Sep 7, 2012

China's Economic Transformation and Business Outlook

By Jing Yan

To find top business opportunities in China, you need to know what kind of economy China is really going through.  As China is having big manufacturing capacities, and a relatively weak service sector, the economic phase is likely between industrial and post industrial.  In many ways, China economy can give each aspiring business entrepreneur a time rewind of nearly 30 years, compared with global business frontlines.

Top business opportunities in China
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What the local consumer density is like

Influenced by a different culture, time era and environmental changes, certain business opportunities are more profitable than others.  In 2012, information technology is trickling through into virtually every sector, including the recent college exam grading system, customs processing system and elderly care monitoring system etc.  Creative design and entertainment industry is also blooming. 

Behind the economy growth figure, China's large population is a key element providing a wide base of consumers.  However, the current business providers in China haven't covered all of them yet, and far from enough.  In addition, vast opportunities lie in untapped 2 or 3 tier "mega" cities. 

For expats entrepreneurs, you need to know both the business trend and the culture of doing business to grab top opportunities in China.  Better quality control, operational efficiency and best customer service are some of the keys to help you beat the competition.

“China economy can give each aspiring business entrepreneur a time rewind of nearly 30 years.”

List of top business opportunities in 2012:

1. IT: 

IT service for government and infrastructure upgrade is sweeping big cities of China. Recently, Chinese government has started to play a bigger part in buying IT services, building efficient systems for public administration, as well as industrial systems.  The vast population of Chinese people, as well as massive number of public servcie employees, need sophisticated system to manage each factor efficienty.  Although local competitors have better relationships with the government officer, but they often do not have the best technologies.  Many opportunities are left uncovered. And the chances of you winning government bids, and private bids in 26 different provinces are still big.

2. Management consulting: 

Nearly every sector here needs upgrade, thus management consulting service is in great demand.  There are already many management consulting firms in China, big and small, but most are just accounting or real estate.  Many uncovered opportunities lie in consulting servcies for local businesses (there are more than 10mn SMEs alone in China) about how to manage the company, grow market share, increase operational efficiency, supply chain, quality control and so on.

3. Public health: 

This sector has the best business opportunities now, and much is waiting to be improved.  A big hospital in Shanghai, Hua Shan hospital has just started to adopt IT services to manage patients registration last year.  A wholly Taiwanese-invested hospital opened in Shanghai this year, and there's none wholly foreign-funded hospital on the mainland yet.  Other untapped opportunities lie in public health education, public disease prevention  equipment and product, as well as hospital management services.

4. Food Safety: 

It is not easy to serve the stomachs of behemothic 1.3bn population.  It is not only a hot issue among all consumers in China now, but also high on agenda for government offices.  Latest news about food safety issues have surpassed local businesses to include outlets of foreign brand Dairy Queen.  Government offices in each one of the 26 provinces have tightened inspection of food safety.  Opportunities lie in government contracts, inspection equipment and service, private contracts, as well as kitchen gadgets.

5. Online business: 

Online shopping is well-accepted by Chinese consumers.  Although China's netizens have reached 500mn (less than half of China's total population 1.3bn, but nearly 3 times of US online shoppers), online consumers in China only account for 42% of that number.  There are many local online business conglomerates. But opportunities are still big, considering lots of uncovered niche market, and services in 2 and 3 tier "mega" cities.

6. Green industry: 

As the world's biggest energy consumer, China is the number one market with most potentials in green business development, including alternative energy supply, infrastructure upgrade, emissions reduction, environmental protection, pollution treatment, pollution control and prevention, sewage treatment as well as consumer goods.  It is not only attracting large investments, but also tax incentives and exemptions with intensive support from local government.