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?
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 business potential in China.
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 – Effective operation from day one
When initiating market entry in China, international companies usually have a modest local presence. Also, unfamiliarity with China’s legal systems and bureaucracy, and the need to deal with cultural barriers in the local business landscape, usually lead to making mistakes.
Relying on a professional services provider that operates in the market and is aware of all the local regulations, enables international companies to operate efficiently from day one. Thanks to the service provider’s local knowledge (accounting, logistics management, HR, digital marketing) and facilities (accessorized shared offices, warehouses, manufacturing lines etc.), the company can lean on professional support in all business aspects, and shift its attention 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 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. So how can you collect payments? And how to repatriate profits out of China?
In this case too, a services provider in China can perform these transactions on your behalf and solve this dilemma.
3 – Maintaining stability & reliability even in times of crises
In the event of any crises occurring, (Covid-19 being an obvious example), companies are usually compelled to make operational adjustments. Naturally, loss of time and risk-taking 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 (employment and payroll management, invoicing, VAT refund, storage etc.) are outsourced and provided by a reliable service provider, the change will be relatively easy and fast. In such sensitive situations, the advantages of outsourcing day-to-day tasks remain clear. Thanks to the service provider’s interfaces with clients and distributors – businesses are able to boast a sense of operational reliability and assurance, even while undergoing significant crises.
4 – Focusing on Business Development & building pipeline
Outsourcing operational services is choosing an efficient and economical solution to managing your business activity in China. It enables sales managers to initiate sales and allows your representatives in China to focus on developing your business and building a pipeline of customers in China.
Without this back-office China business support, an international company’s China team might be overwhelmed by the bureaucratic and operational requirements, 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 develop a local market and increase sales. These are exactly the needs the industrial incubator focuses on. The incubator’s customized production facilities are tailored to the client’s needs. Hence, is provides a quick and cost-effective solution to initiate local manufacturing or assembly in China. Put differently, they enable to enter the Chinese market responsibly.
International companies manufacturing or assembling products in the incubator can save costs and market “made in China” products, meeting the Chinese requirements. In addition, they enjoy a wide range of on-site managerial support services and the opportunity 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. Read more about our professional services or contact us.
Good luck with your China adventure!
PTL Group Team