Following the recent global economic downturn, many foreign industries are increasingly looking toward China to help revitalise their global relevance. Among these, some industries stand out as particularly benefiting from all this country has to offer in terms of market, workforce, and costs. Read on for a sampling of the major industry sectors that are happy to call China home.

1) The automobile industry

Despite the fairly recent announcement that China will eventually begin using only Chinese car manufacturers to supply government vehicles, foreign car producers are still key players in China’s automobile industry. According to www.china.org.cn, multinational car companies have seen an average increase in sales of more than 20% in China since 2009.

Volkswagen is just one example of an international auto company taking advantage of this country’s lower production costs and massive potential market. On average, about 40% of Volkswagen’s total profits come from China, which makes sense considering they are the second largest foreign auto manufacturer (behind the omnipresent General Motors) in China, with 286 million euros earned in just the first quarter of last year (out of a worldwide total of 703 million euros). With total annual sales being projected at 17 million units for this year, it doesn’t appear that foreign automakers will be backing out of the world’s automobile sweet spot anytime soon.

2) Green energy

Despite the country’s notoriously bad air and water pollution (we’re looking at you, Beijing), China is actually home to a great number of foreign innovators (or, as China Daily calls them, “Western technocrats”) who are ambitiously looking for ways to reduce our harmful impact on the earth. China is now officially the world’s largest producer of solar panels and wind turbines in the world, crushing their closest competition (the United States, Germany, Spain, and Denmark).

More nuclear reactors and energy efficient coal power plants are also in the works largely due to the increasing costs of fossil fuels. According to China Daily, “The government plans to increase the share of non-fossil energy in total energy consumption to 11.4 percent by 2015, up from 8.3 percent in 2010.” Leading the way is the small town of Rizhao in Shandong province, which provided subsidies and funding to the solar panel industry. As a result, over 99% of households in the central district use solar water heaters (www.greensolutionsmag.com). Even the streetlights and traffic signals in the town use solar cells.

3) Fast food

Chances are you don’t pass a single day in China without seeing at least one KFC or McDonald’s. And while Pizza Hut, Burger King and other Western chains are spotted slightly less often, nevertheless, it’s all enough to provide testament to China’s growing hunger for fast food. The country’s fast food industry sees double digit growth every single year, so it should come as no surprise that foreign companies are doing business often and well (www.upenn.edu).

Those who succeed know how and when to adapt to Chinese consumers’ tastes – and no one seems to do that better than KFC. Yum Foods, the corporation that owns KFC (along with Pizza Hut and Taco Bell) generated 1.7 billion RMB from Chinese locations in 1998. Compare that to the 6.7 billion RMB they made in 2009 and you will see that the growth of fast food in China simply has no limit.

4) Telecommunications

According to China Daily, which quotes Analysis International, a Beijing-housed research firm, China is expected to have more than 300 million 3G users by the end of this year. Not surprisingly, telecommunications firms from around the world are rushing to get in on the action. Amongst them are British Telecom, which is the telecommunication service provider for a variety of international companies that are currently based in China, such as Nestle, Pepsie and Reuter (www.en.cbf.net.au).

Nokia is another foreign firm that has profited greatly from its  investments in China – it’s now the company’s single largest market, mostly due to Nokia’s big push in 2001 to increase its presence here. In that year alone, the company increased its China imports by fifty percent, bringing the total to about 17.5 billion RMB worth of products. Since 2009, China remains the only Nokia territory in which sales have regularly increased.

Willingness to adapt

So how do foreign companies become and, perhaps more importantly remain, successful here? Much of it has to do with their willingness to adapt to local tastes, which tend to differ drastically from the West. They also stick to what they’re good at, knowing if you provide a quality service, there is no need to expand beyond your means.

This is just a sampling of the success that many international firms have found in China. Whether the reason for a foreign company’s move to China is financial, logistical, or simply because this is one of the largest growing markets in the world, a plethora of organisations are happy they made the move. Everything does not always turn up roses, however, as some foreign firms discover.

In Part II of “How Foreign Firms Fare in China,” prepare yourself for… The Bad.
 

Related links
Foreign Companies Doing a Runner with China's Money
3 Things to Expect When Starting Your Own Company in China
6 of China’s Most Successful Foreign Businesses

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