The Big Impact of Doing Business In China
What if someone walked into your office and told you that there is an untapped market of 300 million middle-class customers, with an estimated 300 million more entering the market over the next 10 years. Would you start to think of what access to this market could mean to your bottom line?
Furthermore, what if these customers have a particular affinity towards New York-based consumer brands and luxury products? Would you want to jump on an opportunity to capitalize on this?
By now, you might realize that we are talking about China. And we are here to tell you that generating revenue from the largest single consumer goods market and also the largest luxury consumer goods market in the world is something that is achievable for New York Brands. This opportunity not only generates more revenue for these companies but increases competitiveness back home in the United States.
The Current State of US Brands In China
New York-based consumer brands have a very specific appeal to the current and evolving domestic Chinese consumer market – Chinese consumers are attracted to the culture and urban persona that New York brands are known for.
Companies can benefit by engaging Chinese markets to develop and establish a competitive edge for both foreign and domestic growth. Many US brands have achieved the market status and financial success unimaginable back in their home market, by sharing the top spotlights with fine European bands in China for the middle and high-end consumer markets.
Pabst Blue Ribbon Beer, Pizza-hut, Haagen Dazs, etc, are some examples. In America, they are known as a staple, while in China they have positioned their product as a premium/luxury brand that is driving more revenue back to the parent company
Even for startup brands, China can become a development and testing launch pad with a certain degree of managed risk, plus the opportunities to access the vast local business resources, from manufacturing, e-commerce, co-branding to investment and finance, etc.
Why Brands Should Think About China
The USA consumer market is becoming highly competitive – driving lower profit margins and a diminishing middle-upper market share due to a shrinking middle class. This leads to the deterioration within the marketplace, especially for premium consumer brands, as well as creative and innovative small and middle size local brands.
For the startups, the challenges are even more daunting – which is why some companies are looking to China to launch a global initiative.
China has passed the economic development stage as a mainly manufacturing driven export country. Its future economy will become more domestic growth driven, particularly in the middle and upper consumer market sectors. While its consumer market still needs the US and European brands for inspiration and fulfillment of the middle-upper marketplace, there’re excellent opportunities for brands from global metropolitan areas such as New York, London, Paris, etc.
As the largest importer in the world, China’s forthcoming economic growth hinges on the domestic consumer market development – which inevitably becomes a crucial part of global consumer trends.
Business In China – What’s Next?
With China’s 300M+ middle-class today and additional 300M+ on the way, their market presents an opportunity to mitigate business risks and operation burdens in the New York/USA market by opening up new growth passages that can drive revenue back to the local American economy.
Leveraging China’s resources (industrial, financial, technology) provides unparalleled access to partnership opportunities with leading Chinese domestic and global players, that seek outside brands over the domestic (Chinese) ones.
Coupled with low startup costs and risks (developing, marketing, e-commerce with global reach, resources by comprehensive manufacturing infrastructures, etc), it is becoming an attractive bet for US-based consumer brands.