The China Venture

entry strategy into the China market. Venturing successfully abroad requires preparatory
measures to ensure the general fitness and compatibility of a company in relation to its
partners and markets in the new environment.
3.1.1 General Readiness to Venture Abroad
As a first step the company should ask whether it is ready to enter the Chinese market. It has
to investigate, for instance whether it has enough free management and capital resources. The
management time needed for a new market entry is almost more than what one expect. Due to
the novelty of the venture, employees working on the market entry project will need a
disproportional amount of top-level guidance and advice. Top management itself will need to
travel to China to establish valuable business contacts. These business contacts will then
demand attention and time to be kept alive. It is therefore recommended that there should be
one member of the top management team who is strongly dedicated to the market entry
project and who is prepared to invest a substantial amount of his or her time for the project. In
SMEs this high level manager with free time resources often does not exist. Such a company
will therefore have to work first on internal processes to create such a capacity it will be ready
to proceed to a next step.
Monetary resources are important. Even if planning is done very rigorously, money invested
in a high-risk emerging market like China should not be crucial to the survival of the
company. There will be ways to keep investment down to a minimum level - market entry
into China does not necessarily have to be expensive - but it is very difficult to reduce risk.
No amount of planning will be sufficient to account for the complexity and rapid pace of
development of the market. For this reason, the company needs to be prepared to write -off its
investments in the worst case scenario (see paper 8 for two examples).
3.1.2 Specific Fit with the New Environment: Products and/or Partners
The company's products must fit with the market conditions in China. Here, it must be
assessed whether the company offers an attractive product mix for the Chinese market. The
level of investigation should be relatively deep as special features or mismatches might easily
be overlooked. At this stage, the company will try to evaluate whether its most promising
product or product category has chances to succeed in China as it is, or whether some special
modification will be necessary. The degree of localisation needed may vary greatly between
simple adaptations in the packaging process on the one hand, and the development of
completely new features on the other hand.
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