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The Perfect Business Model for China for Western SMEs

Defining the right business model for China is one of the biggest challenges for many European SMEs. Many SMEs on one side have the ambition to do business in and with China and do understand that it is important to be present in China to guarantee sufficient control, but on the other hand they lack the necessary knowledge and resources to manage the project successfully, especially in the first 2 to 3 years of the project. Most SMEs are not willing to set up a legal entity right away or recruit a dedicated sales team in China from the start.

Therefore, many of our customers ask us to be involved in the operational stage of the project as well. In the past years we have set up several successful cooperations with some of our customers. Each time Horsten will take up the following 3 functions:

  • Representation: One Chinese-speaking Horsten project manager in China is appointed to represent the customer in China on a part-time basis. In this way the European SME does have a dedicated representative in China, without all the hassle of having to employ a full-time employee in China and set up its own Chinese affiliate. This is a very cost-effective and risk free approach, enabling our customers to grow steadily without burning cash from the beginning, but nevertheless keeping a certain level of control over their starting business in China.
  • Liaison: The management of Horsten in Belgium functions as the liaison between the Horsten China team on one side and the customer’s headquarter in Europe on the other side. Representatives of Horsten Belgium often travel to China and can follow-up the project in an efficient way. In this way our customer doesn’t experience the typical communication problems when working with a Chinese team or partner.
  • Watchdog: with Horsten’s decades of experience in doing business in China, Horsten will watch over the shoulder of our customer and make sure that no needless mistakes are made or nothing happens to the products or business in China behind the customer’s back. The entire Horsten team in Belgium and China works as a back-office for any logistic, operational, legal, HR, regulatory, marketing or other support services which may be required during the project.

The above approach has proven to be a very succesful strategy for SMEs in their first steps on the Chinese market, thus we can say it’s the perfect business model for a start-up SME in China. In short, Horsten’s mission statement is: If you want to go quick, go alone; if you want to go far, go together.

More information about Horsten International and its unique combination of all-round China services and project management skills, with more than 45 case studies, can be found on this website. Please also check our recent blog with six recommendations for SMEs when entering China at the following link: click here.

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