I have currently been negotiating on starting an agency for a company that offers services for establishing company in China. But is it a smart move considering the latest news about the foreign firms getting mad and frustrated with China? Is it really worth of establishing presence in such a complex country?
China is indeed highly regulative country and it favors domestic companies. For example, last year the government proposed a set of policies known as Indigenous innovation Accreditation. Basically it rules that when a new product is introduced to China market, the IPR registration for the product should be done in China before other countries. This raised a fear of technology theft among foreign companies. Yet, the complaints of foreign companies have concerned the unfair public procurement. Apparently the government may insert such criteria in public tendering that only domestic companies can fulfill.
Google was one of the first in the line of tired multinational companies. It departed with its search engine from Mainland China to Hong Kong due to a dispute over the censorship. Also Vodafone got tired of government restrictions and sold its share of China Mobile. The CEO of Microsoft, Steve Ballmer, commented that China is getting less interesting market than e.g. India and Indonesia due to its piratism. The CEOs of Siemens and BASF addressed their complaints regarding to unfair discrimination of foreign businesses directly to China’s Prime Minister, Wen Jiabao, this July. Is China’s attitude to international companies as baltic as the latest news let us to understand?
Well, between the less flattering news about China, there has been other type of news as well. Dell is planning to open new manufacturing and sales facilities in Chengu by 2011 in order to expand its operations to further West of China. Nissan is going to almost double its production in China by the end of 2012. Apple just introduced iPad to China and iPhone 4 is going to be next. Apple has informed its going to open up 25 new stores in China by the end of 2011. Oh, and Google did not escape China totally. It still has R&D center in the country, as well as advertising sales offices.
And what about Finnish companies? Finnair was just recently selected the best airlines in China. China is the biggest sole market to Nokia. Software companies have achieved surprising success in China’s large but very competitive market. Tietoviikko reported that Frosmo, which focuses on sales tools of digital content in social networks, had made significant sales to China.com and RenRen. The company realized soon after entering the challenging market that they need to utilize local experts in order to succeed. Another software company, Rightware, has managed to sell its solutions to China’s Ministry of Industry and Information technology as well as China Mobile. Their success factor seemed to be topnotch expertise in a narrow field and the reputation as reliable and neutral partner.
Despite the struggles with China government, the country is still a very large market embedded with skillful labor and growing consumption. Sourcing is still relatively inexpensive depending on the products and the quality is good. Finnish companies still have good opportunities to succeed in China market if they stay humble, provide high-quality expertise, and learn how to co-operate with the local businesses. China is not going to disappear, it is just a matter how one operates. I am definately still going to continue my negotiations and promote China as a potential destination to Finnish companies.
Sources:
European Chamber, www.europeanchamber.com.cn
Tietoviikko, www.tietoviikko.fi
Others: msnbc.com, Taloussanomat, Tekniikka & Talous
