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China Competitiveness

China business cross-talk: Two views on doing business in today’s China
29 Sep 2014 15:46

by Andrew Hupert ario Cavolo and drew Hupert take two different views on China’s emerging business environment. China’s economic and regulatory policies are a work in progress that are co [ ... ]

Understanding China IP

Preventing China counterfeiting: The basics
20 Oct 2014 11:10

by Dan Harris When Christmas is approaching, China counterfeiting goes into overdrive, and this year has been no different. The real trick to reduce counterfeiting is to do the things earlier in the [ ... ]

Managing China Product Quality

Solve your production issues In 24 hours With QRQC
13 Oct 2014 16:27

by John Niggl What is QRQC? QRQC – or Quick Response Quality Control – is not only a quality control tool and method for troubleshooting but also an innovative concept in the field of global qua [ ... ]

China Trade Fairs

China Cultural Considerations

Cultural caveats: On wining and dining
23 Apr 2014 10:50

by John Niggl Have you ever been in the position of a guest who tries graciously to refuse a lavish gift or over-generous act of kindness from a host? How about the sometimes awkward task of declini [ ... ]

Evaluating Suppliers

Supplier requirements for a factory audit based on ISO 9001
13 Oct 2014 16:23

by Asia Quality Focus team
factory audit should gather useful and comprehensive information for buyers to get to know the factory. The two main objectives are usually to check if the factory is le [ ... ]


7 reasons it's difficult to start small when buying from China
20 Oct 2014 11:12

by Adam Gilbourne Here are 7 reasons why it’s difficult to start small scale when buying from China:- Limited Factory Co-operation If your order is small the factory will never give you their [ ... ]

Paying Suppliers

Can my China supplier’s liability insurance cover me if there is a recall in USA?
08 Oct 2014 08:53

by Mike Bellamy How do suppliers in China supply liability insurance to cover the buyer in case of a recall? Please advise what options are available? Unfortunately, it is very rare for a Chinese s [ ... ]

Managing Supplier Relationships

Changing your China factory? Be careful
22 Sep 2014 16:17

by Dan Harris Just read an article, Toy supplier sues maker in reshoring fight about an American toy maker’s lawsuit against its Chinese supplier. The article describes the lawsuit as being based  [ ... ]


Compliance in China -- Challenges of transparency, interpretation & enforcement
08 Sep 2014 13:44

by Mike Bellamy While there is a law/policy/regulation/suggested standard promulgated by Beijing for almost every aspect of doing business, for the typical Western owned company operating in China,  [ ... ]

Is it still worth it to do business in China? Conclusion

by Andrew Hupert

Is it worth the effort and investment for foreign firms to do business in China?   The answer depends on who you are and what you want from the market – and that’s a problem.

I spent a month in China trying to answer the question, “is it still worthwhile for Westerners to try doing business in China?”   The international business press has been focusing on Beijing’s prosecution of the infamous Anti-Monopoly Law and use of national security claims to restrict foreign firms’ access to China’s burgeoning middle-class markets.  Overseas readers of the WSJ and Forbes could easily get the impression that foreign brands are being chased out of China on a tide of xenophobic resentment and anti-foreign fervor – but it’s simply not the reality on the ground.

Chinese Consumers Vote with their Wallets

Starbucks and other global brands are more popular than ever – or anywhere.  What’s more, there don’t seem to be any local competitors learning even the most basic lessons about marketing or customer service.  The most striking feature of Shanghai’s popular malls (and I’m talking about middle-class Xu Jia Hui – not super luxe Plaza 66 or IFC Mall) is the popularity of Western and even Japanese products.  The Xinhua news agency and CCTV may claim to be defending the Middle Kingdom’s cultural integrity, but Chinese consumers are voting with their feet and shelling out premiums for the same brands as shoppers in NY, London, and Sidney.   The Harvard Business Review may love the Xiaomi story, but Shanghai shoppers are still lining up for iPhone 6.

Beijing Bureaucrats and Shanghai Shoppers:  Two Trains Running – Right at Each Other 

The gulf between official industrial policy and consumer preference raises more questions than it answers.  There are two trends running head-on towards one another, and it’s not going to end well.  State policy is more conservative and inward-looking than it has been in ten years – yet Chinese consumerism is more ardently internationalist than it’s been since the 1920s.  For now the Chinese economy is comfortably ignoring the growing incongruence of a protectionist bureaucracy governing a consumer society – but eventually those two trains are going to start closing in on one another.

There are 3 possible outcomes:

  1. The New Foreign Devils.  Beijing doubles down on the dangers of Western cultural influence.   Growing – and increasingly direct – pressure on international businesses attempting to access the Chinese market.    Expect to see more penalties and fines for Western firms doing “business as usual” – like GlaxoSmithKline’s half-billion dollar tag for corruption.   Unequal standards for foreign and local firms will eventually make China the pre-glasnost Soviet Union of international markets.  On the surface, both MNCs and CCTV will pretend that an open economy exists, but in reality Western firms will start viewing China as an expensive niche market with prohibitive unofficial hurdles that will preclude most commercial efforts.  Black markets develop for international goods in coastal cities, while Chinese with money continue to head for the exits.
  1. The Element Fresh Effect Large MNCs will restricted and over-regulated, but under-the-radar entrepreneurs of all stripes and colors permitted to flourish as long as they do the right thing (i.e.:  follow local laws and don’t command too high a market share).  The official line will soften with gentle admission that SOEs can’t compete or execute on party goals.  “We want a Chinese Starbucks at some point, but aren’t getting it any time soon and yes – we know it.” This is the pragmatic option for a CCP that acknowledges that the Chinese masses can live quite happily without a free press or democratic governance – as long as no one messes with their green tea Frappuccino’s or iPads.
  2. Beijing declares victory and we all get on with business like it used to be. MNCs are still held to more stringent regulatory standards, but the headlines will be about big fines for corruption or food safety – not arrests over national security.  Visa policy returns to pre-2012 standards.  CCTV stops fretting about the foreign bands’ corruptive cultural influence – and starts worrying about the expanding waistlines of Burger Princelings.

Whatever the outcome, the only thing we know for sure is that Beijing will move according to its own logic, for its own reasons.  It is becoming commonplace for casual China-watchers to talk about the inevitability of the Party bowing to market forces.  The fact is that Beijing believes – still and always – that China is vital to the World, but that the World means nothing to China.  That is not about to change any time soon.

Andrew Hupert runs, an online platform that helps the international business community achieve greater success when doing business in China. He also writes He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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