Frank Shipper and several other small business owners joined a trade mission to China to explore market opportunities there. The group learned that China has a population of over 1.3 billion and is one of the fastest-growing export markets for small and medium-size U.S. companies. Average annual income varies greatly across the country, but it is increasing rapidly. Annual per capital incomes ranges from a low of about 51,000 for rural workers to just under 53,500 in urban areas—even higher in Shanghai, Beijing, and other major cities. The World Bank estimates that the economy in China grows around 10 percent each year, and recent analyses indicate that the number of Internet users has been growing 11 percent year-over-year to reach 538 million. Furthermore, as the customer base in China continues to grow and quality-of-life expectations rise, the demand for various kinds of services increases greatly. Members of the group learned that 500 million people in China have cell phones, and nearly half of these people have mobile access to the Internet, with most of these being in large urban areas. On the downside, they found that counterfeit goods (from clothing and leather goods to software and DVDs) were readily available at a fraction of the cost of legitimate merchandise and that local merchants have expressed interest in doing business only with vendors with whom they have established relationships.

1. What types of businesses would prosper in China? Why?

2. What are the challenges and risks associated with doing business in China?

3. What steps should Shipper take to address these challenges and risks in order to increase his chance of success in that market?

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Situation FS and team went to C country to explore business opportunities The team analyzed that the... View the full answer