China Market Opportunities

Glass and ceramic industry

Crystal glass is one of the products with which a significant part of the Chinese can associate the Czech Republic. Vases, crystal accessories, glasses, lights, chandeliers, etc. are popular. The sought-after category of lights with crystal components is further expanded by designer and often custom-made lamps not only for residential spaces, but also for the segment of luxury accommodation, conference halls, representative spaces, etc. Due to development of domestic tourism, accelerated by travel restrictions due to the covid-19 pandemic, it can be expected that demand will continue in connection with the further development of hotel infrastructure.

The continued enrichment of the middle class of society also contributes to the development of tourism. This production was often bought by Chinese tourists abroad, including the Czech Republic. For Czech manufacturers, it is now crucial to get their products to customers through other sales channels – through Chinese business partners or, for example, using so-called cross border e-commerce.

Engineering industry

According to Paul Sourcing, China is the largest producer, consumer and importer of machine tools in the world. According to the new economic strategy of dual circulation, China will build greater self-sufficiency and resilience of its economy by stabilizing industrial production, which in relation to GDP has shown a steady decline since 2006. Maintaining industrial production in the country, including production of lower added value, is one of the priorities for the country’s leadership. The second priority is the modernization of the production base and the production of higher added value within global supply chains.

In this context, Chinese manufacturers will continue to be interested in the purchase of engineering production equipment and in general the transfer of technologies that will help them in the modernization of production. The application potential of Czech production is mainly in the automotive, woodworking and rubber industries.

Entertainment and leisure

Beijing and the wider area will host the Winter Olympics in February 2022. China has experienced a rapid growth in interest in skiing and snowboarding since its successful Olympic bid in 2015. Year-on-year increases in the number of active followers of these sports are in the hundreds of thousands. Statistics vary, but qualified estimates by professionals speak of four million active skiers and snowboarders. Chinese society is very much based on the self-presentation of individual success through the consumption of luxury goods and the consumption of exclusive services.

A healthy lifestyle increasingly belongs to the modern status of elites and the upper middle class. This arouses the interest of manufacturers of branded equipment. The limited size of the market for winter sports equipment, which is a limiting factor for sales of larger volumes, but especially consumer behavior, have set the price level to be several times higher compared to the Czech Republic.

In China, winter sports are therefore the privilege of the more mobile strata of society. This corresponds to the price level of services, for example ski instructors in winter resorts. In this area, there is a very interesting space for cooperation with professionals from the Czech Republic. No less interesting is the area of ​​sports skiing and snowboarding, which is surprisingly still in its infancy in China. De facto, there are no divisions with systematic training of children or junior athletes. Professionals – instructors, trainers, are in demand overseas.

The perspective leisure segment includes the field of musical instruments, as well as musical instrument instructors. A narrow but overall significant segment of Chinese consumers, again from the upper middle class group, can appreciate high-quality handcrafted products from brands with a strong history. In addition to individual demand, the development of concert halls and music schools also helps sales.

Chinese life has increasingly moved online in recent years. The months that Chinese consumers had to spend in home isolation strengthened the online entertainment segment in addition to the already highly developed internet shopping. The trend of moving life into the online sphere will continue to strengthen. For Czech companies, which are traditionally strong in the game industry, this development offers many opportunities. Here again, the Winter Olympics could be a driving force, which could give an opportunity for online games or virtual reality products to allow the local population to try hitherto undiscovered sports from the safety of their homes.

Agricultural and food industry

The increased emphasis on health due to the covid-19 pandemic is also reflected in the food industry sector. The Chinese traditionally take great care of their bodies, with the choice of diet playing a key role. In China, the demand for dairy products is growing, driven by a government program that supports their consumption. Yogurt consumption is gradually increasing, which more and more Chinese appreciate as a source of important substances needed for health and beauty at any age. In the segment of infant and children’s food, foreign production is more preferred, which is considered to be of higher quality and safer. Concerns among Chinese consumers about the possible transmission of covid-19 through packaging materials have helped restore confidence in domestic production.

The rapidly emerging café culture is another reason for the growing interest in quality milk or cream. Healthy and trendy products such as different mixtures of nuts or muesli are green. The Chinese consumer’s focus on health care also fuels the demand for foreign food and nutritional supplements (vitamins, caloric preparations, etc.) or bottled mineral water. Due to the fast pace of life, Chinese consumers living in big cities often look for different types of snacks to help them stave off hunger at any time during a busy day. In this case too, products that offer health benefits have an advantage. As a result of the aging of the Chinese population, the segment of dietary supplements for the elderly can also be expected to grow.

An affluent middle class of four hundred million consumers is driving up demand for pet products and services as well. Czech food for dogs and cats is gaining ground relatively well on the Chinese market and will undoubtedly be a growing segment in the coming years. A positive reference for the products is their European origin as a guarantee of quality and integrity. There is also a demand for fodder for farm animals.

The expected trend is the rapid growth of the bakery industry, which does not have a long tradition in China. The isolation caused by the pandemic has forced many people to look for new hobbies, with home baking gaining considerable popularity. There is still plenty of room for new products and brands in the ingredient market.

Embassy of the Czech Republic in Beijing
e-mail: [email protected]
www.mzv.cz/beijing

4 recommendations for entering the Chinese market during the coronavirus pandemic situation:

  1. Mapping the market China is a very specific and complicated market, even if there is no pandemic spreading around the world. You need to be clear that this is really the market you want to try to enter. It is important to get at least a basic overview of the market, competitive environment, price level, legislative barriers, customs and tax burden, etc. and evaluate the potential competitiveness of your product. It is also possible to use the currently free services of CzechTrade’s foreign offices, of which there are a total of three in China (Beijing, Shanghai and Chengdu) and are able to help with such market research.
  2. Entering the Chinese market The next step is to clarify the method of entering the market. Whether to choose your own presence (relatively demanding financially and time-consuming) or to choose to enter through a representative with the help of a distributor/agent. Another option is to enter through e-commerce, which is especially on the rise now, and this market segment is far from fully saturated. Foreign offices of CzechTrade (ZK CT) can again help with the search for potential business partners. He forwards the searched and contacted contacts to the Czech company, however, they are also able to initiate communication and verify initial interest in the product/service. They recommend this step, as it is very unlikely that a Chinese company would respond to an English-written email from an unknown Czech company. All ZK CT are able to contact the respective companies by phone in Chinese and thus establish initial communication.The next recommended step is to visit or participate in selected fairs and exhibitions in China, where it is possible to meet in person with relevant potential Chinese business partners, and at the same time to get much-needed feedback on the offered product or service from Chinese visitors. Although the fairs are strongly affected by the coronavirus this year, it is generally expected that the exhibitions will be held again at the end of the year or in 2021.
  3. Chinese China is a mature market, and only world-competitive products or technologies, luxury products with a long tradition, or those that are not yet on the market have a chance of success. However, even in this case, language localization is necessary, otherwise it is not possible without Chinese. Even for the initial approach, it is necessary to have at least a short introduction of the company and the offered products in Chinese. In case of further development, the translation of the website, product catalog, business cards into Chinese is to be considered.
  4. E-commerce China has an Internet population of 810 million, over 600 million people use the Internet for shopping. It is therefore the largest online market by a significant margin. China’s e-commerce segment has been growing regularly at around 20% per year, but is now expected to accelerate further. The growing importance of Chinese e-commerce, which already accounts for almost 40% of all retail turnover, is also good news for Czech companies. Building a functioning e-shop on Chinese platforms is not easy, but it is cheaper than, for example, building a retail network. In addition, it is still possible to use cross-border e-commerce, when it is not necessary to obtain Chinese product certifications. The CzechTrade agency follows these trends and is ready to provide assistance to Czech companies.

China Market Opportunities