The Business Case for Expanding to China

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It’s the fastest-growing major economy in the world—expanding nearly 9 percent last year—and 20 percent of the globe’s population calls it home. If these facts alone don’t convince you that China offers endless opportunities to grow your business, consider this: China’s purchasing power ranks second in the world, just behind the U.S.

This vast country offers an economy that’s as diverse as its landscape and a reservoir of 1.3 billion people, who are increasingly entering the middle class with more money in their pocketbooks. China’s deep talent pool can contribute to the success of your business while also acting as an enormous market for American-made products and services across all industries.

Still not sure? Read on for more reasons China should land at the top of your list for global expansion.

Copious Cities

Shanghai and Beijing are certainly well-known economic centers, but China is flush with fruitful places for commerce: more than 260 cities have populations greater than 1 million. Take Qingdao, a northeastern city nestled between oceans and mountains. It was named one of China’s six Golden Cities by the World Bank thanks to its investment climate, governance and other measures. Seventy-six Fortune 500 companies have projects in Qingdao, and it has attracted billions in foreign direct investment.

Another city rich with opportunity is Shenzhen. The country’s first special economic zone, this once sleepy fishing village near Hong Kong transformed into a powerhouse known for manufacturing high-tech products for many industries. Shenzhen has the country’s highest GDP per capita in China, a thriving real estate market, and a sophisticated financial services sector, earning Fortune’s designation as a top five city for doing business in China. If these metropolises don’t suit your business, China has countless others to explore.

Bench Strength

Thanks to the size and scope of the Chinese economy, there’s bound to be expertise and highly trained potential employees or vendors in virtually any industry. Last year alone, 6.3 million students graduated from Chinese universities, hungry for high-paying and challenging jobs. China has reinvented itself from being the factory of the world to a partner in innovation, pushing new ground in many industries from information technology to telecommunications. Other strong Chinese industries include minerals and energy, building construction products, electronics, medical devices and pharmaceuticals.

Incentives and Assistance

China is home to the U.S. Embassy in Beijing and four consulates across the country where trade professionals can assist you with your business needs. In addition, 14 cities are designated as American Trading Centers by the U.S. Commercial Service. These cities account for 54 percent of China’s imports and are growing at an average rate of 11 percent per year. There, American companies can take advantage of consulting and business advice services from U.S. trade experts, including sessions on overcoming barriers, protecting intellectual property and tracking market developments.

China has been a pioneer in creating special economic zones, which foster foreign investment with more liberal trading rules and tax incentives. This spring, the Chinese government announced a package of financial incentives focused on 10 key industries—especially high-end manufacturing, high-technology and eco-friendly businesses—located in central and western China. If your business fits one of these categories, you could receive lower land prices, exemptions from tariffs and other tax breaks for setting up shop. 

Infrastructure Investments

China has been investing heavily in its infrastructure, especially its transportation system. Ports, airports and roads all are being improved to keep goods moving across this huge country, which can help your company bring products to market faster. One of the world’s busiest ports, the Port of Shanghai, is undergoing a significant upgrade to improve automation and minimize the loss of goods. If your line of business is in construction equipment, engineering or safety, you might have an opportunity to win work on one of these large infrastructure projects.

Many companies are also expanding their services to help you ship your products to or from China. For example, the FedEx Guangzhou Hub, which opened in February 2009, now serves as a major shipping center for the entire Asia-Pacific region. See the FedEx International page on China for shipping information, including import and export restrictions and requirements.

More Details

For other assistance and resources, turn to the U.S. Commercial Service of the U.S. Department of Commerce, the American Chamber of Commerce in the People’s Republic of China, and the U.S.-China Business Council.

Suzy Frisch is a freelance writer based in Apple Valley, Minn. She’s covered business, politics, law and many other topics for a range of publications, including Twin Cities Business magazine, the Star Tribune and the Chicago Tribune.

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