April 10, 2020
What You Need to Know Before Exporting to China

What You Need to Know Before Exporting to China

[ Music ]>>With 1.3 billion people, China is the world’s
largest consumer market, which obviously makes it an
attractive target for exporters. That’s one reason American
companies generally feel that China’s still growing
middle class will lead to increased opportunities
in a variety of industries, especially consumer-based
industries, franchising, and the services sector. And with an expected 250 million
citizens over the age of 65 by 2020, elder care is also
seen as a major growth sector. With 700 million people online, e-commerce is also an
area that’s expected to grow significantly
in coming years. Still, tapping into that huge
market can present challenges for U.S. businesses, so doing
extensive research is a must. For example, there are
some sectors of the economy that the Chinese
government doesn’t open to foreign competition. Also, while the government
has taken steps to curtail corruption and
a lack of transparency in business practices,
they are still seen as significant problems. That said, Chinese consumer
spending is expected to triple to over $6 trillion
a year by 2020. The U.S. Commercial Service is
also well positioned to help, with more experts in China
than in any other country. What else does your company need
to know before saying ni hao, or hello, to new customers? And why should a U.S.
company export to China?>>Now here’s why you need
to be exporting to China. First of all, you’ve got
1.3, 1.4 billion people. China is the place to be because
it’s where the market is, and it’s where growth
is being driven. You’ve got so many new consumers
and up and coming middle class that are going to be consumers. It’s transitioning from
an investment heavy to a consumer dominated market. This is really a unique
moment in time for China. So there are a lot of
good sectors in China, and it’s really going to
be dependent on where. If you go to the northeast,
it’s a very different mix of what sectors are
good than in the south. So in the south, in Guangzhou, which has traditionally been
the source of manufacturing, smart manufacturing, there’s
a lot of automation going on. There’s a lot of efficiency and how do you make
manufacturing plants more efficient, more productive. There’s a lot of innovation
going on in the south. So we see a lot of IT
going into the south. But there are clusters
throughout China. Xi’an is a software base. Wuhan is an optics base.>>When you consider marketing
to Beijing or Shanghai or Hong Kong, those cities
are very internationalized and the language might
not be a barrier. You can use English
easily with some of the international traders. But in south China, it’s
still, the companies and entrepreneurs there
are still very localized. Most people will use
Mandarin or Cantonese as the official language. So when first exporting
to China, a U.S. FMEs would consider
either hiring an interpreter or having a local staff
that speaks the language, that will help start
the communication.>>China and China’s governments
have invested in infrastructure. There are 267 airports that
are being built or designed, 257 green data centers
being built in China. So the opportunities are huge. Wherever there’s a pain in
China, there’s an opportunity. Education is huge. The ability for U.S.
educational institutions to attract Chinese
students, two year, four year, trade schools, another
opportunity. Tourism. So travel and tourism
is a $24 billion a year industry from China to the U.S. There’s about 1.84 million
Chinese visitors that came to the U.S. in 2014. And in four years,
that’s expected to be about five million. So it’s a huge opportunity. We also help companies
identify e-commerce platforms. We have, for example, an
e-commerce boot camp that we run because there are a lot
of different platforms where you’re looking at
Tmall, Taobao, JD.com. We help companies,
and particularly SMEs, who are looking to get
into the e-commerce game. How do you position yourself? What do you have to
know about social media and how you’re going
to market yourself on an e-commerce platform? Every, on 9/11, which is
China’s version of Black Friday after Thanksgiving, it’s
called Singles’ Day. Every Singles’ Day
there are $9.7 million in sales every minute online. There are twice the
number of people that are in the United States are
online in China any given day. China is very local, and
you have to really dig into the weeds to find out
what is your price point? How are you positioning
your product? Who are your competitors? Are you up against a home-grown
national champion or not? There are so many factors that
go into can you be successful that what my job is,
my and my team’s job, is to really help
you evaluate that. We want to cut your time
to market and get you to a yes or no quickly.>>One case I met, a U.S.
company used to come to me to complain that when
they write emails to the Chinese companies
they never reply. Actually I’m not
really surprised because the reason they
don’t reply probably is just because they don’t
understand your English because they only speak Chinese, and in China normally we don’t
communicate through emails. It can normally goes
through the fax or if you have a formal
documents to send, or you can just call them. So it’s not the usual way
to doing business comparing with the business model in U.S.>>In China, it’s very
difficult to get the real story, and so having someone that’s
followed a particular sector for 15, 20 years, who has
known the government officials from when they were, you know,
more junior position rising in the ranks is unbelievable to
use that network on your behalf. So three important things
that you need to think about. First and foremost
is due diligence, due diligence, due diligence. Did I mention due diligence? We can help as a
baby step on that. Know who you’re doing business
with, know their connections, know the local playing field. Secondly, protect your IPR. Do the steps you need to
take so we can help you. China is a first to file,
not a first to invent. If you don’t take the steps
to protect your trademark, your trade secrets, when you get
into trouble we can’t help you. And third and foremost is
really know the players. Check in with us. We are one of many points of
reference, but when you come and you do business in China,
do make a point of stopping into one of our six offices and letting us give you an
update of what we’re seeing.>>Want to learn more
about exporting to China? Explore the China Country
Commercial Guide on Export.gov or connect with a U.S.
Commercial Service trade professional. [ Music ]>>Brought to you by the
U.S. Commercial Service, part of the U.S. Department of Commerce’s International
Trade Administration. [ Music ]

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