Understanding the markets of China begins with the right principles

Posted by China Sourcing Commentator

Mar 12

style = “float: left; margin: 5px; font-size: 80%”>

understanding of the markets of China begins with the right principles

China, China, China. Not a day goes by without a mention of “China” in discussions of the international trading community. It seems to open every company in every industry, he wants the potential. However, the success and profitability in this vast market, we must understand the local dynamics of sound.

How do you reliable information on the market as diverse and the market faster, so you can understand the potential risks and create opportunities and practical strategies? First, start with five main principles.

where to find the information you need.

In fact, China is not one market but several markets due to their size, diversity and uneven development between our regions. Each province of China is a relatively large economy. Therefore, market information is often collected and available at the provincial and national level. to obtain

For a good image of the entire Chinese market, it is often necessary to interview executives of the company in each city, as everyone is responsible and take a look at another region of the country. Only by talking to people in many centers for an accurate overview of the entire market.

The process of gathering information should be tailored and targeted to specific cities or regions where local businesses is more information. It is also essential for research on cities that offer the greatest potential for long-term growth by targeted policies.

Find the most reliable source for the beginning.

information sources are often fragmented in China. Therefore, try to create the hand of many fragmented sources of information is probably the most accurate and complete.

For example, China is a huge producer of locks. In China, 60 to 70 percent of the padlock in the province of Zhejiang are made. The association of local industry in Zhejiang is better informed about production figures and other industry trends that the rest of the provinces of China.

procurement and review of the findings of this single source is more important than trying to cover all the various associations of small centers. Concentration to obtain information directly related to such a source is useful to extrapolate an accurate picture of the country of production and demand.

the real impact of the regulations are looking for.

Collection of information should always allow discrepancies between policy and reality. This is especially true if the clarification of the rules vary in the range, where the level of enforcement is necessary. The bill is interpreted in each province also different.

Although the regulatory information is readily available from secondary sources, where industry sources, which, as far as the rules applied, or how they are interpreted locally can comment. Both large and small, local players should ask to what extent the regulations are met and if the regulations are implemented (or not enforced) between firms of different sizes under these regulations.

understanding

understand how long it might take for the authorities to effectively implement the rules, or how long it takes for certain standards to be adopted, will also have a better understanding of short and to medium-term dynamics of market demand.

A good geographic distribution of interviews is necessary to allow for possible regional differences in regulations and factors to understand the differences.

For example, the rules governing the installation of Windows in China by the government’s overall goal of saving energy in question. These rules are generally more detailed and better in northern China, for example, where increased use of PVC encouraged because it increased the demand for buildings with more heat is more effective in cold winters.

forced

Talk to people.

must receive all information from secondary sources also cut by interviews with key players and industry experts. Obtain firsthand information and advice on the industry through interviews is the best way to build on secondary data.

Primary research is really the only way most updated information on market creation. For example, the call will check with your major competitors, current market situation and insight to the published data is only valid for the previous year to adjust.

All of this has yet to say the ability of that information is reliable and that the information is not included. If a company is interviewed about their local sales, according to the interviewee and motivations that are not always obvious, if the sales figures may be over or undervalued. Researchers need to say the possibility of what it is, and find other sources to reconcile data that may have been skewed by respondents.

It is always good to try to assign a number of interviews per company, and seek to answer the same questions with people from different departments and at different levels, the numbers match. Interview external parties is also important to establish good intelligence.

Take time to establish important local ties.

Trade Negotiations with local suppliers or potential business partners, time and effort put on face-to-face is important to establish trust between both parties.

for Chinese companies to establish this trust is the beginning of the relationship. The details of a contract can not be built after a time are used as a confidence building. Companies need to allow time for visits to the market and face time with local partners throughout the length of time an investment.

partnerships or acquisitions should be placed on the list long term and short-list of eligible businesses and the achievement of reasonable due diligence on them. Partnerships in China have often failed because foreign companies to partner with the first Chinese companies who met without having to check the time, if have chosen a better partner. In China, there is always a choice, and that investors should ensure they do best.

Today, many multinational companies with operations in China market information centers in Northeast Asia. This reflects the focus on the Chinese market and a strong need for market information on market size and opportunity to respond here. These five principles of market intelligence efforts on this fertile land of opportunity is essential.

Author: Nicolas Pechet is Vice President and Head of Global Intelligence Alliance of China

“_gaq.push (‘_trackPageview [' / outgoing / article_exit_link']);” href = javascript. Http

This article and others in the practice of the GIA in China, at Global Intelligence Alliance overview and analysis / a>

Strategic . Please visit