With a land area just smaller than the United States, China has a leading population of more than 1.3 billion – four times than that of the United States. China has experienced rapid economic growth in the last 25 years and has become a major player in the world economy.
Despite the current economic crisis, China’s economy is still expected to grow by 10% in 2009 according to China Daily. Personal income continues to rise as workers migrate into the city for a higher standard of living. China’s first quarter statistics show industrial output grew 5.1%, retail sales grew 15%, and fixed asset investment rose 28.8% year-on-year. In addition, sales of auto and home appliances are increasing and agriculture production continues to expand.
In another article by China Daily, it is reported that the disposable income of urban residents rose 10.2% in the first quarter of 2009. When adjustments for inflation were made, the increase reached 11.2%. In addition, the disposable income of rural residents also increased 8.6%. A study conducted by the State Council Development Research Center (DRC) shows that china’s middle class consumers (those consumers earning annual incomes that range from 45,000 to 180,000 yuan or $6,000 to $25,000) are to grow to an estimated of 500 million by 2026.
China has become one of the most observed markets in the world economy. Its integration into the world economy has fueled dramatic changes in global economic growth before the economic crisis. It is likely that China will continue to expand for some time after the global economy gets back on its tracks.
Best Industry Segments
Based on a report by the U.S. Commercial Service (CS), many opportunities exist for exporters from the United States in these sectors: energy, chemicals, machinery, telecommunications, medical equipment, construction, franchising, and financial services. As the sectors with market potential for American companies expand, China will undoubtedly remain an important and viable market.
Regulatory and Tariff Landscape
China Daily reported that China would keep its general tariff at a rate of 9.8% in 2009. The Ministry of Finance (MOF) announced that from January 1st, 2009, import tariffs would be lowered on five commodities. Concurrently, rise in export tariffs for pollution-producing and high energy-consuming sectors will take place. Average tariff rate on farm produce and industrial products in 2009 will remain unchanged at a rate of 15.2% and 8.9%, respectively.
Although China allows imports from companies who register with the China’s Ministry of Commerce (MOFCOM), the Chinese government requires that certain imported products be inspected and accompanied by formal certification.
Online Marketing Opportunity
The growth in Internet users in China has picked up steam in the past few years. It is estimated in the reports from Xinhua that there are 290 million online users in China. Predictions by JupiterResearch show that in 2011, the world online population will be 1.5 billion, with explosive growth rates occurring in China and India. Report from JupiterResearch states that by 2011, Asians will make up about 42% of the world’s online population.
At the current Internet population growth rate in China, the number of Chinese Internet users will surpass the number of American users sometime this year. Although online penetration in China still remains low at 21%, it will surely increase within the next few years.
Online Language Preferences
The predominant language in China is Mandarin Chinese. Although many Chinese people start learning English at an early age in elementary school, most Internet users use Mandarin Chinese. They conduct most of the searches in Simplified Chinese characters. Exploring English sites for some may be difficult but manageable. However, due to the increasing numbers of multinational affairs conducted in China, English has become popular in China in the business world. Companies overseas have found that it is extremely useful to translate at least one webpage into Chinese in order to reach out to Chinese consumers.
Search Engine Profile
According to the Chinese market research firm Analysys International, China’s largest search engine remains to be the dominating Baidu, often regarded as the “Google of China.” It sweeps the market with a market share of 59%. Despite China’s economic slowdown, Baidu says revenue still jumped 41.1% in quarter one of 2009. Baidu’s major competitor, Google, holds 30.6% of the market share. However, it is predicted that Google’s market share in China will continue to increase with Google’s recent launch of a new music search product.
Other search engines used in China include: Yahoo China with 6% market share, Sogou with .8% market share, Zhongsou with .7% market share, Soso with .7%, and NetEase with .4% market share.
As one of the countries with the fastest growing economy over the past years, China shows abundant market potential. With the increase of online users and the expansion of different sectors of the market, China holds great promise for the global expansion of foreign companies. For these reasons, Global eMarketer rank China as a Tier I market for global online market opportunity.