Summary of China insights
Conducting business abroad has become more difficult than 3 years ago according to Chinese mid-cap CFOs. Despite the economic and regulatory difficulties facing all businesses, 96% of Chinese mid-cap CFOs we interviewed are confident that their three year plans to expand internationally will succeed. On average, they expect 35% of their revenues in 2014 to come from sales outside China, up from the current 29%.
Chinese businesses are focusing on expanding into USA, Germany, Australia and France while China plays an integral part in the expansion plans of Japanese, German, Australian, USA, Dutch and Indian businesses.
Market size, higher growth rates and access to new customers are the most important opportunities for companies looking to expand into China.
Currency fluctuations, red tape & bureaucracy and intensity of local competition are the biggest challenges faced by Chinese companies when expanding internationally.
Over half of Chinese businesses act fast once a decision to open a new office is made - 54% open an office in less than a year. Chinese businesses claim that clients/customers (53%) and government agencies (42%) are the most trusted sources when expanding abroad.
Outlook for cross border growth
- USA, Germany, Australia and France are important markets for Chinese outward expansion
- Chinese expansion abroad is driven by increased market demand and potential
- Chinese businesses are more likely to ‘play it safe’, expanding in their core sector and with both new and existing products and services
- Investment in brand and marketing will be the main focus over the next 3 years for Chinese companies expanding abroad
Factors driving inward Chinese investment
- Market size
- Higher growth rates
- Access to new customers
Challenges for companies expanding in China
- Red tape & bureaucracy
- Cultural or language barriers
- Geo-political country risks
Challenges faced when expanding internationally
- Currency fluctuations
- Red tape & bureaucracy
- Intensity of local competition
Top insights for growth
- Do thorough research to improve your knowledge of the market
- Recruitment of good staff is key to success
- Find good contacts/ strong partners in the region
The in-country summaries are given as general commentary only. The global BDO Ambition Survey 2011 is based on 751 CFOs’ responses of mid-cap companies across 13 countries (100 in China). The survey was conducted by StrategyOne between 23 May – 8 July 2011