Doing business in China for small business

Small businesses have opportunities to do business in China with quality suppliers and consumers wanting to buy new products. United Parcel Service (UPS) states in an online article that “China’s two-decade-long market reforms have fostered a wealth of entrepreneurship, resulting in the largest reduction of poverty and one of the fastest increases in income levels the world has ever seen.”

China, which has the world’s 3^rd largest economy, is welcoming of Western tastes while supplying products to companies manufacturing products for consumers and in the retail industry.

But the UPS article also references a report showing the Chinese as a growing consumer force: “According to McKinsey projections, urban households in China will constitute one of the world’s largest consumer markets by 2025.”

California Pizza Kitchen (CPK) scouted China as a business market for expansion. Co-founder Larry Flax told a luncheon audience with the Los Angeles Chamber of Commerce that CPK was going to introduce the Chinese to barbeque chicken pizza. But the Chinese were already eating it before CPK arrived on the scene.

Entrepreneurs who want to do business in China will benefit from a local resource that knows how to do business locally, nationally, and internationally.

D&E Trading Company, Ltd., in Shanghai provides a total solution in its supply chain management.

“We manage the entire supply chain: manufactures sourcing, production management, quality assurance, shipping control and export documentation,” company president Samantha She told me. “Our services include procurement outsourcing, quality control, logistics consulting, and supply chain management.”

Samantha has an extensive background working for U.S.-based and European companies doing business in China. “I started my career in 1988 as an operation manager for APL Logistics. Our customers were Kmart, J C Penny, and AMC.”

She also set up an ocean consolidation department in China with a company that had Wal Mart as one of its customers. In addition, she helped European company Fiskars establish an order management process in Asia.

D&E Trading works with small businesses and medium-sized companies wanting to expand operations in Asia while avoiding the time and expense in setting up an office and making numerous trips. The trading company maintains a database of Asian manufacturers that meet set standards for quality.

For companies interested in doing business in China, here is a list of what to do and what not to do from buyusa.gov.

Diverse Markets Require Careful Research

“Some industries are spread all over the country, some are clustered, and others are heavily concentrated in one area. For example, of the roughly 3,000 personal care products factories in China, 2,700 are located in the southern province of Guangdong.”

Market research for China is available through the U.S. Department of Commerce through http://www.export.gov and Southern California-based market research firm Conscientia Research.

Speak the Same Language

Despite China's commitment to, and success in, developing human resources with good English-language skills, companies that are serious about doing business in China should supply company information in Chinese and be prepared to initiate contact in Chinese.

Find the Right Partner

Small firms typically need to find a counterpart in China to make sales and deliver products for them.

Samantha She of D&E Trading says using a trusted partner will give a business a competitive edge for the long term.

American companies may typically rush to complete deals and do business. But it may be more profitable to do market research, understand the purchasing environment or local consumer tastes before making heavy investments. Patience may pay off in the form of profits in the long term when doing business in China for small businesses.