It wasn't all that long ago that opportunities for building business in China seemed to be everywhere as the booming economy created a voracious appetite for all things necessary to support that growth. China is still growing at an enviable pace, but perhaps because of that growth, while some areas of opportunity have expanded, others have disappeared.
I used to work with quite a few domestic manufacturers of basic industrial equipment and commercial goods who could easily find a market for their products so long as they did what was necessary to develop good relationships, to create a solid brand position, and to stay on top of the rapidly evolving demands of the Chinese customer. Today I think it's fair to say that China is more than capable of producing all the basic goods it needs and has an inherent cultural affinity for domestically sourced goods on that account. But as those opportunities have largely dissipated, new opportunities have opened up.
As China's upwardly mobile consumer class has expanded, they have shown a considerable appetite for opportunities to showcase that upward mobility. As a result, there is a strong market for recognizable luxury goods -- brands by which others can appreciate the owner's status. And while these certainly include all the usual luxury names in cars, watches, clothes and accessories, a broader idea of what can constitute a luxury good is also present. Starbucks, which has been very successful in China, for example, is essentially a luxury good -- a small affordable luxury that communicates one's ability to pay a fancy price for something more than a simple cup of coffee.
Another area of opportunity is high tech, high sensitivity equipment -- things like navigational avionics for aircraft. The Chinese are more than happy to make the basic parts, but they seem to prefer imported tech. Not too many Chinese have said it to me, but my sense is that they too are wary of the Chinese business ethics problems that can plague reliability. As beautiful as the Chinese high speed trains are, for example, the important components are made in France.
Speaking of issues with quality control, another area of opportunity is in the food space. I've worked with one company in China whose entire business model is to sell nothing but imported food to cater to middle class Chinese who are willing to take risks, but not with the health and safety of the food they eat. The owner of this company is hopeful for the day when he can stock Chinese food items alongside his other fare, but that day hasn't arrived yet.
China has always been a market that is about much more than just a lot of people. As with any market, it is critical to understand the unmet needs and the cultural and political contexts underlying those needs.