Doing Business in China For Dummies®

Considering Industry Development

Think about how developed your industry is before pursuing manufacturing in China. Different industries are in different stages of development. For example, the Chinese steel industry is world-class in terms of quality and capability; the automobile industry isn’t really there yet. Foreign investment has driven the development of some industries in China, such as telecom and automotive. Other industries — such as steel and shipbuilding — develop mainly because the government emphasizes them and focuses on building infrastructure to support them.

If you have a manufacturing capability that isn’t developed in China, the situation offers both an opportunity and a risk. You can be one of the first in your industry to take advantage of producing in China, thereby giving you a competitive advantage. On the other hand, some of your technology and processes will be copied if you’re an early mover into China. Also, you’re probably going to have to put in a lot of effort training your workforce.

Entering a developed industry may be less painful because the government should have a better understanding of what you’re doing, somebody else already lost more IP than you likely will, and you may be able to find workers with some experience in what you do. However, competition will already be tight.