Market research, competition and regulations in China

Our market studies stand out from generalist publications through tailor-made analyses, specifically adapted to each client's needs. They take into account the practical realities on the ground and integrate the latest regulatory developments in China, updated for the year 2024. We address the complexity of the Chinese market by considering local standards and regional specificities, often overlooked in traditional analyses. Our goal is to provide precise answers to crucial questions to help you make informed decisions. Whether it involves preparing a domestic distribution strategy, assessing the feasibility of manufacturing in China for the local market, exploring export opportunities, or planning the establishment of a sales subsidiary , our reports guide you every step of the way. They enable you to navigate a complex environment while avoiding regulatory and commercial pitfalls.

 

Here are just a few examples of the questions that are addressed in our reports:

1.1. Competition Analysis and Positioning

• Identification of competing technologies, products and services, both Chinese and foreign, present in China, with an assessment of their strengths and weaknesses.
• Analysis of comparative advantages and the need for product adaptation for the Chinese market.
• Assessment of market maturity for your company and its products.
• Existence of substitute products in China and other markets.
• Take into account Chinese cultural specificities and consumer preferences.
• Terms of sale: Terms of sale: Incoterm for international trade and recommended payment terms.
• Selection of the most suitable distribution networks and access conditions (retail and B2B).
• Examination of the situation and risks of denunciation by dishonest competitors.
• Main pitfalls to avoid to succeed in the Chinese market.
• Overview of the impact of technological innovation on the competiton.
• Case studies: successes and risks in the Chinese market.

1.2. Regulatory environment for entering the Chinese market

• China import duties and taxes, review of possible special or preferential tariff regimes.
• Do quotas exist and what are their limits?
• Restrictions on certain products or the need to redefine their composition to meet regulatory compliance requirements.
• Conditions for compliance and certification of products upon import into China.
• Insights on administrative and tax treatment of services related to B2B sales in China (installation, assembly, maintenance, repair, returns, after-sales service).
• What non-tariff barriers or regulations may slow the introduction of a product into the Chinese market?
• Transfer of Know-How: Optimization of the transfer of know-how, technologies, and intellectual property.

1.3. Estimates of target market size and market share

Review of growth market segments in relation to capacities and a development strategy. Commercial practices and studies of Chinese distributor networks. Distribution: comparison of distribution channels: direct sales and cross-border e-commerce sales. Market reputation: review of the administrative and commercial reputation of current or potential distribution partners. Examination of licences: analysis of the licences and permits that authorise an agent to engage in the activity for which he is responsible for marketing.

 

1.4. China Market insights, trends and statistics

• Market potential assessment and segmentation by product or service range
• Regional consumption trends in China's largest cities and provinces
• Import statistics by sector and classification according to Chinese customs standards.
• Consumption figures and insight changes in distribution channels.
• Real and perceived competitiveness and attractiveness criteria.
• Trend indicators that are likely to affect the development of the target market.
• Competitive investments, government programs, policy changes, new regulations and local enforcement.
• Research of post-crisis opportunities covid-19. Some competitors disappear, others emerge.
  
  

1.5. Strategic Analysis and Distribution Channels

• Sell in China with a 100% foreign-owned LLC company to better manage and control distribution?
• How to manage the retail distribution with a network of retail branches or subsidiaries
• Prefer partner distribution networks and verify their reliability and performance?
• Join forces and partner with a Chinese company to jointly manage distribution?
• Product segmentation: strategies for segmenting product families
• Distribution solutions: compare solutions and cost assumptions for warehousing and distribution
• E-commerce: setting up and managing online sales (e-commerce) in China
• Free Trade Zones: the purpose of using a warehouse in one of China's 21 Free Trade Zones (FTZ)
• Intellectual property protection considerations, taking into account recent regulatory enhancements
• Logistics insights: comparison of cost benchmakrd for warehousing and China inland logistics projects.
  

1.6. Review of product registration requirements in China

• Identification of applicable certification standards and marks (CCC, CQC, CCAP, SELO, etc). Review of required test & audit protocols, control trends.
  
  
• Using a normative frame of reference different from that of Europe and the United States, the Chinese authorities continue to impose their own quality labels and standards. They sometimes force foreign brands to change the composition or ratio of ingredients in products sold in China. This happens for certain pharmaceuticals, cosmetics, paints & coatings, and food products.
  
  
• For highly regulated and controlled toxic or hazardous chemicals, research of the procedures to follow to allow your subsidiary or your local distributor to obtain or extend special licenses or permits.

1.7. Production Value Chain Analysis

• This section looks in detail at the different stages of the value chain involved in producing goods or services for the Chinese market. It identifies the key players, the manufacturing processes, and the costs associated with each stage. The goal is to understand how products are manufactured, value-added, integrated, or subcontracted, and to assess potential opportunities for optimization, cost reduction, and productivity gains. As land and labor costs in China continue to rise, companies are using it as a tool to maintain or improve their ability to compete.

1.8. Export value, sales price, cost of production and break-even point studies

• These analyses focus on calculating the total cost of products or services on the Chinese market. Depending on the project, they include:
  
  
  • For direct establishment projects: set-up, management and compliance, production, distribution and marketing costs, as well as import taxes and duties where applicable.
    
    
  • For export projects to China: calculation of optimal export prices and sales prices to customers. They take into account the transportation costs, import duties and taxes, any consumption taxes (depending on the commodity), transfer pricing practice, distributor and reseller margins.
  
  

• The break-even point is determined by estimating the sales volume required to cover these costs and begin generating profits. This section helps to understand the financial viability and pricing strategy required to be successful in this market. This preliminary approach is most often requested by clients who are considering setting up a manufacturing site in China.

1.9. Financial and Solvency Assessment

• Where data is available, the financial health of partner companies or local competitors in the Chinese market is assessed. In 2024, Chinese regulations still do not require companies to publish their accounting data, except for listed companies. This means that third-party access to financial statements, balance sheets and income statements is not guaranteed.
  
  
• The solvency research examines a company's ability to meet its short- and long-term financial obligations. This section may include analysis of financial ratios, balance sheets and credit ratings to better assess the risks associated with transactions and partnerships in this market.
  
  
• In the absence of official, public financial data, or to supplement it, valuable indicators are also useful to assess the level of confidence and the conditions for working with a Chinese company:
  
  
  • Verification of certificates and licenses
  • Review of ownership structure, partners and capitalization
  • Reputation according to Chinese Social Credit criteria applicable to companies
  • Identify potential affiliations with other private companies or state-owned enterprises
  • Identify potential links to influential individuals.

The parameters listed above are just a few examples of sections of full reports or specific topics that we cover in our China market research reports.

 

 

2.1. About research of Chinese Standards and Norms

 

As a non-tariff barrier tool that is becoming increasingly important as China establishes itself as a major player in world trade, the Chinese authorities have set up a system of product standards and certification specific to their market. This system, designed to meet the needs and particularities of the local market, is clearly distinct from the reference systems and standards applicable in other countries. As a result, companies wishing to access the Chinese market must comply with these unique requirements, which are often more complex and stringent than those encountered in other parts of the world. The Chinese standards (GB standards or ‘Guo biao’) guide the certification test protocols.

 

• Simulations with the Chinese authorities allow you to highlight the required documentation that must accompany, for example, an import made through :
  
  
  • A newly established foreign-owned subsidiary (licenses, permits, authorized business scope)
  • One or more Chinese importers or distributors.
    
    

 

2.2. Navigating the product Certification needs in China

	Certification needs: the need for product certification according to Chinese standards. Regulatory context: The reorganisation of the Chinese administrations responsible for product certification and sanitary inspections leads to frequent updates of regulations. This affects sensitive products widely exported by international companies, such as food and beverages (CFDA) or skin care products and medical devices (NMPA), as well as chemicals or hazardous products. Recognition of compliance: Chinese customs and other market control authorities do not recognise a US or European certificate of conformity, or a test report that refers to non-Chinese standards. Certification solutions: Compare available certification and risk assessment solutions.

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