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on Wednesday, 10 January 2018
in Business in China

What Awaits in China 2018: A More Dynamic and Flourishing Market —— An interview with PTL Group GM-Arie Schreier

Q: How do you see the market shifting in China?

A: The type of international company that is entering the Chinese market is shifting from a more traditional manufacturing and industrial company to start-ups in the tech and internet industries. About 5 years ago, our feeling as an organization had been that everyone who wanted to enter the China market was already here, or that people had tried, failed, and then left. Concurrently, we began to witness a huge start-up boom not only around the globe but also in the Israeli market, which brought new entrants and clients for PTL Group—and they keep coming. Many Israeli companies have taken advantage of both Chinese and Israeli government grants to help support market entry in China. This aid smoothed the way for companies that would not have entered the China market without access to special economic zones such as dedicated industrial parks, and specific policies that allowed an easier entry.

These start-ups are not just Israeli businesses trying their hand in the Chinese market, some are set up exclusively for the Chinese market. One such example is PTL client UgaUga—an innovate baking products startup that specializes in cake mixes that are optimized for easy baking within a rice cooker, since ovens are not a common appliance in a Chinese household.

It is also not just the business landscape that has changed, the companies themselves have also undergone a type of strategy shift. No longer are companies willing to wait patiently for success in the Chinese market—these new companies do not have the time, patience, or money to wait around to see results. This changes the entire business atmosphere because rapid results are the new standard in the China market.

Q: What has PTL done to adapt to the changing needs of those new to the market?

A: Almost all of our clients had some trying experiences before realizing they needed the kind of support that PTL could bring—a China based partner who assists in managing their operations in China. This meant that many of the previous companies PTL has supported only chose PTL’s services and platform on the second or third try in the market, and only after partnering with PTL, did they see success in the China market. But the start-ups have to get it right the FIRST time. Because of this, PTL has adapted to the new landscape by changing its business models. Now, we try to find these companies before they enter the Chinese market, and provide them “China Boot Camp”-a 5 day intensive training for international start-ups to gain a fuller understanding of every aspect that needs to be address when starting their business in China. The boot-camp prepares the companies for their China market entry and gets things right from the beginning, so that they don’t need a second or third try.

One of our old mantras was “in China, you need to take your time, and have immense amounts of patience. Wait patiently to see results…” But our new client base has proved that this mantra is no longer the benchmark. Some of our newer clients stressed that they could only be in the China market from 6 months to 1 year. During this short period, some of these clients actually do end up getting bought and they can take their earnings to start anew with some other venture; however this may not be the best gain in a long term.

Some companies are just in the right place at the right time. These companies have remarkable results, growing dramatically on a monthly basis, having strong sales and recruitment, and soon after their market entry become a sought-after entity. Companies such as this start making money from the very beginning instead of the 2-3 years waiting period that usually would take for more mature companies. This was a marked shift from before, which encouraged us to adjust our service offerings by creating special packages and pricing that allow us to start with small with businesses when they are fledgling, but still allows us to grow and develop our services alongside their needs. Additionally, we began to provide a variety of marketing services for these clients, such as WeChat account set up and content management, Baidu SEO and SEM, website relocation, and ICP license application. This developed from client feedback as to what they deemed a necessity to be successful in the internet savvy market, such as a Chinese online presence, clear and localized branding, and selling through social media.

Q: Do you have any suggestions for the newcomers to the China market?

A: Recently, we also have witnessed that the overseas companies are coming to seek investments from Chinese investors. Before, they would come with the technology and funds to invest in the market. Now, these types of companies come to China with the tech and ask for the Chinese investment. However, this usually means Chinese investors want the Intellectual Property Rights (IPs). For these new comers, our suggestion is to understand the investment terms clearly and protect your IP in all aspects, among which are trademarks, patent and domains.  Another tricky issue is whether to receive the investment in RMB, as for the newly implemented law that transferring RMB out of China is under strict control. Contact us for any lingering questions regarding this matter.

For the newcomers, we do anticipate that more companies will come here and that a few of them will succeed in their fields. However, these newcomers will also need to be aware that the pillars of success in the Chinese market are often defined by the strong foundation they stand on. Strong operational management from the onset of business in China is key, especially for these new young companies whose management consists of young idealists who are wise to the market needs, but lack practical experience and knowledge of Chinese law and Chinese company management procedures. That is why professional support such as PTL provides is crucial in a company “sinking” or “swimming”.

Talk to Arie and learn more about the dos and don’ts for the China market entry.

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