An Analysis Of Prospects And Ventures Of The Chinese Market For German Small To Medium-sized Enterprises

In the era of an advancing globalization and global markets the Internationalization of business is one of the preceding goals for business companies. Today a global production of consumer goods is already self-granted. Besides this concept of a global production, new emerging markets worldwide are changing into desired markets for western consumer goods. In view of the fact of slowly growing domestic markets, international and national entities are realizing the necessity for a global strategy. Along with the abolition of tariff barriers and the globalization of markets, the competitive environment is changing too. The emerging markets, especially China, are shifting from labor intense production of bulk commodities towards competitive value goods. In the last decade, China has shown a fast-paced economic growth. This development made China one of the most financially rewarding emerging markets to invest for foreign entities. Since the early years of economic involvement by German companies in China, mostly the big corporate enterprises were in the focal point of politics and media. With their ties to politics and a strong set of experiences of internationalization and derived strategies for global markets, they have been the forefront of the German China business. This has changed in recent years. Today, Small to medium-sized companies already outnumber the big corporations and build the majority of German entities on the Chinese market as the argued importance of a global strategy is becoming more internalized. Although more and more German SME are involved in the China business, the uncertainties and potential risks are high. The country specific peculiarities of the Chinese market can become a barrier that-especially for SME with a lack of experience and limited resources-evolve into an absence of investment return, instability and even bankruptcy. Concerning this, any kind of involvement of SME on the Chinese market is a step that requires strategic planning and country specific knowledge on a great variety of fields. To this regard the paper at hand, will explain the general motives for an economic involvement in China, inform about German SME as the object of investigation, their managerial character and their importance for the German economy as well as their role on the Chinese market today. The goal will be a showcase analysis of the Chinese market framework and a concluding operational decision making for German SME. Accordingly, an insight of the Chinese peculiarities will be given. The countries specific, traditionally rich culture and long history that as well as its complexity and heterogeneity of geography and society make China so incomparable to other markets and defines its business culture, consumer behavior and certain market entrance strategies with specific requirements of business knowledge for foreign SME. Based on the findings, the chances and risks for German SME when expanding their business to China will be derived. Based on certain external factors analyzed in this work, such as the Chinese specific political-economic, legal and sociocultural characteristics, in the latter a typical problem statement for German SME will be deduced and the focus will be on certain methods of risk resolution and potential achievements that can be gained with the appropriate preparation and by choosing the right strategy for a Chinese market entrance. In this sense the paper informs about the determining factors and country specific peculiarities of the People’s Republic of China. The Chinese economic development and reformation and certain economy defining aspects of the last three decades are given and the peculiarities that define the business framework of German enterprises today is in the focus of analysis:the topical key data, the political-economic and legal framework as well as the cultural specifics. The thesis at hand concludes with a summarization of the perception that was won in the course of the paper and is giving an outlook on the developments and their relevance for German SME in the future. According to the perception and insight that was obtained and derived on the Chinese target market an elaboration of the prior-ranking potential prospects and ventures for German SME are given and a course of action for risk abatement and profit maximization for foreign enterprises is provided and accordingly an information procurement on the Chinese market investigation, market entry as well as strategy solutions for the major obstacles of the Chinese market will be provided.