Entering the market in China

What to expect in China?

Tailored support: China’s huge economy is driven by a highly competitive and fast-moving market. It can offer boundless opportunities, but the inherent challenges to market entry remain daunting to foreign start-ups with limited or no local experience. By providing individualized, one-to-one support, the camp continuously guides Swiss start-ups towards achieving their goals in China at every step of their market internationalization journey. Camp participants can sharpen their business plan by gaining a thorough understanding of local market conditions and the regulatory framework based on knowledge exchange with industry experts, potential clients, and partners.

Network & matchmaking: As an official representation of Switzerland, Swissnex in China has developed a broad, diverse network of industry, academia, and policy actors over the course of 15 years, which helps open doors for new opportunities and offer first-hand insights. The close collaboration with the Swiss Embassy, Consulates General, SwissCham, and other local partners also help start-ups tap into China’s top innovation clusters across its vast geography.

Cultural bridge: Cultural and linguistic barriers are often cited as major hurdles to doing business in China. The camp manager can accompany the start-up entrepreneurs in-person at business meetings to help them effectively navigate these communication gaps and establish trusting relationships with local partners.

Learn more with Lijun Zhang, Head of Innovation & Entrepreneurship at Swissnex in China.

Why expand into China?
As the world’s second-largest economy, China continues to be an important market for start-ups that want to go global. The massive size of the market offers attractive scale where start-ups can grow quickly, prove sustainability, achieve traction, and accelerate their business into the next stage. Tapping into the resources of China’s dynamic entrepreneurial ecosystem, innovators can transform their ideas into commercial products rapidly and often at a lower cost. Thanks to their science-driven background, Swiss start-ups are reputed as trusted partners and can stand to benefit from policies that encourage deeptech solutions.

What’s the actual situation like in China?
China’s transition from the world’s manufacturing hub into a major tech hotbed has been spurred on by an adaptive domestic market in which competition drives success. A “try fast and fail fast” entrepreneurial mindset embedded itself in the start-up culture, where the rapid product iteration capabilities often lead to fast maturation and scaling. Companies operating in China need to be extremely agile to stay competitive in the market, adapting quickly to shifts in market demand and new preferential policies. At the top, the government sees its rapidly growing digital economy as the next global economic paradigm, placing significant emphasis on data governance, ICT infrastructure, and digital industrialization.

What is the state of innovation?
In 2022, China’s spending on R&D is the second highest in the world and ranks 11th in Global Innovation Index 2022. The government’s 14th Five-Year Plan (2021-2025) prioritizes basic research and technology applications as an important driving force behind the country’s economic growth, implementing policies targeting cutting-edge fields such as next-gen information technology, biotech, new materials, new energy & cleantech.

How easy is it to find qualified employees and partners？
China boasts a large, well-educated talent pool, where the first-tier cities offer a steady supply of highly skilled bilingual and multilingual talents that possess both local knowledge and international experience. However, locating, attracting, and retaining the right employees can take time and effort. Start-ups could consider recruiting from the community of Swiss university alumni who are natural cultural translators. Likewise, qualified partners are readily available in China, but carrying out due diligence and evaluation can be challenging and time-consuming.

What are the challenges?
Given China’s sheer size and characteristics, careful preparation is a must. Navigating the complex business regulations and bureaucracy can be costly in terms of both time and resources, while IP concerns impose potential obstacles for foreign start-ups looking to make inroads into Asia’s biggest economy. Swiss start-ups should prepare a detailed entry strategy and play to their strengths. It is also crucial to overcome cultural and linguistic barriers in order to develop local partnerships, which can help connect start-ups with game-changing local resources, such as distributors, clients, and market intelligence.