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Export to China: Now Is A Good Time

For the past decade practically everyone was talking about exporting goods from China to abroad. Nowadays people can’t stop talking about how to export to China.

China is no longer simply a cheap location to manufacture goods; it’s one of the largest, fastest growing markets in the world and also an increasingly important strategic location for companies worldwide.

With more and more foreign companies exporting to China and developing local sales and manufacturing operations, it’s becoming imperative to succeed in China in order to stay competitive in your other markets. Moreover, it’s also a strategic location to target the rest of Asia-Pacific.

Here are some reasons why now would be a good time to start exporting to China.

A rapidly growing domestic market

China is transitioning from an export-led economy to a consumption-led economy, and consequently shifting its traditional focus on developing low-cost products, in favor of attracting more advanced technologies from abroad.

China can no longer be considered as merely a sourcing location. Instead, the second-largest economy in the world is fueling its domestic market and pushing for consumer-driven growth.

The modernization of rural areas

The majority of foreign companies entering the market tend to focus their sales efforts on larger cities such as Shanghai and Beijing. Yet, most of China’s future growth will come from its smaller and less developed regions. Many of the second and third-tier cities, located primarily in central and western China, have been helped by the Chinese stimulus package which has provided better highways and faster trains to increase access to these areas.

Whereas China’s largest cities are growing at around 7.5%, developing regions grow between 8% and 12% per year and are increasingly contributing to overall GDP growth. The modernization of rural areas is giving a push to local economies, which in turn creates more opportunities for businesses. New regulations enable farmers to purchase larger plots of lands and expand their business. But they will need advanced machines and technologies to get the most out of it.

Increased purchasing power

The country’s rapid development has paved the way for an emerging middle class. As incomes increase, people are gaining more purchasing power and the demand for high-quality products and solutions has increased accordingly.

Nor is consumer-demand the only factor pushing the need for more efficient technologies and machines; the graying of the population is demanding it as well. China currently possesses the fastest growing consumer market in the world and its e-commerce market has already surpassed the U.S. in terms of total revenues of sales.

Quality is becoming more important

Whereas price was the main differentiator only a few years ago, Chinese consumers and businesses alike are now increasingly paying attention to quality and brands.

Due to an increase in purchasing power and quality-awareness, value is starting to triumph over price. Foreign brands are often associated with higher quality. As a result, advanced foreign technologies and products of high quality are gaining popularity.

A hunger for new knowledge and technologies

The Chinese government is actively offering support in the form of subsidies and loosened regulations to foreign and domestic companies in order to push domestic innovation and growth in their priority sectors.

The types of subsidies available, such as free land-leases and favorable tax conditions, depend on the region and district you want to invest in. The Chinese government currently supports the following industries: new energies, energy conservation and environmental protection, biotechnology and medical devices, new materials such as rare earths, new IT technologies, high-end equipment manufacturing and clean energy vehicles.

Duco van Breemen

Duco van Breemen

Duco is project & marketing manager at Launch Factory 88. He has lived in China since 2008 and has worked with both state-owned and private Chinese and foreign enterprises.
Duco van Breemen