China: successes and pitfalls

It is undeniable that the People's Republic of China is now a major economic player in the world. As the world's second most important economic power, with a GDP of 8,765 billion and an average annual growth rate of 8%, China is becoming an essential trade partner for the West.

The cost of outsourcing and its attractive market of 1.3 billion potential consumers with growing purchasing power have led many companies to choose to locate in China in order to take advantage of the many benefits offered by this “mainland” market.

We can count approximately 20,000 foreign companies operating on Chinese territory, which represents 59% of Chinese exports – 39% by companies wholly owned by foreign capital and 20% by companies with mixed capital. Among them, there are more than 1,300 French companies employing over 250,000 people.

Advantages of investing and developing in China

The first benefit of investing in China remains unquestionably the size of its domestic market and strong growth, which even managed to withstand the global economic crisis thanks to government stimulus. A presence in China allows you to fully benefit from this expansion.

In addition to having a rapidly growing market, China is also a production base with low costs. Real estate prices (which are subject to strong regional variations) and construction and transportation costs can seriously compete with European and American markets. Labour is abundant and very cheap, with a minimum wage of about 115 euros per month.

Moreover, China has a stable political system and has been committed to trade liberalisation and free enterprise since its accession to the World Trade Organisation in 2001. Thus, it guarantees access to private property, the freedom of establishment and continues to be in favour of a liberal economy. However, the State still manages, regulates and influences the economy as well the political and social sphere.

Finally, being present in China is the best way to control operations in Chinese territories. This presence ensures that client relationships, production and distribution are managed properly. It also allows you to better analyse the behaviour of Chinese consumers and to observe the evolution of the Asian market.