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Community Blog The 7 Barriers to Success in China (And How to Beat Them) – Asia Accelerator Series Part 2

The 7 Barriers to Success in China (And How to Beat Them) – Asia Accelerator Series Part 2

In the second article of the Asia Accelerator series, we will get to know the 7 barriers to success in China and how to beat them.

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Learn all about the opportunities, market barriers and entry strategies in our latest Your Journey to China: Identifying the Opportunities, Market Barriers and Entry Strategies whitepaper.

China is a complex but promising landscape with the potential to propel savvy businesses into a market where consumer spending is predicted to more than double in the next 10 years, reaching USD$12.7 trillion by 2030.

But success in this market is not always easy – that’s why Alibaba Cloud introduced the Asia Accelerator and our China Gateway 2.0 solutions to help businesses overcome the barriers to success and scale with confidence. Let’s look at those barriers in more detail now.

Barrier #1: Language

In a country of more than 1.4 billion people, the average level of written and spoken English across China is generally low. According to a 2021 English proficiency survey by Education First, China ranked 49th out of 112 non-English speaking countries with most English speakers based in the major east coast cities such as Beijing and Shanghai.

This can complicate typically straightforward administrative procedures, requiring businesses to find dependable bilingual local contacts.

Barrier #2: Trade Policy

China’s trade policy has gradually shifted away from protectionism, since its economic reform started in 1978. However, this transformation has not always been steady and varies across sectors.

Understanding the rules and regulations set by the Chinese government can be challenging but it is essential because nearly all products that go on sale in China are required to go through full clearance at China’s customs office.

Barrier #3: Investment Climate

Investing in China is a concern for some due to a rising national debt levels and slowing growth, as the economy transitions from investment-fuelled to consumption-based models.

However, China’s policy climate around inbound investment is favorable and is likely to remain this way. The government knows that it cannot maintain its growth rates without foreign money. China’s drive for digitization, consumption and more value-added services will not be possible without support from foreign investors.

Ongoing investment reforms will likely lead to a more streamlined approval process as well as encouragement for foreign investors to participate in China’s major initiatives.

Barrier #4: Vast Geography

China’s scale is daunting. Some of its largest provinces are larger than France and Germany combined.

However, mapping the geographic distribution of China is fairly straightforward with regional and provincial governments enjoying a high degree of autonomy in economic planning and the central government eager to diversify China’s economy.

Barrier #5: Intellectual Property and Regulatory Compliance

Several high-profile incidents of IP theft from foreign companies by Chinese firms have captured media attention. Mirroring the rest of China’s legislative landscape, regulatory laws are also becoming increasingly sophisticated and extensive.

On1 November 2021, the country’s first comprehensive data privacy law came into effect, for example, affecting how companies do business in China and with global repercussions.

Barrier #6: Labor Costs and Skill Sets

As of 2020, average wages in China almost tripled from 37,147 yuan in 2010 to 97,379 yuan.

Foreign businesses have also consistently identified a lack of skilled labor as a serious problem. For foreign multinationals looking for professionals at the higher end of the labor market, this issue is compounded by the growing number of domestic firms looking to attract graduates and skilled workers.

Barrier #7: Internet and Other Tech Issues

The Internet in China is controlled by the government and it’s important to know how the law affects your business.

For example, the Chinese government recently introduced guidelines on cyber governance, aiming to bring the country in line with global best practices. Regulation of privacy and data is also likely to increase in China in the years ahead.

China’s tech infrastructure is also a long-standing concern for many businesses. However, the country is poised to pump USD$1.6 trillion into its tech infrastructure up to 2025.

What Next?

These market barriers are not insurmountable. Our Asia Accelerator and China Gateway 2.0 solutions can help, providing you with a reliable partner to help you navigate China’s complex and dynamic market.

This includes our Information Security and Compliance service to help you comply with local regulations, MLPS 2.0 Compliance provision for cloud security and compliance with this key regulation and other security measures to help you build a robust cybersecurity, risk management and compliance strategy.

Plus, we’re also the No.1 public cloud service provider in China, combining both local and technical expertise whether you need to start a business in China, migrate to the cloud or digitally transform your business in China. Click here to see some of our customer success stories.

Learn More

Alibaba Cloud is a world-class cloud provider and the No.1 public cloud service provider in China and Asia. To find out more about the burgeoning market and how your business can succeed in China, download Your Journey to China: Identifying the Opportunities, Market Barriers and Entry Strategies whitepaper today.

Or learn more about our Asia Accelerator program at: https://www.alibabacloud.com/asia-accelerator

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