Entering the Chinese market is a challenging and long-term venture. Establishing an effective business model, knowing the regulations, finding a suitable Chinese partner, launching your brand, training the team in China and in the home country, and understanding the fast-evolving Chinese market and its typical business practices are all important factors that make market entry into China both time-consuming and work-intensive. Members of the Belgian-Chinese Chamber of Commerce (BCECC) are increasingly exploring opportunities in China, driven by innovation, niche technologies, and strong entrepreneurial ambition.
Belgian SMEs often lack the resources to invest heavily in China and usually have only one chance to do it right. Reports have shown that almost half of start-up projects in China fail within the first two years. Therefore, it is not only extremely important for Belgian SMEs to be well prepared and select the right entry mode for China, but also to find a way to follow up and master the project once it is started.
Here are some key recommendations for Belgian SMEs when considering a China venture:
1. Stay in control
Whatever business model you choose, it is important that you permanently stay in control of what is happening in China, including intellectual property rights, management, finances, marketing, etc. Obviously there is a good chance that it will be necessary to have a local partner (or partners) in China (for example distributors), but that doesn’t mean that you have to give away the control over your business.
2. Localization
Even if you have been successful in any other market in the world, when outlining your strategy for China you need to completely reconsider your strategy and take into account the local situation in China, particular market requirements and any other local aspects. Simply copying your strategy for other markets to China does not guarantee success in China.
3. Mitigate the risks
There are always risks when you enter an emerging and challenging market such as China. It is important that you identify and analyze any possible risks, assess which risks you are willing to take and find ways to manage them. Ideally, you should choose a business model that offers the best prospects of success, limits the initial investment and minimizes risks.
4. Flexibility
It is important that you remain flexible in your China business model at all times – even change it if necessary, learn from your experiences and adjust correspondingly. You should also be able to change your partner or add additional partners.
5. Commitment
Maybe the most important factor for your success in China is the commitment of your entire organization to the China project. Merely starting the project and signing the contract with your Chinese partner, and then letting it advance, will unquestionably not work. You need to travel to China on a regular basis, build the relationship with your Chinese partner(s) and customers, get to know and closely monitor the market and follow up accordingly.
6. Exit strategy
Although a business model will be chosen which generates the best possible chance of success, nevertheless, you should build in an exit strategy from the beginning. This will enable you to easily withdraw from China in case the project turns out to be unsuccessful (for whatever reason) or in case another opportunity becomes apparent.
Clearly, staying away from China because of lack of knowledge and understanding or even anxiety about the Chinese market and Chinese business practices should not be an option. Unfortunately many Belgian SMEs often get lost in long decision processes and as a result lose opportunities in China. There are still huge opportunities in China for many Belgian SMEs with unique products or technologies.
We highly suggest that Belgian SMEs seek advice or assistance from China experts, advisors, and networks such as the Belgian-Chinese Chamber of Commerce. For BCECC members, sharing experience, building trust, and learning from peers remain key success factors when entering the Chinese market. With careful planning, flexibility, and commitment, Belgian SMEs can navigate the complexities of China and seize the significant opportunities this market offers.
At the Belgian-Chinese Chamber of Commerce (BCECC), we support Belgian companies in navigating China’s diverse landscape. Please contact us for more information or guidance