China: Top Ten Mistakes in the Market by Julie Reinganum, President of Pacific Rim Resources, Inc. for the American Marketing Association, Silicon Valley March 13, 2000

Know your market: know your market As background, when one looks at corporate marketing in China, it has generally gone hand-in-hand with corporate investment in China….in other words, if you did not produce a product in China, there were many restrictions on your ability to sell it. Of course, not the least of which were tariffs at about 33% Today, the common miscalculations include:
	1. Lure of 1.4 Billion Customers
		--econ is about 1.8 trillion—size of Italy
		--1/3 size of California
		--8th largest economy in the world
	2. Inaccurate market segmentation—particularly true in technology—for example flat panel technology
		--coastal cities vs. inland cities usually estimate the market based on the urban vs. rural, often overlooking that
		--in fact there is a 5 year lag between the adoption of technology in the inland vs. the coastal areas. This is not an urban rural but an inland coastal issue
	3. China lacks transparency
		--tendency of many firms to rely on "go-betweens"
		--the opportunist vs. the strategist
		--China is protectionist….will always favor local industry
	4. Criteria for a "good partner" is contigent on the business specifics
		--how regulated in your business i.e. telecomm requirements vs. equipment issues
	5. What is your value-proposition?
	6. Who is your customer?
		--state-owned vs. private
		--import/export authority or not?
		--require service?
		--need local warehousing?
	7. Who are your competitors?
		--MNCs vs local firms
	8. Intellectual Property—the limits of enforcement
		--for example Sina.Com won its case and only could receive $30,000 in damages!
	9. The legal system?
		--judges are local—many are former army people with little legal training
		--contract does not rule—arbitration in HK does not solve the problem
		--settlements are often unsatisfactory
	10. One can apply the same standards in the US and in China
What will be in the impact of China’s accession to the WTO on these top ten?
	1. For sales of technology products, the import/export issues MAY be less complex
		--elimination of state requirement to go through Foreign Trading Corporations, but companies will still need on-the-ground presence
		--in industries such as the semi-conductor industry this will make the difference between being competitive and losing the business
	2. For technology manufacturing
		--there is a reduction in local content requirements
		--can import other products and support their sale
		--IP cannot be required as a provision of a JV
	3. However, entry into Telecomm will still be difficult, because the approval of projects in subjective and not impacted by the WTO

---