In 2016, China GDP growth to 6.7%. China’s 13th Five-Year Plan (2016-2020) calls for ambitious policy reforms to “comprehensively build a moderately prosperous society” by doubling 2010 GDP and per capita incomes by 2020. This will require China to maintain an average of 6.5% annual GDP growth over the plan’s five-year period. Significant market potential exists for foreign companies, particularly those operating in industries such as energy efficiency, clean technology, and healthcare, where critical Chinese needs provide an opportunity for mutual benefit.
As always, companies should consider their own resources, previous export or business experience abroad, and long-term business strategy before entering the China market. Representation in China by a Chinese agent, distributors, or partners who can provide essential local knowledge and contacts will be critical for success. Intellectual property rights holders should understand how to protect their IP under Chinese law before entering the China market, and should conduct thorough due diligence on potential partners or buyers before entering into any transaction. Foreign companies have a wide range of options for corporate formation in China, including Wholly Foreign Owned Enterprises, Joint Ventures, Representative Offices, and other investment vehicles. Each option has its own advantages, disadvantages, and risks.
In general, international companies continue to feel that China’s growing middle class will lead to market opportunities across a number of industries, such as: consumer-based industries and the services sector. Consumer-based and services sector companies view e-commerce as an explosive area for growth. Companies in the services sector by a wide margin (71%) expect to benefit from the globalization of Chinese companies and increased outbound investment. Companies in the industrial and resources industries expect to benefit from China’s urbanization push and continued support for infrastructure projects. Companies offering clean energy goods or services stand to benefit from stronger environmental regulation and more stringent emissions standards.
If you want to know more about how to enter Chinese market, we, Salina Consultants and our Chinese partner, Asia Perspective, will be delighted to offer you 1-hour free consulting to hear your objective.