Entering China's Market: International Business Strategy Guide

Introduction

As a Western manufacturing company of English-language products considering a major investment in one of the BRICS countries—preferably China—it is advisable that the company first possess an assessment of the feasibility of achieving its aims in a country like China, which is currently engaged in a trade war with the U.S. that shows no signs of letting up. Moreover, an examination of the overall context of globalized society in the 21st century will help the company determine whether this investment would be particularly strategic at this time. While the general business environment in China is broadly positive, there are a number of obstacles that Western companies face when attempting to enter the Chinese market. Cultural and institutional challenges make up the bulk of these obstacles, but, as other companies have overcome them in the past with the right approach, it is not impossible that this company should achieve the same.

This report will (a) give advice on the general business context internationally and nationally, (b) advise on entry mode and explain why that entry mode was selected, (c) advise on dealing with institutional and cultural differences as well as opportunities and challenges between the host and home countries, and (d) base all advice on theory supported by academic literature, evidence-based practices, relevant data, and statistics wherever applicable.

Global and National Business Context

Global

Altbach (2004) points out that "English-language products of all kinds dominate the international academic marketplace" (p. 11). Journals, books, and other popular media formats in which English-language products are produced and disseminated can be found virtually everywhere in the world. Part of this expansive reach of English is the fact that, at any given time in today's globalized world, approximately 1.5 million students are studying in some discipline outside of their native countries (Altbach, 2004). Some 80% of all international students, moreover, hail from developing countries—which means English is not their native language, and yet it is more than likely the language in which they will pursue their education (Altbach, 2004). English as a global lingua franca is particularly prominent in Asia: Bolton (2008) notes that there are more than 700 million English-language learners from India to the Far East. This means there is certainly a market for English-language products in the East. In China specifically, it is estimated that approximately 500 million students are engaged in English-language learning (Bolton, 2008). With a population of 1.3 billion, roughly one-third of the nation's people are involved in some form of English-language learning.

National

As Pan and Block (2011) note, English is viewed as a "global language" in China, where this company's English-language products are intended to be sold. There is therefore a clear market and demand for this type of product among Chinese consumers. The Chinese people are, moreover, very forward-looking (Agnew, 2012) while simultaneously maintaining their traditional cultural values. This means that the Chinese are willing to invest a great deal of time and energy in learning while also keeping a considered distance between their culture and that of the West. The attempt by Mattel to sell its American Barbie products in China illustrates the extent of the cultural divide between China and the West (Lyles, 2008). Nonetheless, because English is recognized as a "global language," the products this company aims to produce and sell in China are unlikely to be met with the same indifference or resistance that Mattel faced. China is, after all, one of the world's largest sources of students traveling to the West (Altbach, 2004).

In short, there is a great deal of national interest in China in accessing the English language. Likewise, with China's economy growing at an exceptional rate in the 21st century—at roughly 10% year over year in recent years (Bolton, 2008)—there is a significant economic advantage to entering the Chinese market. This market is fertile: "by 2020, it is estimated that 300 million, or 40 per cent of the Chinese population [will] be in the middle class" (Bolton, 2008, p. 8). As part of the middle class, these 300 million Chinese consumers are also more than likely to be English-language learners—a strong indication that the market for English-language products in China is ripe.