What is the right way to build and consolidate a successful business in the Chinese market?
Most international business managers recognize the importance of operating in a calculated and gradual manner in China, but practically speaking, what should you do to ensure your China business scales effectively?
The answer is simple. Many of our clients, international companies doing business in China would attest, that outsourcing back-office functions such as accounting, HR or supply chain management to an external proficient and market-specialist service provider, is critical to solidifying their growth.
And to prove this, we asked our clients to summarize the benefits they have experienced from outsourcing operational tasks in China. Here’s what they had to say:
1 – Localized reach – increasing your grip on the market
When initiating market entry in China, international companies usually have a modest local presence. Also, unfamiliarity with the China’s various legal and procedural systems, contrasting cultural barriers and business norms inevitably lead to the making of easily avoidable mistakes.
Relying on a professional services provider that operates in market and is aware of all the local standards and regulations, enables international companies to operate efficiently and save costs from day one. By utilizing the service provider’s local knowledge and facilities (e.g., accessorized shared offices, warehouses, manufacturing lines etc.), the company’s attention can shift to establishing sales, distribution channels and consolidating their customer base in China.
2 – Overcoming regulatory obstacles
International companies especially at the China Market Entry phase occasionally face a dilemma when encountering regulatory difficulties. A common example is conducting sales using the local currency (RMB). On the one hand, their scope of business in China does not justify the investment into establishing a local company that would operate using local currency. Whilst on the other hand, some Chinese clients are reluctant to accept payments in a foreign currency, or they physically aren’t able to do so.
A well-established local service provider can perform these transactions on behalf of an international company and solve this dilemma easily.
3 – Easier adaptability & flexibility
In the event of any crises occurring, (Covid-19 being an obvious example), companies are usually compelled to make operational adjustments. And naturally, loss of time and control are somehow inherent in any process of change.
Yet, both flexibility and stability can be maintained if change is managed correctly. When operational services in China are outsourced and provided by a reliable service provider, change is easier and the advantages of a fulfillment service in China remains clear. Thanks to the service provider’s infrastructures and their interfaces with clients, businesses don’t need to compromise their sales in China and instead are able to boast a sense of operational reliability and assurance.
4 – Efficient & focused functioning
Outsourcing operational services is choosing an efficient and pragmatic economic solution to managing your activity in China. It enables sales managers to initiate sales and allows your representatives in China to focus on developing your business. Without this China business support, an international company’s China team might be overwhelmed by the bureaucratic and operational requirements that come with running a business in China, leaving them struggling to find time to sell and grow your company’s in-market presence.
5 – Reduced manufacturing expenditures
Any business that enters the Chinese market seeks to increase sales, and this is exactly what the industrial incubator focuses on. Its customized production facilities provide a quick and cost-effective solution to initiate local manufacturing or assembly in China, and as such, to enter the Chinese market responsibly.
International companies operating in the incubator can enjoy a wide range of on-site managerial support services. It allows companies to build the foundation for an independent manufacturing operation in China, without the need for high initial investment.
For 20 years PTL Group has helped international companies in the running and management of their operations in the Chinese market. We’d be happy to assist you as well.
Good luck in your China adventure!
PTL Group Team