We all know that since 2010, China became the largest economy in the world. But what does this really mean for companies around the world? An opportunity to sell products from around the world in the Chinese market.
I am from Mexico and I came to live in China 2 years ago. While being here, I have seen how businesses from Latin America are falling behind when it comes to China. For example, nowadays around 80% of Mexican exports go to the USA, and only 2% of Mexican exports go to China.
What would happen if those companies that make up 80% of Mexican exports turned their attention to the Chinese market?
How big is China compared to the USA?
While traditionally exporting to the USA has brought enormous opportunities for companies, China is a huge market that is currently being unexplored by a lot of companies. China has the world’s largest middle class, that is estimated to reach 630 million by 2022.
This is almost twice the current US population, and 3 times the US middle class. And because its huge consumer market is one of the main drivers of growth of the economy, China is ready to purchase foreign premium products on a massive scale.
It is true China might be unknown and complex market, but the key to getting China right is understanding the market and understanding the consumers first, to adapt the products and strategies to the market.
Even large companies have made mistakes when trying to do in China what works in the West, which is not always the best idea. But when they do adapt, the benefits can be substantial.
What did Starbucks do to succeed?
For example, what has made Starbucks succeed in a market that has traditionally drunk tea for thousands of years and had was not used to drinking coffee?
Most importantly, it did not arrive to China trying to impose a coffee drinking culture. It first embraced the tea drinking culture introducing beverages with flavors familiar to the market, in a very chic and comfortable place that made the experience of going to Starbucks and meeting friends exceptional.
Chinese people started to associate Starbucks with a symbol of Western coffee culture, and with it a representation of modern lifestyle. Today, Starbucks has more than 3,600 stores in China, and in 2017 it opened its biggest store in the world in Shanghai.
Just as it was possible for Starbucks, entering Chinese market is possible for foreign companies who are willing to commit and adapt to it. The benefits will be greater to those who decide to tap on it sooner since now companies from all over the world want to go to China, and competition among local and foreign players will be increasingly fierce.
It’s time to think outside the box and include China into your plans of global expansion, before it is too late.
Read more about e-commerce in China in my previous article: