Fishing For China's New Opportunities

The nature of business opportunity in China is changing as the country's economy undergoes a massive restructure. Yet although its nature is changing, opportunity in China remains as ubiquitous as ever, even amidst adverse influences that characterize the nation's present business climate.

The adverse influences we refer to have been widely discussed in international media. They include rising costs of labour, materials and land; slumping export markets; high interest rates; and lack of access to affordable credit. These conditions are squeezing small and mid-sized firms throughout China, forcing many of the less competitive ones into bankruptcy.

In Wenzhou, for example, several mid-sized firms shut down last summer after their owners, unable to repay loans, fled town. The owners had been so desperate for credit that they were borrowing on the black market at rates as high as 300%. The closures left thousands of people without jobs, creating something of a crisis on the local level. Similar scenes have played out in other towns, on a smaller scale for the most part.

Even with the challenging influences on businesses, opportunities for profitability in China are still as numerous as shrimp in the sea. The difference is only that some of the species of shrimp, or their relative proportions, have changed.

The number of millionaires in the country, for example, continues to climb. They currently total about 530,000 (yes, that's US dollar millionaires), more than the number of millionaires in every other country except the United States, Japan and Germany. Like wealthy people everywhere, China's millionaires want to spend their money, and entrepreneurial minds are working double time to help them do just that.

China's millionaires aren't the only ones in the country whose rising wealth is creating opportunities. As noted, wages are rising, and while that does represent higher costs for business, it also means that people have more cash to buy products and services. We'll leave it to professional economists to determine the extent to which wage hikes and inflation offset each other in the aggregate. What we can say with certainty is that millions of Chinese are enjoying higher standards of living every year. Even China's huge peasant population is said to be enjoying a significant trickle down of wealth in some areas, thanks to higher prices of agricultural products and government policies

And speaking of government policies, Beijing's plan to bring inland the development and prosperity that now characterizes much of the nation's east coast -- one of government's overarching objectives -- has been progressing apace. The plan requires large investments in infrastructure, which means big opportunities for many large multinational corporations. Once finished, these infrastructure projects will provide the framework for the development of robust local economies in which entrepreneurs and SMEs are able to thrive. In other words it will be opportunities galore!

Another good example of government policy driving business opportunity is the plan to make Shanghai the world's top international financial centre. The Lujiazui Financial District, a rather bleak place just ten years ago, is now packed with office buildings where international and domestic banks, insurance companies and stockbrokers have taken up residence. Alongside them is a growing number of consulting firms and various small businesses and entrepreneurs who service these financial conglomerates with needed products, services and innovations.

Changing preferences, values and habits of China's consumers also represent opportunity. Young people with lifestyle habits that differ greatly from older generations are entering the workforce, creating opportunities for companies to create products that meet their unique needs. 

Since opening our first China location in Shanghai in 1999, we at Servcorp have watched hundreds of entrepreneurs and SME owners flourish and grow as they used our business centres and services to launch ventures and expand their operations in the country.  If anything, their numbers are only increasing.

High demand for our serviced and virtual offices in China isn't surprising when you think about it. In a period of high costs and dynamically changing markets, a new business venture becomes more risky.  And a serviced or virtual office is a far less risky way to launch a business. In addition to providing speed to market and quick expansion Serviced and Virtual Office services obviate the cost of leasing and furnishing a traditional workspace, fitting it out with telecom and IT infrastructure, and hiring administrative staff. And if the venture fails, exiting is far, far easier.

So if you are thinking of opening or expanding a business in China, we're here to increase the chances of your success. Find us in three locations in Shanghai, as well as in Beijing, Guangzhou, Chengdu, and many more cities to come.

Servcorp, Shanghai