It is difficult to find a market that is not significantly impacted by the Chinese market. Market growth rates regularly top 30% annually. In the healthcare market alone, McKinsey Quarterly is estimating that 2011’s Chinese spending of US$357 billion will grow past US$1 trillion by 2020. There are several reasons for this staggering estimated growth rate. First, the Chinese Middle and Upper Classes are already a sizeable population – roughly double that of the entire U.S. population. Second, Chinese people are living longer, which means that they are susceptible to more diseases and injuries over their lifetimes. And third, more and more Chinese are buying health insurance to help offset any unexpected health costs in their families. The healthcare market is a strong example of market growth, but also what happens in a variety of market segments as a country like China’s develops and matures. We see this now in China, but the pattern will be seen over and over in the upcoming years as so many developing countries follow China into prosperity. This begs the question: what could this mean for your market?
Greater Expectations from Customers
As new foreign entrants and home-grown Chinese companies continue to add into emerging markets in China, markets begin to evolve too. Chinese businesses and consumers now expect higher levels of customer service. They expect higher quality levels from products and if their expectations are not met, they often change brands. This is good news for foreign companies with competitive advantages in quality.
The Chinese government has had a love-hate relationship with capitalism. On the one hand, economic growth above 6% helps to keep the Communist Party in power. On the other hand, the Chinese government wants to have a certain amount of control over which ways the economy develops in order to be competitive in both the Chinese market and around the world. New healthcare reform laws came out in 2009 and the latest 5-year plan involves growing in the biosciences industry. Whether your company has entered the Chinese market or plans to do so some time in the future, it is wise to follow any new regulations as this will impact the entire industry. And you can bet than any new legislation will work in favor of domestic Chinese vendors.
Increasingly Stronger Domestic Competition
Think that your company doesn’t have Chinese domestic competition? You’ll want to think again. A few years ago most technology developers could discount the Chinese for lack of quality and innovation. But that gap continues to close. One way to overcome home-grown competition with clear home-field advantage is to partner or create a joint venture. If this sounds like an option worth exploring, be sure to talk first with your IP attorney for guidelines for partnering without endangering your key intellectual property.
I hope this article was helpful to you. For more insights on markets in China and elsewhere, please read more from my site: https://the-international-entrepreneur.com/blog/