Born In China: A New Kind Of Australian Business

A certain sort of Australian small business is emerging, but these businesses haven’t got any existence on home soil. Instead they are setting up only in China to benefit from a fast expanding Chinese market.

China’s expansion provides opportunities that don’t exist in the gradually moving markets of developed nations.

When China opened its doors to global investment and trade in the 1970s and the 1990s, Australian manufacturers moved their operations to China to manufacture products more cheaply.

At the time that the Chinese market was small and of little attention to those business, and they sent their products back to Australia and overseas.

Stepping forward 20 years China joined the World Trade Organisation, its market had developed and the Chinese marketplace became attractive. Australian companies started to set up operations in China to service this new sector.

Foreign Advantage

There’s something about the foreignness of those entrepreneurs, that provides them with a specific type of validity significant for business success in China.

The businesses set up in China specifically to offer financial advice and arbitration services find Chinese customers have more religion in foreigners from countries where these solutions have existed for longer than they have been around in China.

People operating in the food industry have a similar encounter repeated food contamination loopholes in China mean the Chinese market has more religion in foreigners from countries with strong food safety records. A few of the businesses even found that their principal market in China is foreign businesses.

The absence of need in China for many solutions common in western countries means overseas businesses are often the sole providers of those services in China. These solutions are in high demand from foreign companies operating in China which don’t have the ability to provide themselves.

The Challenges Of Beginning In China

Among the biggest challenges of operating solely in China is a scarcity of capital for expansion. It is difficult for these companies to attract business financing due to their foreign status in China. One small business owner said:

These entrepreneurs told us the banks didn’t value their foreign strategy to company and wouldn’t accept financing.

The nature of the Chinese market means the businesses we studied needed to continuously restructure and refocus their surgeries.

Even companies offering specialised services for long term markets, such as resources and construction, face the threat that big companies will step into their market as soon as they’ve developed it.

One technology firm reported that if they developed a new market in China with a fresh superior product, they would suddenly loose their large clients. These customers would move their business to a big Chinese company that had entered the market with a copy, even in the center of a contract.

What It Takes To Succeed

Chinese company conditions have caused larger and internationally successful companies such as Apple and Uber to fail in China.

These firms did not take the cautious marketplace focused approach of those we surveyed and rather tried to compete directly with large and well established Chinese businesses.

The validity of those huge businesses was also based on systems that they had developed for other markets. This meant they were not able to adapt to the different regulatory system and client requirement in China without sacrificing their competitiveness.

A quick rate of growth and change is a standard part of business in China. The entrepreneurs we talked with explained their businesses as challenging work, but a lot of them claimed there were many like them in China and they enjoyed the stimulation of being besieged by entrepreneurs. One said:

Networks, smart business systems and decent staff helped them to develop their businesses by changing, moving and dividing into new markets.

Its an aggressive environment, so these entrepreneurs were very careful managers closely controlling their businesses, being cautious about who they use and constantly planning.

The secret to success in China is being highly educated and conducive to local market conditions. 1 business owner explained this as:

This specialisation also signifies that these companies could only be prosperous in China.

One entrepreneur we spoke to, who builds social networking outlets, operates a range of these at the same time. The entrepreneur then sells these outlets to rivals after a few years.

The sockets are turned over in a staggered manner so the portfolio is comprised of fresh, maturing and ready for selling outlets. This permits the owner to constantly introduce new outlets as opportunities arise.

China offers opportunities to small and medium Australian companies they would not experience elsewhere. Taking up these opportunities is not without its risks opponents, the need for constant change and difficulty in obtaining funds are significant challenges.

The Australian companies we surveyed respond with being innovative and utilizing their foreignness as a competitive advantage to cultivate their businesses. But a new market in China now will be a market full of competitors tomorrow, and such companies constantly should modify and adapt to remain ahead.

China’s expansion provides opportunities that don’t exist in the gradually moving markets of developed nations.

When China opened its doors to global investment and trade in the 1970s and the 1990s, Australian manufacturers moved their operations to China to manufacture products more cheaply.

At the time that the Chinese market was small and of little attention to those business, and they sent their products back to Australia and overseas.

Stepping forward 20 years China joined the World Trade Organisation, its market had developed and the Chinese marketplace became attractive. Australian companies started to set up operations in China to service this new sector.