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Saturday, October 23, 2010

China is not only for big players. Even you are small players, you can still take part in the economic development in the country, amid in much smaller ways. If you are small, then go for small share of the market, which can mean big to us. I remember  there was a Malaysian ICT enterprise ventured into a small city in China of 200,000 population, offering a unique IT solutions that can benefit the whole city. In this case, though the market is small, but it is an achievement for this Malaysan enterprise gaining access into China market. It will take some time though but what is important is that you have a niche and special products/services and you have a reliable partner, which can be privately or state owned enterprises. The support from local partners is absolutely important in making sure that your business plan executes well.

A friend of mine recently asked my views on how to promote her 'special' tooth brush in China. This special item, with a special design, is claimed as a very effective tool to eliminate dirts and clean teeth. For a new product, a lot of work needs to be done in marketing and promotion. In this case, you  also need a good backup from medical point of view and work with reputable partners. Pricing is another issue, where market segment you want to target, the price cannot be too high though there are many customers who can afford to buy expensive imported products. If you  are nobody in terms of branding, the marketing and promotion task will be tougher. For internationally known brands, the brand itself can facilitate promotion of new products in the market, for these popular brands, consumers already associate any new products as reliable and high quality though prices may be expensive.

Competition is very stiff in China, regardless of what business you are in. It comes from local and foreign players and for marketing purpose, you need to have a deep pocket. It's better to ask ourselves whether our presence in China is crowding out the market or is giving us a competitive edge. If it is crowding out the market, the competition is very strong and may require deep pocket. If you have a competitive edge, then you may require less spending but what is required is how you position the product in the market. This is where your partner's cooperation in crucial since they normally understand the local market better, though we also need to do our own homework.

Sunday, October 17, 2010

What products or services that China want? For so many years, China has been importing a lot of natural resources/raw materials and commodities and continues to do so. China imports timber, natural rubber, oil and gas and palm oil from Malaysia in a large quantity. It also imports huge volume of semi-conductor and integrated circuits from Malaysia. Generally speaking, imports of all these items constitute more than 60% of China's total imports from Malaysia. It implies that China still require these products for its industrial use and more or less we can say that there are already big players from Malaysia who consistently export these products to China and if you plan to join in, you need to compete with these big players and certainly it is a tough challenge.

So, what else we can offer for Chinese market? Products like processed food and beverage, like confectionery, snacks and bakery products, canned and ready made products, frozen food, seafood, juices, white coffee and cocoa products among those that have good potentials in China. As I mentioned several times earlier, the increase of purchasing power and the middle income population has to some degree shifted the customers perference for imported products. Buying imported products, though relatively expensive as compared to local ones, is perceived as having a high status in the society and imported products are regarded as high quality products.

The mushrooming big shopping malls and complexes in major and medium size cities in China has contributed to increasing inflows of imported products. Products with big brands like Channel, D & G, Dunhill, Ferragamo and Gucci are much sought after in the market and it goes on to so many other foreign brands that to us some of the brands maybe we have never heard before. All these brands and products have their own niche market and relatively doing well even though some of them did fail.

During my stay in China, some of Malaysian brands are already present in the market, among them like Royal Selangor (pewter), Bonia (leather products) and Ekowood (engineering wooden flooring). The brands are not only limited to products but also companies and services and these include companies like Maybank, Petronas, Malaysia Airlines, Air Asia, Parkson, Shangri-la Group, Sime Darby and UMW.

Beside food and beverage products, what else have good prospects in China? Some of Malaysian ICT companies have also made inroads into China with their unique services that can cater the need of ICT customers; like softwares, solutions, creative multimedia contents,etc. We read in the media that such companies as Green Packet, Cworks Berhad and Mobif Berhad have ventured into China market. If Malaysian enterprises can offer some special and unique ICT services that can fulfill the increasingly ICT savvy customers in China, then they have a good chance of success.

The above are just some instances of what products or services that Malaysian enterprises can offer for China customers.

Friday, October 15, 2010

As I mentioned earlier, one of critical success factors of doing business in or with China is a credible partner in China. It is a challenge if you want to do everything by yourself but it would be more realistic if you work together with a reliable partner to achieve a success. How?

There are many ways to find a good partner. It may come from recommendations from other people that you know well, from government agencies that can advise you like Malaysia External Trade Development Corporation (MATRADE) or Malaysian overseas missions. Another common and relatively effective way to look for partners is through participations in international exhibitions overseas. In fact, though this is a traditional way of promoting your products and services internationally, these events are still much relevant to those who are especially new in international market. During participation in the exhibitions, you not only can introduce your products but also can establish contacts with potential partners who come and visit your booth.

You may receive hundreds or even thousands of visitors during the period of exhibition and many of them probably interested in your products/services and interested to become your partner; in the form of distributorship or importing. Then come another challenge; from all these interested potential partners, who will be the right partner(s). Let's see if you want only a sole distributor of your products for China market, how do you choose the 'right' partner from many. You then need to assess the credibility and reliability of this partner, via many ways, including via your already existing contacts in China, internet, local commercial authorities in China like Ministry of Commerce (MOFCOM), China Council for the Promotion of International Trade (CCPIT), municipal bureau of trade and investment as well as Malaysian representative offices in China like MATRADE, MIDA, and Malaysian overseas Embassies/Consulates.

This proper due diligence is essential to be conducted before a final selection of a partner is made. One thing for sure your partner should not show genuine interest in your products but also should be supportive to you to overcome regulatory hurdles for your product to enter China market and work closely together in marketing and promotion activities for your products to gain customers' acceptance. Sure you do not want parners that can give 1001 promise before they get the business but later end up failing in the market or you do not want  partners who say everything 'no problem' but after the deal sealed, then you realise that there 'are many problems'.

So, finding the right partner is important. It is not easy but you have to if you want to succeed in business. This applies not only for China market but also elsewhere.

What else important beside finding a right partner? Next, do you have the right product or services for China market? This is from the perspective of selling products/services to China.

Tuesday, October 12, 2010

Malaysian companies that I think have successfully established their presence in China include among others Shangri-la Group, Parkson, Salcon Engineering, Sime Darby Berhad, Maybank Berhad, Hong Leong Berhad and UMW Berhad. These are big companies, there are others that are small and medium sized companies, including ICT companies like Redtone Bhd, Green Packet Bhd, Cworks Bhd and many others.

The above companies and many other Malaysian companies have recognised the importance of China as their market for growth as other markets probably do not offer the same length of business opportunities for expansion and continuous growth. Competition is tough though considering many other local and foreign players each trying to grasp a small pie of share but due to the vast experiences and expertise that Malaysian companies can offer, they are able to execute their projects well in China and being recognised.

In terms of trading, China offers ample opportunities for Malaysian products. Though commodities like petroleum and gas, semi-conductors and integrated circuits, palm oil, timber and rubber among others are main exports to China, gradually this trend has changed and more exports of Malaysian-made processed products are gaining access to China's huge consumer market. These include processed food and beverage, leather products and rubber-based products and wood-based products.

Saturday, October 9, 2010

Investments into China by Malaysian enterprises are in many sectors; manufacturing and services. The size of companies do not matter and it depends on what types of business they are doing. Among products and services that Malaysian enteprises involve in include processed food and beverage, rubber gloves, cosmetics, electronics components and parts, construction and real estate, information and communication technologies and hospitality.

There are many different reasons for investing in China. Main reasons include the huge domestic demand that China offers. The 1.3 billion population market size is already a pulling factor for foreign enterprises to come to do business in China. The purchasing power in China has also risen significantly, the middle income constitute about 30% of China or about 400 million people.

Another reason is that China has abundance of labor resources and relatively the labor cost is still lower, especially at 2nd and 3rd tier regions. Labor intensive industries will have no issue to get people to work, and in another word Malaysian investment in China also generate employment for the locals.

Besides investing in China, some other Malaysian enterprises resort to direct exporting and importing with China. And because of the growing middle class and increasing purchasing power, imported products are becoming more sought after items due to various reasons; status, high quality perception and internationally well known branded.

Friday, October 8, 2010

Yes, China over the past 10-15 years have evolved drastically; economically and socially. The China Government has put in place rigorous strategies and plans to benefit the people and one of the bold moves made was the 'Open China' policy. This especially seen during the administration of its leader, Deng Xiaopeng, who has steered China as the important economic superpower nowadays.

Open China policy has witnessed the inflows of foreign investment in China, and this has helped to develop the local economy and partly contributed to the social stability in China with increased job creation  for the locals. Nowadays, China is one of the biggest recipients of foreign investments in the world and the trend continues. The foreign investment plus China Government's robust action plans for achieving social and economic stability has led to weath creation and increased purchasing power.

China is also Malaysia's important partner in all areas; economy, social and cultural. Malaysia in fact was the first among ASEAN countries that established diplomatic relationship with China on May 31, 1974. I was 6 years old then. Our Father of Development, Tun Abdul Razak at that time made a historical visit to China and met his counterpart, Zhou Enlai, during this histrocial moment, and since this the relationship between the two countries continues to flourish until now.

Malaysia has also taken part in the development of China's economy. Malaysia's investments in China continue to increase. In 2008, Malaysia's investment in China amounted to more than USD3 billion and I believe the volume now is bigger. Malaysian enterprises realize the importance of China as the future economic superpower and leveraging on this conducive environment to do business in China, to tap on its relatively cheaper resources and huge domestic market.

Thursday, October 7, 2010

I had a chance to travel around China during my more than four year stay. It is amazing how fast China develops. During my first trip to China about ten years ago, China cities like Beijing were congested with so many bicycles, even vehicles need to find their ways through a throng of bicycles. But when I arrived there for my second visit and stay, the roads were full cars and the bicycle lanes were not as busy as before. Now, the road can have 3 or 4 lanes one ways but it is still full with vehicles and heavy traffic is common.

What does it show from the above one scenario?

Monday, October 4, 2010

There are more than 30 provinces in China, which include several autonomous regions and municipalities. Hence, when we plan to do business in China, we can't treat China as 'one' market, but instead as more than 30 markets. Each province is big in market size and may have different set of ways of doing business.

We should consider exploring other markets or cities in China. As mentioned earlier, big markets like Beijing, Shanghai and Guangdong are already saturated and highly competitive.

There are thousands of cities in China; some of them are categorised as 2nd tier (very fast growing) and some of them are 3rd tier cities (least developed markets but economy is gradually improving). Many of us probably never heard of the cities but a lot of things have happened that made these cities develop very fast.

Some of 2nd tier cities include Nanjing, Dalian, Qingdao, Yantai and Chengdu and 3rd tier are like Urumqi, Xinjiang and Yinchuan, Ningxia. The 2nd tier economies are growing rapidly with increasing inflow of foreign investments. These cities are not only big in size but also offers good infrastructure facilities for doing business. The competition in 2nd and 3rd tier cities is also not as intense as in the 1st tier cities though we can see growing competition in the 2nd tier. There are therefore still ample business opportunities in these 2nd and 3rd tier markets.

Saturday, October 2, 2010

Where you want to sell your products or services in China is one of important factors to consider. China is a huge market of 1.3 billion and  a size of more than 1 million sq km. We need to study the market first before decide which part of China we want to start.

We probably know more about Beijing, Shanghai and Guangzhou as compared to other cities and probably we want to start from these 3 biggest cities in China. Beijing has about 17 million population, Shanghai and Guangzhou have more than that. So these three cities already offer us with about 50 million market size. But, do not forget that because of being too much exposure to foreign business community, these 3 cities have been overcrowded with not only local players but also foreign businesses that are chasing to grasp a small share of quite a big market. Competition become stiffer and only big players with deep pocket can sustain their presence. It does not mean that small players like us cannot go into these 3 cities, we must pretty sure that the products or services that we want to offer are unique enough and for 'niche' market. Otherwise, the money spent to open up the market will be wasted and 'burnt'.

Saturday, September 25, 2010

It is not easy to find a reliable partner in China though it is an important requirement for us to sell our products or services in China. How to get connected to potential partners; either it a sales agent or consultant, a distributor or an importer? There are multiple choices; you can get some contacts through online B2C or B2B like, Taobao and others. You can also search through popular search engines in China, including Baidu or Sina or you can go online to trade promotion organisations in China like the China Council and Promotion of Investment and Trade (CCPIT).

You can also enquire through various Malaysian agencies available abroad; esp like Malaysia External Trade Development Corporation (MATRADE), Ministry of Agriculture, Malaysia Industrial Development Authority (MIDA) and Malaysian missions overseas. They can provide all sorts of information on market and trade leads.

To start a business relationship takes time. Whatever it is, it should be done professionally and according to standard business practice. Both sides may not know each other and thus it takes time to build up the trust. Even after knowing each other and comfortably doing business for long time, you may still need to take continue with precautionary measures to safeguard your business. Anything can happen, in bad and good times. Even when business in rosy times unexpected things can happen and you should always be alert of signs that may adversely affect your business.

Friday, September 24, 2010

When you want to sell in China, we need to find out about the potentials/prospects of the market for our product/service. Among factors that you need to consider before decide whether to go in or not are:

* market size of a product/service that you want to sell - that includes for both locally available and imported or foreign
* market segment - low, medium and high end customers based on your pricing and product positioning
* where to market; 1st tier, 2nd tier or 3rd tier markets ( 1st tier the most advanced cities like Beijing, Shanghai and Guangzhou), (2nd tier the emerging markets like Dalian, Qingdao, Nanjing and Chengdu), (3rd tier the less developed cities/provinces like Xinjiang and Ningxia). Remember regardless of what tier, the three market segments are still applicable
* Product costing - to make sure that your retail price or price that you offer in the market still give you considerable margin
* Who is your partner in China - you want to do it yourself? It's recommended that you find a good and reliable partner in China to facilitate your market entry, distribution and marketing of the products/services

The above are some of the factors that you should think of when you want to sell or enter China market. No doubt it is a lucrative market but at the same time it is very competitive market, considering the competition that you face not only from local players but also foreign players that are flooding into China.

So, what you need is to identify the 'niche' market for your product/services. Always remember that small share of market in China can mean big to us. Don't be greedy, start small first and expand from there.

Thursday, September 23, 2010

When we want to start doing business with China, first thing we need to choose is what products or services we want to involve in. Are we buying or selling or are we doing both(trading).

For selling, what products or services that we can offer to China? We need to find out what China customers want. Surprisingly, though China is regarded as world's factory where we can find anything that we need, just name it, but at the same time now the customers are also craving for foreign or imported products. China produces all types of processed food; but at the same time the country is also importing all types of processed food from all over the world. A simple example, China produces biscuits and confectioneries, at the same time they also import a lot of biscuits and confectioneries.

What can we say about this? This shows that customers' mindset has gradually shifted in China from China-made only products to now foreign or imported products. The increasing purchasing power has changed the lifestyle and customers with money is willing to spend more for expensive foreign or imported products as a symbol of high status in the society. This is happening not only to big or 1st tier cities like Beijing, Shanghai or Guangzhou but also to other newly emerging cities like Nanjing, Dalian, Qingdao and Chengdu. The middle class which can afford foreign products has increase in numbers, at the moment 300-400 million population in China is categorised as middle and upper class.

Sunday, September 19, 2010

Setting up a Malaysian restaurant in China

A friend of mine is in the midst of opening up a Malaysian restaurant in a big city in China. I had given my input and advice on the prospects of having a unique restaurant to promote Malaysian cuisines to 1.3 billion people in China. No doubt it is a big market but at the same time, there already so many foreign restaurants in China, do not talk about local restaurants/food stall as the number are in the millions.

But, is it still worth it to have another Malaysian restaurant in China? Yes, and it depends on how we position our restaurant; fine dining, normal restaurant, cafe style, kopitiam style of food court outlet style? Each positioning has a niche market. More important is how you promote the restaurant and the traffic flow at the location also a critical factor.

As we may aware, nearly 1 million Chinese tourists visit Malaysia every year and the same number of Malaysian tourists visit China annually. So, the presence of Malaysian restaurants in China would serve for both locals and Malaysian tourists, and not to forget the increasing foreign community in China.

The friend's restaurant is expected to be launched by end of this year and i hope can join the celebration.

Another friend of mine is in the midst of signing an agreement with a local distributor in a second tier city in China to sell white coffee. Through my network in China, I helped them to find the local partner. White coffee from Malaysia has increasingly gained popularity in China and I had observed several Malaysian white coffee brands already in China market. But as the market is big, there's still good prospects for white coffee market to be expanded.

I am also helping other friends to develop all types of businesses with China and I am happy that my assistance to them have been quite useful.
I am helping several friends who want to explore China market. They have products and they want to enter China market. Based on my experiences in China, I get them connected with potential distributors/importers.

Monday, September 6, 2010

How to do business with China?

Regardless whether you a small, medium or big companies, the first thing you should do before embarking on doing business with a particular market like China is doing your market research first. This is a natural thing to do but this is a very important element before you can decide whether it is worth or not to do business with China.

There are many ways of conducting market research. Medium or big companies maybe can afford to oursource this activity from market research agencies or buy existing reports that available in the market. While small companies may have to do it themselves. In this modern IT world, information is widely available and it just requires our initiatives to search for the information. It may not be as comprehensive as the info that available from market research reports but at least we have some important info to fall back.

I had experiences helping Malaysian companies doing market research or compiling market info.

China - The Place for Doing Business

Many people are sourcing products from China. The obvious reason is for their lower prices as compared to many other countries. China is regarded as the 'factory' of the world, you can name any products and its there in China. The price is very competitive though the quality can be an issue. Cheap and low quality products have its own customer base, people are still buying costs their are cheap and would rather use it for certain period of time and then replace it with new one. China's products quality nowadays has improved significantly and been exported worldwide.

Many of small time foreign buyers, esp from Malaysia, are interested in household products like bed sheets, table liners, curtains,clothes, etc. Other products of interest include all types of gadgets like computer parts and accessories, handphones, watches, etc. They can get these products from wholesale market and popular shopping areas in China, if the volume is not big. If the volume is big they can source directly from factories. Some of them visit trade fairs and exhibitions to get to know the producers directly and can get better price.

What are recommended steps of doing business in China? See you next posting..

Sunday, September 5, 2010

China - The Place for Doing Business

China is the 'place' for doing business nowadays. Everybody is taking advantage of China's booming economy and going there to do business. The answer whether it is possible to do business in China is YES, and it is still not too late to seize a small share of China's economy and make profit.

It depends on what type of business you want to do with China. The investment will depend on the type of business. Some Malaysian companies are doing big there, having their production facilities or factories in China and this will require heavy investments, probably millions of US$. Some of them invested in projects, like waste and water treatment, information and communication technologies (ICT), infrastructure, real estate and so on. These also require heavy investments, and some of them in billions of US$.

Don't talk about millions or billions of US$ unless you have such financial capability. We can also do business with China in smaller ways. For instance, if you want to do trading, the investment needed is not as high as compared to other types of business. A lot of people do trading with China. Many of Malaysians also do trading. For those who buy or source Chinese products, normally they visit some of the well known wholesale or retails markets in China and look themselves the products they want to buy. They either bring back the products by hands or appoint an agent to ship the products back home. This kind of trading is small but the profit margin can be big.

Will continue.....

China - the next world economic powerhouse

China is fast becoming a major economic powerhouse in the world today. The country has surpassed Japan as the 2nd biggest economy in the world and the economic growth has been sustained by its huge domestic economy, foreign direct investment as well as its exports.

During my 4+ working experiences in the capital of China, I am fortunate to witness the fast development of the country. From its infrastructure to its social development, China has reckon itself as the 'market' for foreign enterprises, and Malaysia not exluded. The number of Malaysian enterprises; small, medium or big, doing business in China has increased significantly over the past 20 or 25 years. The Malaysian companies venture in all sectors; manufacturing, services, trading and so on. Some of them already have their business set up in China; in the forms of production facilities, branches and representative offices. All because they want to tap the huge 1.3 billion market. A small share of business in China market can mean big to us, hence like it or not we need to give it a try.

Would it be possible for us to do business with China, how much investment we need and what we need to do before dealing with China market?? Wait my next posting...

Thursday, September 2, 2010

Before we conduct market research, we need to specify what type of information that we want. We need to have focus, otherwise we may waste not only our time spent in doing research but also money if we outsource the research.

I have done a quite a number of market research myself and share it with others who need it. Many students and small and medium size enterprises also requested me to do market research with a nominal fee. I do not mind to spend time doing research since I like doing it and also I know the info can benefit others in education and business.

Market Research

Market research is important before we plan to do business or sell certain products or services. It is not difficult to conduct market research if you know how to source the information. In this modern internet world, the easiest way to source for info is via internet. We can get a lot of information from internet, which may help you in doing your market research. I think this is most cost effective way of doing market research.

Another way of doing market research is by visiting resource centers and libraries that are available in various places. You will find it useful to visit these resource centers as they offer various kinds of information and depending on what types of info you require, you can always check which resource centers or libraries that can offer such info.

Of course, if you have a bit of savings or good financial back up, you can always outsource for the info from a reliable market research agencies. They will do the job for you at a cost, and normally the info gathered is both the first and second hand sources of information.

I am keen in searching for information esp business related info. Probably my interest is due to my background that requires me to do a lot of research and helping people to do business. So I need to quip myself with a lot of knowledge on business. I had also lived abroad for nine years and exposed to intense and challenging business environment and competition which require me to do a lot of market research on particular business in order for me to help others who want to do business.

If you are keen to explore working with me on market research or seeking advice, esp if you are students of novice in business, please feel free to exhange ideas.