China used to be the production powerhouse for products that the world wants. But now, the Chinese consumers and businesses are buying too and selling in China is a great opportunity. “China is no longer only a ‘sourcing heaven’, it is rapidly becoming a new market with great buying power”, says Maarten ter Keurst of Launch Factory 88, an incubator firm in Shanghai that provides a B2B sales and production platform. He sees opportunities in important market areas: agriculture, medical equipment and water technology.
Companies that source their products to ship them all over the world may need to rethink their strategy. The growing Chinese middle class are the new consumers of today and tomorrow. But that is only half the story, says Maarten ter Keurst, Business Development Manager at incubator services company Launch Factory 88. “Selling products to local companies has become a viable option. There is a strong development in certain Chinese industries. For example, recent agricultural reforms by the central government will allow Chinese farmers to trade their land. China’s agriculture companies will scale up in the future, leading to a growing demand for several types of machinery and equipment. International companies with expertise in this area can benefit.”
Launch Factory 88 is a business development agency with sixteen years of experience in setting up local production for international companies with a strong focus on complex metal and plastics products. “The traditional approach was to produce and ship all products to Europe, the US and other markets. Next to this, the entrepreneurs behind Launch Factory 88 have set up several businesses in China in which they have been successful in selling to Chinese B2B customers. More and more clients have tried their luck on the local market and Launch Factory 88 helps them take the necessary steps to sell on the local market, combining our production services with our experience in selling to the local market.”
Companies need to produce locally, Maarten ter Keurst insists, to be competitive in cost of shipping and import fees and in delivery times. “For some products local manufacturing is a government requirement. Anyone who wants to sell certain types of medical devices, should have 60 per cent of the products made in China.” Like agriculture (see above), medical technology is one of the development focus areas that was recently defined by the Chinese government. “We expect the market for medical equipment to show a growth rate of at least 20 per cent per year.” Another promising market for selling in China is water technology and management. “There is great challenge in China’s water quality and good solutions and products in this area will surely find buyers.”
If your company is not a large multinational, setting up an office may be a large and costly step. “You need to find agents and distributors to market and sell your product all over China. Finding the right partners is one thing, but how are you going to train their staff? How to handle after sales? Setting up local activities can be a formidable task if you want to steer and oversee things from Europe or the US. It is virtually impossible to do that without having a local party that can pave the way, find partners and take care of the numerous tasks at hand.”
Launch Factory 88 specialises in setting up local presence in China, from within its incubator facilities. “We hire dedicated personnel with specific experience in the target industry and let them operate in our office, under our business licence. An international business does not have to set up its own entity immediately; it can focus all efforts on developing the market. We offer supervision and monitoring of local sales staff on behalf of our international clients: we offer a stepping stone, with full backoffice support. All you need to do is focus on the sales efforts and work on the next step: being so successful that you need to open up your own office in Shanghai or any other major city."