The Downsides of Doing Business in China
Corruption May Occur During Procurement
As there is a close association with Government officials and businesses, there have historically been issues of bribery and additional middlemen being inserted into business proceedings, which can be difficult to handle or report.
Intellectual Property (IP) May Not Be Completely Protected
IP laws in China are not considered to be as robust as some countries, and the Chinese legal system does not often take strong action against counterfeiting or IP theft. This means that serious precautions to protect IP are an absolute must.
Domestic Products are Generally Prioritised
Although Chinese customers can have access to a huge range of products and services, there is a history of the Chinese economy protecting its own first, and typically prioritising domestic businesses over foreign-owned companies. This can make it extremely difficult to gain a foothold.
Rising Costs
With the rapid expansion and changes to the Chinese market, along with infrastructure improvements and demands for better conditions and rights being enshrined in law – businesses in China have to account for the increasing costs that are coming with it.
Making a Decision
There are definitely strong reasons why doing business in China can be a great step forward for your business, but as with every decision, it does come with consequences that you have to evaluate before taking that step forward.
Consider carefully your current business structure, strategy, product, and placement in the market – and then consider the pros and cons of what expansion (either in premises or product offering) can, will, and could do for your business.
Once you’ve got your list of ‘it will do this’, ‘it can do this’, and ‘it could do this’ – you’ll be much better placed to decide how much each of those factors are worth, and whether the potential risk is acceptable for you and your company going forward.