Subscribe to feed Viewing entries tagged SMEs

Entering the Chinese market: more challenges, more rewards

Posted by Tyler Kretzschmar
Tyler Kretzschmar
Tyler Kretzschmar has not set their biography yet
User is currently offline
on Monday, 22 April 2013
in Business in China

The global financial crisis and the fast growing Chinese consumer market, as well as the abundant wealth available for investment in China today, amplify the growing need to penetrate and operate in the Chinese market. It is no secret that China offers numerous opportunities to expand a business; however what remains a mystery for many small and medium sized enterprises (SMEs) is how to effectively address the challenges of entering and operating in China.

One such challenge is the growing market itself, giving way to an increasing number of competitive local companies. The 12th Five Year Plan that laid the roadmap for China’s social and economic development for 2011-2015 shifted the focus of the Chinese policy makers to the strengthening of China’s dynamic new homegrown companies, referred to in China as Domestic Private Enterprises (DPE), both home and abroad. In 2010, 60 percent of China’s GDP came from DPEs – this is in striking contrast to the 38 percent they contributed in 2005. The fact that GDP is expected to quadruple itself between 2007-2025 also gives perspective into the business threats facing foreign companies in China and in home markets in the next few years.

Furthermore, the 12th Five Year Plan’s goal to increase the overall quality of life for Chinese citizens is creating higher operating costs in some sectors. One example is minimum wage increases (up to 13 percent each year), translating into more costly production in many of the developed manufacturing hubs along the coast. Another is China’s goal of a 40 percent reduction in carbon-dioxide emissions per unit of GDP by 2020, constituting elevated environmental taxes for manufacturers. 

Dutch Trade Delegation's visit to Changzhou and Jintan Economic Development Zones, a great Success!

Posted by Administrator
Administrator
Administrator has not set their biography yet
User is currently offline
on Tuesday, 13 November 2012
in Business in China

The branch associations FME-CMW and GMV China, organized a Dutch Trade Mission to Shanghai and Beijing, China from the 4th to 9th of November. The Mission was aimed at operations and export managers from companies that want to make the step in search of setting-up production and sales in China. The delegation consisted of companies that focus on two of nine key business sectors; Agro-food and High-Tech Manufacturing, sectors in which the Dutch government had implemented international economic policies over the past few years.

During their visit to Changzhou, the participants visited the Changzhou Industrial Incubation Initiative (CI3). This is a 13,000 square meter area that consists of manufacturing and office space, in the Wujin Economic Zone (WEZ), Jiangsu province. There, companies are able to create a cost-effective establishment that includes the development of their own production and sales facilities in China. 

In the morning, Zvi Shalgo (CEO, PTL Group) gave a presentation about the opportunities for Dutch SMEs in the Chinese market, and the challenges in managing production and distribution channels in China. Afterwards, the participants went for a guided tour within the CI3 compound.

For lunch there was a meeting hosted in the presence of Yao Xiaodong, Mayor of Changzhou (a city with approximately 4.6 million citizens), and the visit to Jintan was officially opened. To create a better understanding of the companies that are operational in the Jintan area, the delegation then visited several companies operating in various industries. After the company visits, presentations were given by Roeland Schuurman, Representative Officer of the Netherlands Business Support Office in Nanjing (NBSO), Zvi Shalgo and Ding Rongyu, Mayor of Jintan.

The day ended with a diner hosted by the government of Jintan, in the presence of all the Jintan government officials. The NBSO in Nanjing, representative of the province of North-Brabant of The Netherlands, and the vice-consul of the Consulate of the Netherlands in Shanghai were also present at this official event. 

Overall, this was a mutually beneficial event and a big success for Dutch companies willing to learn about doing business in Jintan area and China, and to be able to establish high-level connections with the local government. It also strengthened the healthy economic relationship between China and the Netherlands. PTL Group would therefore like to thank the Jintan Government and all other partnerships involved for their efforts making this day a success.  

Increasing labour costs? Should I stay or should I go

Posted by Administrator
Administrator
Administrator has not set their biography yet
User is currently offline
on Tuesday, 30 August 2011
in Business in China

Offshoring and increasing labour costs

Every country with cheap labour eventually gets richer - the labour costs increase and alas, we nomadically relocate to another country. Generally, the key benefit of offshoring is lower labour costs. In light of China’s fast-increasing labour prices, companies are faced with a dilemma - to stick to one’s guns and remain in China, potentially losing that attractive profit margin, or to shift one’s industry to another developing market. This article sums up some key stats and argues for staying in China. The key tenet of this proposition is that a Yuan revaluation is inevitable, leading to an appreciation in buying power. The domestic market in China will experience a surge. This, coupled with China’s increasing investment in inbound SMEs and a superb infrastructure are but a few of the pillars of a competitive multinational in China.

The current labour problem

According to the IMF, China’s labour is now the third most expensive in emerging Asia, after Malaysia and Thailand. New labour laws arguably offer more job security to the detriment of employers and transport prices are rising with the cost of oil. All the while, there is the question of a Yuan revaluation and the resulting impact of an appreciation on the export Industry.

Boston Consulting Group listed a number of multinationals, which have already shifted production, including Caterpillar, Ford, Flextronics and toy manufacturers such as Wham-O. These have moved to other cheaper Asian countries or back to their home markets.