How U.S. Companies are Succeeding in Exporting to China
The Chinese market is an increasingly attractive market for midsize U.S. manufacturers and the smart ones are moving there quickly.
In a recent survey (CMO Survey, February-2012) in response to the question, “Which international market is your highest revenue growth?” 21.5% of US exporters responded with: China. This is up from 16% reported just one year ago in the same survey. In response to the follow-up question, “Considering the China market, by what percent did your sales revenue increase in the last 12 months,” companies surveyed reported a surprising 51.5% increase. This reflects as much on the fruits of a well-executed new market entry as Chinese market growth itself.
With robust economic growth, the Chinese business sector is poised for a “buying binge” that could benefit medium-sized U.S. companies. There has never seen such an opportune time for US business to target the Chinese market.
Why should midsize U.S. businesses take on the hard work and the risk of exporting to China?
There was an old, mid-20th century American idea that everybody in the world should beat a path to our door. That idea was very true in 1960. Today it’s incorrect and anachronistic.
What’s changing now?
The Chinese government has been placing full-page color advertisements this year touting its China International Fair for Trade in Services. Instead of just jet turbines, it seems the next wave in selling to China is going to be intangible services and technical expertise. As ever, any company brand synonymous with global quality that can make a strong case for increased product safety, lifespan or specification is likely to find opportunities at the apex of the China market.
What kind of technology and know-how are they looking for?
What you want to sell is a niche product or service, or better yet, a niche of a niche.
Some U.S. business owners fear that their proprietary formulas or skills will be pirated if they take them overseas, particularly to China. How do they deal with that?
Anything in China that succeeds, people will at least attempt to replicate it - usually unsuccessfully. IP is really an equal opportunity thing in China. US companies should not be paralyzed by this fact. They should focus on their hands-on, daily experience that can’t be copied.
How else is negotiating a business deal different?
In the US, you sign a contract, and every word means something; it can be interpreted literally, and it’s largely enforceable in court. But in China, a contract is more like a suggestion, or an expression of a preference.
What’s the Chinese view of American exports?
Chinese companies and the Chinese people have great respect for American products that are durable and made with care. They don’t have to be luxury items. Chinese consumers are increasingly paying for quality and reliability - this extends to both consumer and industrial markets.
What’s the biggest fallacy about selling in China?
Some companies are in denial and they think they can succeed overnight. US companies with the right blend of hands-on management, strategy and entrepreneurialism understand that it takes time to break into a new market. In China you have to make visits, attend technical seminars and trade shows, answer questions, and yes, attend banquets and develop new relationships. Then you have to take the time to argue about price, delivery, and credit terms with your partners and customers before they finally place a trial order. The unfamiliarity can be difficult to overcome. But if US companies are will to undertake a sustained effort and pursue the Chinese market the potential is almost unlimited.
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