China as the land of opportunity for foreign businesses ? Not now. Maybe never

What people are saying about Mulberry Fields
“a very interesting blog” A company in France

There have been a couple good articles this week on success and more notably failure in China. In spite of all the headlines you see in national publications like the NY Times and Forbes extolling the opportunities for US companies there as China’s middle class grows China is just not an easy place to do business. Home Depot recently closed all of its China stores – and there were quite a few of them – citing years of doing an unprofitable business in China. Ditto for Best Buy which had a 5 year experiment in China and recently closed its last store there. Wal-Mart is also closing stores even though it owns only about 6% of Chinese market share now ( hypermarkets ). Wu-Mart on the other hand, a Chinese chain retailer, with both convenience stores and hyper-markets is doing quite well and is opening more stores. The reason for this is that Chinese consumers and the govt favor locally grown retailers to foreign ones, a point that was made in an Economist article in 2011 on Retailing in China. There are implications for this if you source in China as well.

I will paste the more positive article here, about Panjiva’s success in China. This 3 keys to China success as mentioned in the article pretty well encapsulates what it takes to succeed in China ( and make no mistake about it, China is still a very good place to do business, especially if you are sourcing there). However, I would add a 4th thing here. Luck. Because often finding a vendor in China or getting your order out on time needs some good luck in addition to all the due diligence and hard work.



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