Is China in Your Expansion Plans? It May Already be Too Late

Last Updated Jun 28, 2011 10:33 AM EDT

Companies large and small around the globe are looking at China's incredible growth in consumer spending and salivating. But if you aren't in China now, it may be too late for you to get much of a foothold.

That's the lesson I took from reading What the West Doesn't Get About China, in the June issue of Harvard Business Review. According to authors George Stalk and David Michael from Boston Consulting Group, what we don't understand about the Chinese market includes:

  • The market opportunities there are spread across wide geographies, languages and ethnic polulations -- China has 90 cities with middle-class populations of more than 250,000, and will have 400 in the next decade. (The US and Canada combined have 70.)
  • Product adoption rates are higher in China than in most markets. That means that companies that aren't in early and dominant don't have much chance to steal share later.
  • Serving the hungry Chinese consumer can be like drinking from a firehose -- growth rates of 30% to 70% that many Western companies can't satisfy, and thus cede to competitors.
Few multinationals have figured out how to succeed in China; those that have include Volkswagen, Yum! Brands, P&G, Nokia and GE. On the whole, however, "Most Western companies underestimate how quickly the Chinese market is developing and how little time they have to establish a competitive foothold--particularly in cities other than Beijing and Shanghai," according to Stalk and Michael.

Do you have plans to enter markets in China? What's your strategy?

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(Photo by Flickr user docsdl, CC 2.0)
  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.