What You Need to Know Before Exporting to China

[ Music ] >> With 1.

3 billion people, China is the world'slargest consumer market, which obviously makes it anattractive target for exporters.

That's one reason Americancompanies generally feel that China's still growingmiddle class will lead to increased opportunitiesin a variety of industries, especially consumer-basedindustries, franchising, and the services sector.

And with an expected 250 millioncitizens over the age of 65 by 2020, elder care is alsoseen as a major growth sector.

With 700 million people online, e-commerce is also anarea that's expected to grow significantlyin coming years.

Still, tapping into that hugemarket can present challenges for U.

S.

businesses, so doingextensive research is a must.

For example, there aresome sectors of the economy that the Chinesegovernment doesn't open to foreign competition.

Also, while the governmenthas taken steps to curtail corruption anda lack of transparency in business practices,they are still seen as significant problems.

That said, Chinese consumerspending is expected to triple to over $6 trilliona year by 2020.

The U.

S.

Commercial Service isalso well positioned to help, with more experts in Chinathan in any other country.

What else does your company needto 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 needto be exporting to China.

First of all, you've got1.

3, 1.

4 billion people.

China is the place to be becauseit's where the market is, and it's where growthis being driven.

You've got so many new consumersand up and coming middle class that are going to be consumers.

It's transitioning froman investment heavy to a consumer dominated market.

This is really a uniquemoment in time for China.

So there are a lot ofgood sectors in China, and it's really going tobe dependent on where.

If you go to the northeast,it's a very different mix of what sectors aregood than in the south.

So in the south, in Guangzhou, which has traditionally beenthe source of manufacturing, smart manufacturing, there'sa lot of automation going on.

There's a lot of efficiency and how do you makemanufacturing plants more efficient, more productive.

There's a lot of innovationgoing on in the south.

So we see a lot of ITgoing into the south.

But there are clustersthroughout China.

Xi'an is a software base.

Wuhan is an optics base.

>> When you consider marketingto Beijing or Shanghai or Hong Kong, those citiesare very internationalized and the language mightnot be a barrier.

You can use Englisheasily with some of the international traders.

But in south China, it'sstill, the companies and entrepreneurs thereare still very localized.

Most people will useMandarin or Cantonese as the official language.

So when first exportingto China, a U.

S.

FMEs would considereither hiring an interpreter or having a local staffthat speaks the language, that will help startthe communication.

>> China and China's governmentshave invested in infrastructure.

There are 267 airports thatare being built or designed, 257 green data centersbeing built in China.

So the opportunities are huge.

Wherever there's a pain inChina, there's an opportunity.

Education is huge.

The ability for U.

S.

Educational institutions to attract Chinesestudents, two year, four year, trade schools, anotheropportunity.

Tourism.

So travel and tourismis a $24 billion a year industry from China to the U.

S.

There's about 1.

84 millionChinese 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 companiesidentify e-commerce platforms.

We have, for example, ane-commerce boot camp that we run because there are a lotof different platforms where you're looking atTmall, Taobao, JD.

Com.

We help companies,and particularly SMEs, who are looking to getinto the e-commerce game.

How do you position yourself? What do you have toknow about social media and how you're goingto market yourself on an e-commerce platform? Every, on 9/11, which isChina's version of Black Friday after Thanksgiving, it'scalled Singles' Day.

Every Singles' Daythere are $9.

7 million in sales every minute online.

There are twice thenumber of people that are in the United States areonline in China any given day.

China is very local, andyou have to really dig into the weeds to find outwhat is your price point? How are you positioningyour product? Who are your competitors? Are you up against a home-grownnational champion or not? There are so many factors thatgo into can you be successful that what my job is,my and my team's job, is to really helpyou evaluate that.

We want to cut your timeto 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 whenthey write emails to the Chinese companiesthey never reply.

Actually I'm notreally surprised because the reason theydon't reply probably is just because they don'tunderstand your English because they only speak Chinese, and in China normally we don'tcommunicate through emails.

It can normally goesthrough the fax or if you have a formaldocuments to send, or you can just call them.

So it's not the usual wayto doing business comparing with the business model in U.

S.

>> In China, it's verydifficult to get the real story, and so having someone that'sfollowed a particular sector for 15, 20 years, who hasknown the government officials from when they were, you know,more junior position rising in the ranks is unbelievable touse that network on your behalf.

So three important thingsthat you need to think about.

First and foremostis due diligence, due diligence, due diligence.

Did I mention due diligence? We can help as ababy step on that.

Know who you're doing businesswith, know their connections, know the local playing field.

Secondly, protect your IPR.

Do the steps you need totake so we can help you.

China is a first to file,not a first to invent.

If you don't take the stepsto protect your trademark, your trade secrets, when you getinto trouble we can't help you.

And third and foremost isreally know the players.

Check in with us.

We are one of many points ofreference, 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 anupdate of what we're seeing.

>> Want to learn moreabout exporting to China? Explore the China CountryCommercial Guide on Export.

Gov or connect with a U.

S.

Commercial Service trade professional.

[ Music ] >> Brought to you by theU.

S.

Commercial Service, part of the U.

S.

Department of Commerce's InternationalTrade Administration.

[ Music ].

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