Despite the news we read in the headlines every day, make no mistake: China is and remains a good place to do business for companies around the world. China is an important engine of global growth and will be for the foreseeable future as fully one-third of global GDP will be generated by China over the next ten years. While US-China trade talks continue to cause some disruption, tariff rates for many China imports have declined, resulting in increased imports from many of China’s other trading partners. Let’s take a look at three prevailing trends that are fueling these continued opportunities for global commerce in China.
Continuing Ease of Entry Barriers
Due to ongoing Chinese economic liberalization and a reduction of taxes, tariffs, and investment restrictions, it has actually gotten easier for many of China’s trading partners to succeed there. Many foreign companies continue to thrive and report substantial profitability by catering to Chinese customers. These profits are sent home to corporate headquarters and used to generate more jobs. Research and Development done in China helps companies remain competitive at home, in China, and in other world markets. China continues to open on many fronts, and in particular, the financial services sector, allowing 100 percent foreign ownership.
Businesses can find one especially encouraging example of this continued opening in Alibaba, the Chinese-owned e-commerce platform. The company recently announced that foreign companies can engage in business-to-business transactions when previously, non-Chinese firms could only make purchases. Now Chinese companies can buy products from foreign companies on this platform, using the host’s algorithms to find suppliers.
Local Opportunities and Infrastructure Investment
Companies outside China should also look hard at provincial- and city-level investment opportunities, as officials are often eager to welcome foreign investment and provide matchmaking services for their local businesses. Some have sizable procurement budgets and welcome foreign-company participation, especially in sectors such as environmental technologies and services, alternative energy, and medical equipment. Chinese private sector companies at the regional level are looking for foreign partners to help them remain competitive as the economy transforms from manufacturing and export to services and domestic consumption.
Another potential growth area is the Belt and Road Initiative which promotes and finances large infrastructure projects in developing countries. These projects may provide opportunities through subcontracts from China’s large state-owned enterprises, which need additional expertise.
Increased Availability of Expertise
Aside from e-commerce, opportunities for starting or expanding business in China are best unlocked with assistance from expertise on the ground, which is only growing in availability. The US-China Business Council—with offices in Beijing and Shanghai—provides a wealth of resources for US companies. Businesses from other foreign countries should look to their embassies and consulates in the country for assistance, which often have a commercial section that can help. Likewise, if you belong to an industry association, check to see what resources they may have in China. World Trade Centers Association (WTCA) Members and their local companies have access to an abundance of China expertise through the WTCA network.
There is no other market in the world with 1.3 billion people and an annual growth rate that exceeds six percent. If you want to be successful in the world, you need to be successful in China. If you are a smaller company, you should consider if the market is right for you, which means not being discouraged by what you see in the media. The bottom line is that China is and remains open for business. And as it continues to expand its presence in global affairs, companies around the world will only benefit in working together to tackle more complex issues that await us in the near future.
This post was made possible by support from the US-China Business Council (USCBC), a private, nonpartisan, nonprofit organization of approximately 200 American companies that do business with China. Founded in 1973, USCBC has provided unmatched information, advisory, advocacy, and program services to its members for over four decades. Through its offices in Washington, D.C., Beijing, and Shanghai, USCBC is uniquely positioned to serve its members' interests in the United States and China. Visit https://www.uschina.org/ to learn more. To access reports made available to the public, visit https://www.uschina.org/reports.