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  April 13th, 2017 | Written by

Is China Really a Good Option for International Trade?

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  • China is still classed by some as a developing economy, which can indicate possible trade issues.
  • A rising middle class over 30 years has lifted 70 percent of the Chinese population out of poverty.
  • China could be a lucrative export option once a business has thoroughly assessed Chinese markets.

With a landmass that covers more than the whole of America and also a population of over a billion, it’s fair to say that China is quite a sizeable nation. By simply putting two and two together you’d assume that more people means more business opportunities, but when you consider aspects like China’s language barrier, political situation and significant internal production levels, it’s not that straight forward.

It’s almost like a vicious circle in that a business manager will know there are markets out there for them to tap into, yet with potential pitfalls in the way it does beg the question of whether or not China really is a good option for international trade.

A business can weigh these aspects as part of their decision making.

China’s Economy
China’s strong internal production and exports on paper suggest a wealthy economy, yet it is still classed by some as a developing economy, as in this article from the World Bank. As such it can indicate possible issues ahead for businesses looking to start working in, or targeting, areas outside of cities and urban developments.

However, despite this there are converse reports from this official guide for doing business in China, that the nation has been “the great economic success story of the past 30 years.” It claims how the country has gone from strength to strength and overall has seen a notable shift towards a receptive market-oriented economy.

Buying Power
This guide also goes on to explain how the markets that are available, are now the wealthiest they have ever been and that they have strong buying power. This is believed to have stemmed from a rising middle class which over this 30-year period has seen 70 percent of their population lifted out of poverty. Also, their access to technological advancements and online shopping, along with a reduction in the state control of these, has also led to greater buying power.

Again, however, one could safely assume that this is also within the more urban areas of the country.

Industries at a Glance
Another key consideration is the vast manufacturing industry China possess. Recent studies show that China is the world’s top exporter shipping an impressive $2.119 trillion worth of goods in 2016, with electrical machinery and equipment among the top products. Naturally, that’s good news for companies buying-in, but what about those who wish to export to China?

Well, the flip side to this is that there is still quite a hunger for raw materials from China to support this expanding nation. In terms of business opportunities this could be one potential trade option.

Additional Import/Export Information
Looking outside the general view of China, a business could encounter issues with more specific aspects and may want to ask questions like:

Is there a demand for the goods/services in my targeted area? As China’s attitudes and needs can vary massively around the country. As can variations on the local language.

What connections does my business intend to make with its Chinese counterparts? Their methods and approaches to doing business can be quite different to western culture, which could affect any long-term partnerships.

Is my business safe and secure to import or export any goods? There are still restrictions in place in China on certain items, but there is assistance available on correct processes and procedures, in pieces such as this shipping guide from TNT.

Is my company politically and socially aware? While the situation is much more stable now, there are still instances of unrest that could affect a business’ trading endeavours.

To answer the titular question, on the face of it, it would appear that China could indeed be a potentially lucrative option for international trade. It’s important to note though that this is once a business has thoroughly assessed the Chinese markets and made certain that they will be receptive to the trades involved.

Marcus Turner Jones graduated in economics from the University of Sheffield before working in London and Madrid. His particular area of expertise are the Latin American markets. He currently lives in Buenos Aires as a freelance writer and investor, with his dog, Luna.