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Why China Is an Attractive Market for Export

| June 17, 2016 | Articles

In the current evaluation of the international trade, any analyst would rank China as the world largest supplier of goods: it is the world’s largest exporter.  In fact, many countries are warning about the effect that the high penetration of products of Chinese origin is producing in their economies.  However, China is also a demanding market of products and services. There are immense opportunities for those who want to develop that market.  It could be said that the export potential of China and the level of demand in the market are two sides of the same coin.

This reflection leads us to wonder if there are concrete grounds to direct trade actions toward such a large and faraway market, which has not yet been sufficiently evaluated by the majority of the Caribbean exporters.

In response to the existence of motives, there are six main reasons why companies that are developing external markets should take a look at China.

What are the main reasons that make China such a great attraction for the export market?

The high economic growth: China has grown at double-digit rates over the past years, currently continuing with enviable rates by the standard’s of almost any economy in the world.  By 2015, GDP growth slowed, although it stands close to 7%. The GDP per capita was USD 6,250 in 2008; it is estimated that it will reach USD 8,870  in 2016, which represents an increase of almost 50% in less than 10 years.  For 2020, GDP per capita is estimated around USD 9,500, which indicates that the increase of consumption will continue.  This denotes the existence of an extremely large market, and growing, creating the appearance of opportunities for new bidders.

The number of people joining the middle class: The middle class of China has grown significantly in recent years, already larger than the middle class of the United States.  This social class was 157 million people in 2009, and it is currently estimated at 200 million, representing the class that comprises 20% of the country’s inhabitants.  By 2030, this social class will exceed one billion people.  This suggests the search for opportunities, arising from the consumption that aspires people who are going to climb socially.

The demand for services: Along with the growth of the economy and the middle class, new demands are appearing in the market.  Much of these needs consist of services that improve the quality of life of the country’s people.  Examples include: medical, recreational, cultural, sporting and educational services, which have increased their share of household budgets.

The existence of unsatisfied market segments: China has very different market segments.  Just as there are those individuals who assess price over all other variables, there is a market of middle class hungry for higher value-added products. Likewise, there is a very high income sector, which meets their needs through premium products.  The food industry is a clear example of this situation, where the higher income consumers are willing to pay very well for differential quality products.  Remember that China is the second country with many of the rich in the world, counting with more than one million millionaires, and nearly 17 million homes for wealthy families.

The interest in the Westernization: Many Chinese consumers have formed an image of distinction as to the adoption of Western customs.  Many products of the products that they demand correspond to the so-called “aspirational” category, i.e., those that cover needs of a higher hierarchy, and tend to differentiate people.  Assimilation of Westernization currently appears to be a sign of distinction in China.  This triggers demand for many products that denote Western culture.  Some of the new customs derived from this Westernization consist of dining options, beverage choices like coffee, wine or beer, or a preference for certain shops pertaining to specific international brands.

The increase in online purchases: Online sales has grown significantly, and people are growing increasing accustomed to using the Internet to acquire products.  Food, mainly fresh produce and other perishables, are leading online shopping statistics, followed by tickets for shows and events, and games. This trend opens doors for new offerings over the Internet, exploiting the fact that consumers are accepting this channel for purchases.  The growth goes in hand with the use of credit cards, an ideal means of payment to buy and sell on the Internet.  It is estimated that by 2020 China will be the world’s largest credit card market, overcoming the United States.

In this regard, there are tremendous export opportunities in the Chinese market.  The first step is to analyze the market for your company’s product, after which you are sure to discover many opportunities, which will be capitalized by those who first enter this market.

The professional team of trade experts behind the MasterCard Biz site has assisted with numerous business plans to insert products and sell services in the Chinese market.  You, as other companies have done already, can seek the advice of one of our specialists in the Chinese market, who will provide you with information and experiences, assisting with your firm’s entry into a transcontinental business venture.

RGX Online
RGX Online
RGX is an international consulting firm with presence in 53 countries worldwide working to assist exporting companies in their process of internationalization. Our global presence and our knowledge of each market allows us to work with companies in the country of origin and in the destination country, accompanying companies throughout the process and facilitating their negotiations. With 17 years of experience, our access to the SMB segment is due in large part to our work as partners and suppliers of content, training, and consulting services for more than 700 chambers of commerce and business associations and different areas of government to implement projects and growth strategies for small and medium-sized exporting companies. Our extensive knowledge and access to SMBs and our close relationship with governments, chambers of commerce and business associations is the reason why multinational companies choose us to assist them with the creation, development, and implementation of various projects for the acquisition, understanding and conversion of the segment.

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