Doing Business in China: Face the Risks, Reap the Rewards

One of the biggest and most challenging areas of international opportunity can be found in China. Managing the risk, accommodating the cultural differences, and targeting the areas of greatest opportunity however, can be quite daunting. With escalating consumer demand, opened trade, tremendous economic growth, and increasing interest for direct investment opportunities, China is a rare find. Navigating the complicated environment and economic differences, however, makes finding the areas of greatest profitability a real challenge. China has experienced an annual growth rate of over nine percent for more than two decades, a population of 1.3 billion whose per capita income has grown tenfold over the last two decades, and a working culture that encourages entrepreneurship, but permits failure. This seems to be the perfect place for financial opportunity. For the Big4 firms, the increased presence of many of the world's largest players has created substantial opportunity for financial services sector growth. Through outsourcing, IT support, and advisory services, many of the Big4 have expanded their operations in China dramatically over the last several years, with more opportunity to come. Procter & Gamble, Coca-Cola, Nestle, Kodak, and Motorola are just a few of the corporate giants operating in China, and with foreign direct investment increasing, more should begin operations. Seventy-one percent of US firms have reported that their profit rates in China are equal to or higher than their global average. However, the greatest challenge may lie in the sustained operations of these corporate powerhouses, due to differences in government regulation and the available supply of resources, such as electricity. The biggest challenge for the Big4 seems to lie in the coordination and regulation of international transactions and Chinese government regulation. Bridging the gap between these two may prove quite a task. By Rene' V. Richards, Staff Writer, Big4.com, August 2006