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Changes in China's Business Environment and Vendors' Corresponding Strategies

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Date: 09-Mar-2016
No. of pages: 26
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After three decades of economic reform, China has become a great economic power in the world, thanks to low-cost labors and materials. Now with intensified competition, rising production and labor costs, and excess production capacity, China's economy is facing a strong headwind, posing severe challenges to local and foreign businesses. This report profiles major challenges faced by Chinese, Taiwanese, and foreign companies in China, and provides corresponding strategies to help business owners overcome the difficulties in China's changing business environment.

List of Topics


  • Challenges faced by Chinese, Taiwanese, and other foreign companies in China; the research results were from surveys conducted by various organizations, including American Chamber of Commerce and European Chamber of Commerce in China

  • Top ten challenges for businesses operating in China and their corresponding strategies, touching on labor and production costs, storage of human resources, policy uncertainty, social Insurances and tax, IP infringement issues, the need for business transformation, difficulty in securing capital funds, the risks of unclear laws and regulations, and environmental protection issues


Companies covered

American Chamber of Commerce in China, Bain & Company, Boston Consulting Group, Capital Economics, Cathay United Commercial Bank, China Entrepreneurs Survey System China Social Security Research Center, China's Development Research Center of the State Council, Chinese Academy of Governance, Chung-Hua Institution for Economic Research, Deloitte Taiwan, European Chamber of Commerce in China, Foxconn, German Industry and Commerce, International Federation of Robotics, M.J. International, Management Institute in Taipei, Manpower Taiwan, Ministry of Industry and Information Technology, Ministry of Economic Affairs, National Bureau of Statistics, National Development Council, PwC China, Roland Berger Strategy Consultants, State Administration for Industry and Commerce, Sichuan Provincial General Chamber of Commerce China, Taipei Chamber of Commerce, Taiwan External Trade Development Council, Taiwan Business Association, TCL Towers Watson, United States-China Business Council

Changes in China's Business Environment and Vendors' Corresponding Strategies

Table of Contents

1. Challenges Faced by Chinese Companies in China 4
1.1 CESS Survey 5
1.2 MIIT Survey 6

2. Challenges Faced by Taiwanese Companies in China 6
2.1 CIER Survey 7

3. Challenges Faced by Foreign Companies in China 7
3.1 American Chamber of Commerce in China 8
3.2 The US-China Business Council 8
3.3 AmCham Shanghai 10
3.4 GIC 11
3.5. European Chamber of Commerce in China 11

4. Top Ten Challenges for Businesses Operating in China and Corresponding Strategies 12
4.1. Challenge 1: Rising Labor Costs 13
Strategy 1: Industrial Upgrading and Innovation 14
Strategy 2: Relocate Entry-level Production Lines 14
4.2 Challenge 2: Human Resource Shortage 15
Strategy 1: Relocate High-level Staff to Taiwan 15
Strategy 2: Automate Manufacturing Processes 15
4.3 Challenge 3: Policy Uncertainty 16
Strategy 1: Reduce Reliance on Chinese Incentives 16
Strategy 2: Construct Research Systems 17
4.4 Challenge 4: Excessive Burden of Social Insurances and Tax 17
Strategy 1: Sign Taxation Agreements 17
Strategy 2: Streamline Personnel Structure 18
4.5 Challenge 5: Rising Production Costs 18
Strategy 1: Reduce Energy Consumption during Manufacturing 19
Strategy 2: Joint Procurement and Shipment 19
4.6 Challenge 6: IP Infringement by Knock-off Products 19
Strategy 1: Set up Joint IP Protection Organization 20
Strategy 2: Create Technological Entry Barriers 20
4.7 Challenge 7: Need for Business Transformation 21
Strategy 1: Collaborate with Local Businesses 21
Strategy 2: Raise Capital Funds 22
4.8 Challenge 8: Difficulty in Securing Capital Funds 22
Strategy 1: Secure Loans from Taiwanese Banks 22
Strategy 2: Launch a Second Public Offering on Taiwan's Stock Market 23
4.9 Challenge 9: Unclear Laws and Regulations 23
Strategy 1: Comply with Laws and Regulations 24
Strategy 2: Communicate and Negotiate with China Actively 24
4.10 Challenge 10: Environmental Protection 25
Strategy 1: Reduce Exhaust Gases 25
Strategy 2: Optimize Waste Water Treatment 25
Appendix 27
Glossary of Terms 27
List of Companies 28

List of Tables

Table 1 Major Business Challenges Faced by Entrepreneurs between 2012 and 2014 5
Table 2 Major Business Challenges Faced by Enterprises 6
Table 3 Primary Restraints on Profit Growth in China 9
Table 4 Do Chinese Enterprises Have Access to Preferential Benefits? 9
Table 5 Major Concerns about Rising Costs for Foreign Enterprises in China 10
Table 6 Top Ten Challenges Faced by Germany Businesses in China 11
Table 7 Primary Challenges for Chinese, Taiwanese, and Foreign Businesses Operating in China 12
Table 8 China's Top Ten Business Challenges and Corresponding Strategies 26

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