The remarkable growth of China’s economy and emergence of a burgeoning middle-income class over the last two decades has presented China as one of the, if not the most, exciting consumer market the world has ever witnessed. China’s retail sales are projected to exceed $3 trillion (U.S.) in 2020, surpassing that of the United States.
International brands spanning across the globe have long recognized the vast potential the Chinese retail market promises. A few weeks ago, China’s two leading eCommerce companies, Alibaba and JD.Com, set a world record with total single-day sales valued at $120 billion during the “Single’s Day” China’s annual online sales event.
Almost every major premium brand in the world is trying to compete for a piece of the pie, making China one of the most fiercely contested market. Billions are being spent by marketing agencies to help international brands better understand the behavior of Chinese consumers. Companies are adapting recognizing that what works in the West, may not in China.
I recently joined the Canada China Business Council’s “Riding China’s Economic Wave” virtual conference. The event, sponsored by EDC, focused on understanding the Chinese consumer, growing the Canadian brand in China and, of course, understanding government regulations.
At this conference, we discussed how navigating the legal environment in China can be challenging. As the economy continues to open up, many sectors are being reformed in order to support the growth of the country.
Not only are the laws and government policies complicated, they are always evolving, making it extremely challenging at times for foreign companies to keep up with the rules and regulations within China.
This complexity is exacerbated by differing practices that can be inconsistent from cities to cities, and provinces to provinces. Local authorities often have their own interpretations of the national laws and therefore enforcement can be unpredictable. Moreover, there are also “window guidances” issued by the state in response to the needs of the state and the geo-political relationship between China and the rest of the world. In 2020, the business environment is significantly more complex. EDC believes that U.S.-China pressures will likely to persist in one form or another. This situation could make global commerce more complex and less predictable than it has been in the past, especially for smaller countries. For these reasons, it has become increasingly important to have the right partners and advisors.
EDC works in various capacities to be that partner: We can help you protect your business with EDC Credit Insurance, we can help you grow with our financing and bonding solutions and we can share our expert market knowledge. In 2019, EDC served more than 750 Canadian businesses, exporting $4.67 billion worth of Canadian goods and services to China—much of this with the help of EDC Credit Insurance.
Despite the challenges, the Chinese market continues to offer significant opportunities for Canadian businesses. China represents close to 13% of global goods trade, 20% of world GDP and has an enormous and growing middle class, estimated at 300-400 million. Year to date, Canada’s exports to China are up by 4.2% as of September 2020. In a post-COVID-19 world, China is leading with GDP growth of 4.9% during the 3rd quarter and is expected to grow by 9% in 2021. Such level of growth brings tremendous opportunities for Canadian companies.
In support of our customers EDC has a team of account managers located in all major cities in Canada as well as a team located in Beijing and Shanghai to help you.
For more information, click here: https://www.edc.ca/en/blog/how-canadian-businesses-can-ride-chinas-economic-wave.html