How to choose the right market to enter China

When a company tells me, “We want to enter China!”, my first instinct is to ask,“Which market exactly?””.

The People’s Republic of China has nearly 1.4 billion inhabitants, divided into 23 provinces, 5 autonomous regions, 4 municipalities, and 2 special administrative regions.

Given this complexity—geographic, cultural, economic, and even linguistic—how can an SME identify the best markets in China for its products?

Here are some tips to help you choose the right entry point:

Study the Five-Year Plan and Made in China 2025 Plan

The Five-Year Plan, published every five years by the Chinese Communist Party (the current one is the 14th, for 2021–2025), sets economic growth goals, identifies promising investment areas, and defines priority sectors.

The “Made in China 2025” plan, issued alongside the previous 13th plan, identifies 10 strategic industries and outlines pilot projects for each province.

These two documents already offer valuable insights.

Research Provinces and Cities

China has 160 cities with over a million residents. These cities are grouped into about 20 clusters, each comparable in size to a European country, with consistent infrastructure and socioeconomic characteristics.

When deciding which city or cluster to start from, consider:

1.   Market size and trends for your products, and the presence of customers and competitors
2.   Logistics infrastructurefor shipping, storing, and distributing your products
3.   Availability and cost of materials and workforceespecially if you plan to set up operations locally
4.   Bureaucratic ease and availability of public/private support services , which vary greatly between cities
5. Incentives and tax breaks for foreign investments —especially significant in high-tech industries and in western and northern provinces

Follow these guidelines when choosing your starting point in China, but remember: never make a decision without visiting the location several times, either in person (when possible) or through trusted local representatives.

In this case, time spent making a good decision is always time well spent.

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