New China: New Opportunities for SMEs, New Challenges for Consultants

China now offers new opportunities for French businesses. This country is no longer just an export market primarily benefiting large corporations. China has become a growth engine, an anticipation of competition, and a source of financing sorely needed by our medium and large enterprises. Here are some examples:

New Products and Services China is growing at an annual rate 4 to 5 times higher than ours and is absorbing increasingly sophisticated products and services. After equipment and infrastructure projects, the Chinese have diverse needs, ranging from the press, decoration, and IT services to leisure, education, or paramedical services. A vast market is now open to the vast majority of French companies wishing to establish themselves there.

New Forms of Establishment A second opportunity is offered to large subcontracting SMEs of large corporations. Many of them, established in China, suffer from no longer having the quality of long-term relationships with their French subcontractors and would like them to join them on-site. The German example of dedicated implementation zones – such as Shunde in the Pearl River Delta – where certain resources (finance, control, logistics, etc.) are shared, allows for pragmatic and efficient Chinese establishment. Furthermore, recent developments in Chinese law make it possible to broaden the modalities of establishment, partnerships, as well as their financing and repatriation of profits.

New Financing China offers a new financial opportunity: its internationalization. Indeed, after 20 years of global investments in China, the country now has considerable financial means – notably through the state fund – which are beginning to be invested in foreign companies. Thus, many French companies looking for investors could find an interesting partner in China.

It is symptomatic to note the growing interest in China from French private equity players, who see it as an opportunity for “exits” through Chinese industrial acquirers. Some sectors will benefit primarily from these investments: selective distribution, brands and highly legitimate brands, industries in consolidation phases, mature technologies, or even some struggling sectors holding specific expertise.

New Competitiveness In today’s global markets, competitiveness is increasingly gained in dollar zones, close to major production and research centers, but also future competitors, thus allowing better anticipation of their arrival on “our” markets.

So why don’t we see more Franco-Chinese operations? In addition to the general reluctance of French SMEs for foreign markets and their reluctance to pay for professional advice at the international market level, the answer also lies in the necessary adaptation of the bridges, which are business consultants, to this specific market. The “China” specialization of these consultants is an essential but rare response concerning the Chinese market, which also obeys very specific operating rules.

Thus, for example, decrypting and qualifying commercial or financial information alone require specialization in skills in terms of real access to qualitative data providers (professional federations, banks, etc.), but also in terms of understanding this information (legal decryption, tax, commercial implications, etc.).

Professionalization of Necessary Advice The professionalization of advice must be affirmed. Over time, Chinese partners have learned our methods and how to adapt to them. Thus, it is no longer possible to envisage a successful long-term establishment relying on generalist consultants, often of poor quality whose main competence is speaking Mandarin, or solely on legal advice. Financial, legal, commercial, operational, or tax issues are strongly intertwined and require specific and coordinated skills.

Finally, a better recognition of the role of each and better coordination between the numerous public and private stakeholders would allow each to fully play their role and serve the interests of businesses better.

Which company executive can find their bearings among the numerous government and local aids, the role and limits of chambers of commerce, government agencies, Economic Missions, or private, functional, or operational consultants? Clarifying roles and better collaboration between excellent public advisors and professional private advisors, culturally difficult to implement in our country, will help more effectively support our companies in fully benefiting from this market.

Share your love
Articles: 378

Leave a Reply

Your email address will not be published. Required fields are marked *