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With over 15,000 new foreign entities establishing their presence in China each year (over 65 billion USD in FDI last year alone) and over 9% GDP growth for the past 10 years, understanding how to leverage China has become one of the most important strategic considerations for companies around the world.

Whether it is seeking a new source for manufactured goods, a new market for consumer products, or a competitive threat in a third market, the dynamics of China need to be understood, considered, and planned for by companies large and small.

China Platform 1: Manufacturing In China
For many executives of manufacturing companies, the first strategy that comes to the surface is outsourcing part of the supply chain process to. In the case of many industries, this has been an effective strategy that many of the world's largest companies have employed successfully.

Depending on a number of constraints, the level of comfort and knowledge executives have of China, and the scale by which the product need be manufactured, product manufacturing can be outsourced to a third party or a China based manufacturing facility can be built. 

For companies looking to source in China, the following items should be of importance:
(1) Know what you will gain and create a strong execution platform (in-house or third party)
(2) Create and manage QC program to protect product IP and minimize failures
(3) Make frequent site visits

China Platform 2: Selling Into China
With 1.3 billion people, selling one’s products into China has been the dream for many and as China is more like the E.U. than the U.S., strategies will need to be flexible for industrial and consumer goods manufacturers.

Distributing foreign products in China requires managers to create a plan that is based in solid understanding of market dynamic and deploy a mixed strategy of distributors and sales teams. 

For many successful companies distributors were used as the primary entry channel, but gradually were fazed out of larger markets as direct sales channels were established as the local team grew in strength, knowledge, and numbers.

A successful distribution platform will include:

1. Understanding the markets of China, developing a multifaceted strategy, and implementing in geographic phases
2. A platform that leverages existing customer relationships, local distributors, and in-house sales and support teams
3. Create strong brand and protect with a strong customer service

China Platform 3: Defending Tertiary Markets
As the technologies, techniques, and sophistication of Chinese manufacturers has improved over the last 5 years, many multinational manufacturers are being forced to complete with Chinese manufacturers in Latin America, Africa, and the Middle East.

In these markets, where the quality standards are lower that in U.S. or E.U, there are a flood of Chinese OEM goods that have begun to take away market share from not only U.S. and E.U based manufacturers but also local manufacturers. It has been seen with medical equipment, construction equipment, white goods, and in many other categories as Chinese manufacturers use these markets as their test markets for the future.

For many multinationals, this phenomenon should be a critical concern as:

(1) Profits from 3rd markets (primarily developing countries) for many Western multinational companies risk being reduced, and therefore global revenue streams become unstable.

(2) Chinese firms are using these markets to not only build expertise, but also to perfect technologies that will be used as a base for technologies used in products for 1st world markets

Conclusion:
To succeed in China, companies will need to have grand strategies that fulfill themselves over an appropriate time frame. Thinking too big in China, or thinking that China is a single market will ensure a difficult time in China. Keep it simple. Focus on landing key accounts, build a strong manufacturing platform in key areas, and leverage that global platform to grow globally.
To ignore China is to forfeit cost savings from contract manufacturing, forfeit profits from expansion into the China market, and most importantly, forfeit their competitive edge in the global market