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Market Entry & Product Development

By Bryn Butler
June 17, 2018
pexels-photo-239898


Important Things to Know from Market Entry to a New Product Development in China

With an economic development globalization, the cooperation across the world are playing a significant role in world economy. Some cooperations have already accessed the saturation of the domestic market and with a vision to explore international markets, have already started scaling up. As China is one of the fastest developing economies in the world, China is continuously attracting companies that range from start-up to well-established companies with a huge turnover. One of the main issues that most of the companies deal with is how to enter the China market and start a product development. Below are some of the ways one can use to enter into product development in China:

Direct Exporting: It involves the direct export of goods and services from one country to another country, then directly to the final customer.

Indirect Exporting: It involves selling goods to an intermediate agency that is based out of the target country, who sells your products to the customers. The intermediate agency includes agents, distributors, licensors, franchisees etc.

Investing directly: It incorporates the establishment of a legal entity in another nation to expand activities or potentially generation. Such elements may incorporate completely remote claimed undertakings (WFOE, generally known as WOFE), joint endeavor’s (JV) and the partnerships.

Each mode of product development in China market entry has its own strengths and weaknesses, most of the companies work on a gradual approach based on time and resources and the market response as and when the product development in China occurs. Some of the deciding factors in the development of business plans to make an entry in the China market, one should look into the below mentioned strategic points:

  1. The firm size
  1. The nature of the products
  1. Expertise in export and previous experience
  1. Business conditions and regulations including exporting and investment requirements in China
  1. Need for on-the-ground representation like marketing, after sales service etc.
  1. Control on the product and intellectual property rights (IPR) protection.
  1. Resource and the time of the company.

How and when to enter the market is one of the main decisions that must be made by multinationals as the companies’ performance will be strongly affected by market barriers, government policies, legal and financial systems, cultures, languages, distances, distribution channels, currency exchange rate etc. Therefore, formulating feasible market entry strategies can efficiently enhance the validity of decision and the rate of success and is important to be taken care of.