China

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Country starter pack
Getting started in China
2.2 RESEARCHING CHINA
Some useful public data sources on the
Chinese market include:
• National Bureau of Statistics
• China Internet Network Information
Centre
• China Greentech Report, produced by
the China Greentech Initiative.
Intellectual property (IP)
Intellectual property (IP) rights have been notoriously
difficult to enforce in China. Despite recent
improvements in the ability to both register and
protect IP, some companies reportedly continue to
suffer commercial losses due to problems in this area.
Counterfeiting, for instance, is estimated to result
in approximately 20 per cent revenue loss for many
global products, while estimated losses from piracy and
counterfeiting of movies and software can be as high as
90 per cent.
China is one of 10 countries on the US Trade Office’s
2014 Priority Watch List, which targets countries that
do not provide an adequate level of intellectual property
protection or enforcement, or market access for anyone
relying on IP protection. Overall, however, protection of
IP rights in China has improved in recent years thanks to
the passage of new laws. Enforcement campaigns have
also been stepped up, although this effort has not been
sustained.
Regional risks
Australians wanting to do business in China should also
be aware of regional tensions involving China that may
contribute to business risk. China’s relationship with
Japan is at times difficult due to historical grievances and
an ongoing territorial dispute over the Diaoyu/Senkaku
Islands. These can be sensitive issues for Chinese business
partners and are best not to be discussed. Large-scale
protests that occur during heightened tensions with Japan
are unlikely to target Australians or Australian businesses,
but can be disruptive. Protests also occur in some parts
of the country where there are internal tensions including
regional areas requesting independence. These can be
disruptive for businesses.
Rival territorial claims in the South China Sea are
another source of tension between China and some of
its neighbours, including Vietnam. There is also ongoing
sensitivity with Taiwan, which varies in intensity depending
on the state of political discussions. Elections in Taiwan can
particularly lead to increased tensions with the mainland.
Comprehensive research is crucial when entering the
Chinese market because of its unique features, including:
• Geographical size and cultural complexity
• The speed with which the market can change and
evolve
• Rapid change in rules, regulations and the focus of
enforcement authorities
• A lack of consumer information and vague
regulations.
Your market research should cover a very wide field, from
import duties and other regulations to market-specific
issues such as distribution channels, market size and
growth, competition, demographics and local production.
Gathering this information is usually straightforward
but it is easy to get overwhelmed by research and all the
information that exists. This section aims to condense the
main areas that can assist you. However, do not limit your
Chinese market investigation to this guide.
When researching China, you need to be focused on the
needs of the Chinese market, not your own company’s
needs. As discussed earlier, it is vital to take into account
the different geographies and markets within China.
Even urban markets in the same province can differ
significantly. Compare Guangdong’s Shenzhen, with its
young migrant population of predominantly Mandarin
speakers, with Guangdong’s Guangzhou, and its older,
more family-centred composition of Cantonese speakers.
Each region must therefore be researched before entry,
as customer preferences, as well as regulatory and value
chain considerations, vary. There exists a broad spectrum
of income levels as well, and new types of Chinese
consumers are emerging, exhibiting unique spending
behaviours. Plans are subject to change, though, and
some flexibility will be needed to account for the change
in dynamics of these disparate markets and the shifting
needs and tastes of Chinese consumers.
Information available on the internet can only get you so
far. You may need to commission your own professional
China-based research and visit the market in person
numerous times to develop crucial relationships. Data
availability and reliability are also important considerations
for any market study. The urban migrant population can
be difficult to track, while some Chinese consumers are
becoming more reluctant to disclose personal details.
Market statistics might either be region-specific or
industry-specific or too broad or out-of-date to be
useful. Researchers should also note that much of the
useful market information may be in Mandarin.