Opportunities in the B2B sector in China
This is an abstract from an article written by Bart Horsten and published on the WeChat account of the Belgian-Chinese Chamber of Commerce on 15 September 2020.
Europe has many great companies, many of them SMEs (small and medium-sized enterprises) and family-owned, and with high quality products or services and advanced equipment or technologies. In B2B-industries, a lot of these SMEs are world leaders in niche industries, successfully exporting their goods to international markets. Examples are companies in sectors such as automotive, agribusiness, environmental tech and sustainability, logistics, food and beverages, life sciences and health, high-tech equipment, textiles, aerospace and aeronautics, etc.
China is the promised land for many western companies, also for B2B industries, but only a limited number of SMEs are successful in China. Here are some guidelines for B2B companies.
China’s 5-year plan
First, it is worthwhile to study the priority sectors of the Chinese government, as outlined in China’s 5-year plan. The soon-to-be-announced 14th 5-year plan for 2021 – 2025, on the agenda during the upcoming fifth plenary session of the 19th CPC Central Committee to be held in Beijing in October, is expected to focus on the same priority sectors as the current 5-year plan: IT, artificial intelligence, biotech, new energies and new materials, environmental technology and services.
If you are active in one of those industries, you can certainly find a lot of potential customers or investors in China. The Chinese government is actively trying to acquire new technologies to boost the country’s global competitiveness. Consequently, advanced technologies that are in line with the Chinese government’s goals have great potential for future growth within the domestic market.
China moving up the value chain
Additionally, in the past years China is focusing on automation, efficiency improvement, innovation and digitization. The Made in China 2025 program has the objective to transform the country from being a mass-producer of cheap, labor-intensive low-quality goods to the manufacture and export of higher-value products, made by a high skilled workforce. Consequently, if your company is dealing with such activities, it is about time you look at China. And finally, there are also opportunities for European companies in the Belt & Road Initiative (BRI).
Know the market
If your company is not active in one of these industries, there may still be opportunities in China, but it is important to investigate the market: is there is a market for your products, services, equipment or technology? What are the industry-specific regulations in China? Are your competitors active in China? And if so, how did they enter the market? By setting up their own legal entity, or by working with agents or distributors? What can we learn from this? And finally, it is important to protect your intellectual properties (patents, utility designs, trademarks, trade secrets).
Selecting your mode of entry
There are multiple entry modes you can choose from. The majority of B2B companies wanting to sell in the Chinese market will initially start working with a local distributor. If the distributor’s results show potential, the next stage would be to initiate more sales activities within China by developing a local sales office. This stage might also involve localizing (part of) your manufacturing to become more competitive.
B2B marketing in China is a bit different from the West. Traditional trade shows, conference calls and meetings are irreplaceable aspects of B2B marketing now and in the future. However, in particular because face to face meetings with your customers in China has become very difficult these days, a digital presence is increasingly important.
Your business’s presence on sites and apps like LinkedIn, Maimai (China’s LinkedIn), WeChat, Zhihu, Alibaba.com, 1688.com, Globalsources. com, blogs and more can be used for product promotion, education and to assess market feedback.