China - Different, Difficult, and Unique

China is Different

Even as China enters her third decade of economic modernization, market intelligence (which Westerners take for granted in developed countries) is still not widely available here. China continues to lack a viable database for centralized company information analogous to ""(an online database providing business information on 12 million companies). While limited secondary information may be available, its accuracy tends to be questionable, depending on the reliability of the market intelligence provider. This is due to two reasons.

(i) Local firms often collect information without a systematic approach or a rigorous cross-verification process. Such deficiencies impair the objectivity of a market analysis.

(ii) Official data provided by the Chinese government agencies may be less reliable due to an inconsistent data gathering methodology.

China is Difficult

Western companies investing in China have had a mixed experience in the Chinese market. While this experience has proven highly profitable to some companies, it has also proven otherwise for many.

The typical reasons for market failure in China include the following.

(i) Rushing into the market before obtaining reliable market information to support the investment decision. Some companies have simply followed this trend of market entry without a clear risk/opportunity assessment.

(ii) Relying on secondary information, which is outdated and of questionable quality. Given the rapid business and regulatory changes in China, timely market intelligence is extremely important for sound business decision-making.

China is Unique

The Chinese market has some unique characteristics:

  • Extreme fragmentation. For example, the auto component industry and the pharmaceutical industry contain thousands of manufacturers.

  • Rapid consolidation and restructuring of state-owned enterprises.
  • Being the number one investment destination for foreign direct investments year after year.
  • Complexity due to over investment in certain industries. With the substantial new investments, for example, China has already seen over capacity in the steel industry.
  • A unique business culture that emphasizes on "face-to-face" interaction. This implies identifying the right local partners, which in turn, requires an extensive and expensive on-the-ground networking with potential candidates and sifting through skewed or altered information provided by candidates, until professional assistance can be obtained.
  • Diverse language and dialects, country size, and regional cultural disparities, which make it even more daunting to obtain first-hand knowledge of this market.

    How Frost & Sullivan Helps Clients in China

    Since 1998, Frost & Sullivan has been helping the world's multinationals to enter and succeed in the Chinese market.

    Today, nearly 100 Frost & Sullivan analysts are dedicated exclusively to the Chinese market. Our integrated China team consisting of local professionals applies Frost & Sullivan's rigorous and proven methodology and leverage a rich business and source network across China. Thus, Frost & Sullivan is uniquely able to provide the highest quality of Chinese market research and unbiased growth advice to its clients.

    Click here to e-mail us for more information on our growth consulting services in China