The China Venture

3. Pre-Entry Strategic Considerations to Maximise Business
Potential
Understanding the operating environment for foreign businesses in China is only a first step to
strategic formulation. Understanding oneself or one’s own business in terms of its strengths
and weaknesses provides an important basis for strategic formulation. Paul remembered
vaguely the old Chinese proverb: “Know yourself, know your enemies. A hundred battles
fought. A hundred won.” A critical consideration before entering a new business arena, in this
case, ventur ing into China, is therefore to know one’s own business in terms of its strengths
and weaknesses and in relation to existing and potential players in China. Paul started to read
about the “Need for business self-examination” ...
Klaus Kukovetz, a doctoral student working in China wrote:
3.1 Pre-Entry Considerations: Need for Business Self-examination (by Klaus
Kukovetz)
A lot of publications and business guides are available which explain the does and don'ts of
market entrance into China. These are valuable tools to avoid the most common and pitfalls of
such an endeavour. Many of them, however, neglect the very first stage of market entry:
business self-examination. Even in a simple and well known business environment, the
product-to-market and company-to-market fit is a precondition for success. This is even more
true for a complex and alien environment like China. Even if the market is found to be very
attractive and relatively risk-free, and even if a strong demand for the company's products can
be assumed, market entry is not self evident. The company must be fit for market entry as
well. For an SME such fitness should not be taken for granted prematurely, but should be
assessed with great diligence. Any company's strategy move a into new territory will
necessarily consume a substantial amount of resources. For SMEs which generally do not
have sufficient personnel and management resources. This would not be an easy problem to
solve.
Before a company ventures into a new market, it must determine it’s own strengths and
weaknesses as well as the opportunities (and threats) offered in the new environment. In the
first case, the general readiness to enter the Chinese market was found to be lacking even
though there is a good fit in the relevance of its product in the Chinese market. In the second
case, a thorough analysis of a company’s strengths and weaknesses in relation to the
opportunities and threats in the new environment has enabled the company to develop a sound
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