China is the largest marketplace in the world, and, despite being a communist state, has an unrivalled consumer appetite. For the majority of international businesses, it's now the market in which to succeed (recent market concerns notwithstanding).
But make no mistake, China is one tough nut to crack. Just ask Google, Amazon and Facebook.
It's hard to imagine there is any part of today's globalised world where the phrase "just Google it" isn't an everyday remark, but in China, the phrase is more likely to be "just Baidu it". Why? Because China's population of over 1.3 billion makes up just under 20% of the global population. Such a huge captive market audience has enabled Chinese businesses to develop Chinese equivalents to many services, products and business models that the rest of the world recognises as household names.
A guide to Chinese companies & their western equivalents:
Baidu = Google
Alibaba = Amazon/eBay
Tencent = Facebook
Weibo = Twitter
Youku Tudou = YouTube
Didi Chuxing = Uber
Weixin = WhatsApp
Admittedly, some multinational companies have the added difficulty of Chinese state censorship laws which obviously help their Chinese counterparts to flourish (Facebook, Twitter and YouTube are all blocked), but others are freely available.
WhatsApp, for example, has 23 million users in China, compared with Weixin's 450 million, and has been described by some Chinese smartphone users as "outdated". Similarly, Uber is facing serious competition from native rival Didi Chuxing. Didi Chuxing has a whopping 87% of the taxi market share in China according to the company, whilst Uber is still operating at a staggering $1 billion loss in the Chinese market.
If these corporate giants can't crack China, then what chance is there for the rest of the business world? Well, somewhat unusually, the Chinese export market seems to be best suited to mid and small-sized businesses. The same Chinese middle class that is shunning Amazon and eBay is going crazy for Tyrells Crisps and Jack Wills.
Tangle Teezer, a medium-sized British company selling bespoke hairbrushes, has achieved unprecedented success, with China becoming its second most profitable market after just three years of exporting. Similarly, Suffolk-based brewer Greene King has seen demand for its beers skyrocket in China, with a 16 fold increase in orders in 2015.
You might be starting to notice a pattern. The majority of these companies provide "luxury" or, at the very least, "middle class" goods, many focusing heavily on "British heritage". You're probably not going to see a Poundland opening in China anytime soon (Tesco tried, and failed). But this trend alone cannot explain the success of smaller companies and the failure of their larger peers; it is difficult to see why an apparent love for all things British should not benefit large companies in the same way as it does smaller ones. It's not entirely clear why, but there is clearly a resistance to global brands in China. So, does this Chinese resistance to global corporations spell the end of billion dollar conglomerates and the return of the medium-sized business model? It seems unlikely. Amazon still has another 6.1 billion people on the planet it can target, and there are anomalies to the trend in China. Just look at Coca-Cola and its fellow American superbrand PepsiCo which claim a 63% and 30% share of the Chinese carbonated soft drinks market respectively, leaving limited market space for domestic brands.
But what about the impact of China's slowdown in economic growth? Despite plenty of speculation, it's unclear how this will affect the import/export market. Experts predict there will be a decline in sales of "luxury goods", which are always the first to be cut back when spending tightens. But let's not forget this isn't an economic downturn we're talking about, just a slowdown. All forecasts indicate the Chinese economy will continue to grow, just not quite as fast as before. In addition, the Chinese government maintains that a key reason for the slowdown is China's goal to transition its economy to one led by consumption and services, as opposed to exports and investment. If this succeeds then, in the long term, consumption of exports in China should increase, and could mean heady days for exporters.
So, in spite of economic forecasts, China is still an exciting and unique marketplace for small and medium-sized businesses, a country where more people may have heard of Tangle Teezers than eBay. Who would've thought it!