with excellent results which are suitable to a great extent to the Chinese market and yet, it is not necessarily enough to succeed in it. Few small operational and logistical changes can have a significant impact. For instance, the right pricing, slight changes on the packaging box, choosing a Chinese name for the product or picking the right lines to start with in China, are important aspects that can be easily missed out. Also, good marketing is a major factor such as emphasizing the important advantages of the product for the Chinese market.

4. Regulation

The regulation and bureaucracy in China can often be a crucial barrier. To be able to sell your product in China, it requires time and capability to overcome Chinese regulation.

5. Strategy

It is possible to try and make a massive investment to penetrate China’s market and maybe successfully sell your product. Many SME’s have the vision and wish to penetrate China’s market and believe their only option is to go to China by themselves, understand the market, build an operation and try to promote their product. In Reality, to do so, many SME’s will invest around two years, and 400K to (maybe) start being out there on the market.